Electronicdesign 2775 Xl smartgrid

Consumer Attitudes Will Shape The Smart Grid’s Success

May 12, 2010
Microchip's Michael Ballard asseses consumer response as an element in the success of the smart grid.

Michael Ballard, Microchip Technology Inc.

With the rapid development and interest in the U.S. Smart Grid market, an unprecedented number of factors is affecting the evolution of technologies, standards, and applications. From implementations of smart meters by utilities, to government grants for Smart Grid and renewable programs, to changes by regulators of electrical-pricing structures, many companies are looking to take advantage of this emerging and yet uncertain market.

What will define its success or failure? How will new legislation such as the Carbon Tax affect utility and energy prices in the U.S.? How will consumers accept the changes to their lives that may be required with the new Smart Grid? How will tiered pricing affect consumers’ behavior in how and when they use energy? What new applications and infrastructures will need to be implemented? How will all of these smart systems communicate? Will systems communicate wirelessly or via power-line communications, or a hybrid of both? The answers to these questions may not be answered for years to come.

U.S. utilities acknowledge that making their existing infrastructures more efficient would save billions of dollars on new power plants and transmission systems to meet the increased demands for electricity. New legislation is encouraging the use of renewable resources, which are dynamically variable in nature and will have a profound effect on the grid as they become a larger percentage of electrical generation. This will force the grid to become smarter by requiring the ability to quickly reroute power and reduce the grid loads for short periods of time. Two scenarios are being implemented across the country to reduce the peak loads on the grid during times of the day where energy is in high demand.

The first is the use of tiered pricing. By making energy more expensive to the user at peak times during the day, utilities hope to not only recoup the costs that they incur for short-term demand-response generation units, but also change consumers’ behavior by providing incentives for them to use energy at other times of the day. To succeed, enhanced communication from the utility company to the consumer must be implemented to share detailed energy consumption data. The second method, load shedding, actively removes loads from the grid to decrease the load. In this scenario, the utilities can control the loads within the home (HVAC, refrigerator, oven, water heater, etc.) to reduce the demands on the grid during certain periods of time.


Many companies are wagering on which technologies or applications will drive the success of the future Smart Grid. So what one factor will drive its success? Is it legislation, new technology, or something yet to be considered? The simple answer is not located on a circuit board. It has to do with consumers themselves. Success will depend upon consumers’ willingness to alter their energy-consumption habits—a paradigm shift being recognized today. As consumers monitor their real-time energy usage through the use of in-home energy displays, they can modify their behaviors by identifying the sources of their energy utilization.

Not all customers are open to the changes in lifestyle that may be required for the Smart Grid to be successful. In parts of the U.S. where smart meters have been implemented in conjunction with tiered pricing structures, consumers aren’t necessarily seeing the lower monthly bills as promised by the utilities. Many consumers are actually paying more for their energy each month. This has created many cynics. Likewise, active load shedding has fostered skepticism among consumers who are accustomed to using energy whenever it is needed.

Now, to implement tiered pricing and real-time command and control of loads, the typical U.S. consumer is going to have to adapt to the changes or will revolt against them. The public and political outcry could slow down the implementation of Smart Grid technologies.

The Smart Grid will emerge using one of two models—either a scaled-down Smart Grid with utility-controlled smart meters used solely to implement time-of-use plans, or a fully integrated Smart Grid that can accurately command and control loads, predict demands, and integrate variable electrical sources onto the grid. Which grid will evolve? It’s all up to the consumer.

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