This column is to create a forum for ideas, passions and perspectives on our industry that are controversial, provocative and energising. The views expressed here may be unpopular, politically incorrect, heretical or simply humorous. They may be ideas that all of us have had but didn’t care (or dare) to articulate. The opinions expressed are those of the author alone, but are probably shared by many who have yet to say so.
Where does the rubber meet the road? Here! Right now!
For all the planning, analysis, projections, pilot programmes, and focus groups that the electric utilities and their advisors have done… for all the expectations and all business case projections… or all the pontification by the demand response gurus… for all the dreams of regulators, legislators, accountants, for all the wistful vendors… it now comes down to the customer, and how that customer will really behave.
How will that consumer behave under time-of-use and dynamic electric rates? Will he or she really embrace (buy, install, programme) the home area network (HAN) technologies, the programmable communication thermostats (PCTs) and other “customer-side-of-the-meter” devices. Or not?
We have said that these will help the residential customer take better advantage of the rate structure (price schedule) by automating his response in accordance with his preference, and will produce two to three times more demand reduction during peak periods than if the customer did not have that equipment.
But will that consumer really do what we project? And if he does, for how long? What’s his staying power? How long before boredom or frustration sets in? Is this just one more complication to his already complicated life? Will that consumer be willing to reach for his wallet and pay for the HAN equipment, as envisioned by many utilities? Or will that purchase have to be subsidised by the utility, or paid for with a monthly “rental charge” that appears on the customer’s bill or will the customer get it free? What if the consumer believes the equipment isn’t working – where does he turn for support and service? Does he even hear the utility messages and trust them, or does the customer suspect that he is being sold a “bill of goods” as some PG&E customers have reacted?
I am sure you have heard the term “where the rubber meets the road.” It was originally part of the advertising of a major auto tyre company. But it took on a larger meaning. The website “usingenglish.com” defines common idioms. It says “Where the rubber meets the road is the most important point for something, the moment of truth. An athlete can train all day, but the race is where the rubber meets the road and they’ll know how good they really are.”
We are approaching the moment of truth, and it isn’t especially pretty. In North America more than 35 companies are vying for their piece of the pie. Many of these firms won’t make it. Then too, the so-called “white goods” manufacturers of major appliances like GE and Whirlpool are making positive noises, talking about embedding intelligence and communications in their products. Companies like Apple, Google, Cisco and others are expressing their visions for the customer’s future in energy information and control.
But the AMI systems with HAN interfaces are going in now. And more AMI systems are being procured every month. Most AMI system procurements are based on the economic assumption that the HAN technology is available as the installation progresses, that it is standards-based and interoperable, that it is readily installed and will work, and that the consumer will be cheerfully willing to buy it.
Investor-owned utilities generally have to demonstrate to regulators that the benefits of a planned investment will exceed the costs in order that the expenditure can be placed in the rate base. Most of the comprehensive business cases develop the operational, the societal and the demand response benefits. Many business cases are negative without the demand response benefits. To capture all these benefits we generally presume levels of consumer participation and levels of adoption of customer-side technologies such as home area networks. We presume that the consumer will understand the rate structure, will find it attractive, and will find it in his best interest to respond to the “price signals” it represents. If those presumptions are wrong about the rate or its adoption by customers or the technologies, for whatever reasons, then the business case goes negative.
The lowly customer is a very critical element in AMI system justification, and thus is very critical in the realisation of the larger smart grid vision. The residential customer is where the rubber meets the road. We already have large AMI systems with HAN interfaces being installed daily, but yet we have no credible commercial availability and retail supply chain for the HAN devices, and no mechanism for supporting the customers who install them.
We must get this right and we must do it very soon. Or we shall have millions of AMI end points installed whose justification was a rude fantasy in retrospect.