The consumer side of smart grid involves meters that collect data on usage frequently and then make that data available to the consumer so that they can either manually or automatically (depending on how smart their appliances are) alter their electric usage during times of peak demand. That altered behavior will theoretically reduce the need for expensive and peaking generation that consumers pay for every day but only runs a few hours a year. As a result the system realizes both environmental and economic benefits. It sounds great but before the consumer can alter their usage patterns they need to get access to the data. That’s where the need for cloud computing architecture enters the scenario.

In the world of smart grid utilities will be storing much more data about customer usage than they do now. Most utilities currently take one reading of an electric meter for an entire month. With smart meters in place utilities will be storing thousands of readings a month for each meter. That means utilities will need lots and lots of databases (data centers actually) and applications to access and analyze that data. Computing power is going to be a big deal but it isn’t nearly the sweet spot for utilities. It should come as no surprise that computing giants like IBM, Google, Oracle and Microsoft are lining up to service utilities as they transfer to smart grid technology. So the data storage issues should be sorted out. Don’t forget about the customer though.

In order for the customer to be involved they need access to the data being captured by the utility and they probably need it in real time for the whole scheme to be effective. Customers will need to know, “How much power am I using RIGHT NOW, not fifteen minutes ago.” If smart grid technology delivers on its promises the utility should know that but getting the data to customers in a user friendly manner will be a trickier proposition. That’s where cloud computing platforms enter the situation again. All this data is stored somewhere (out there) in the cloud and that means the customer should have access to that data anytime they have an internet connection. Google’s Gmail service is a great example of a cloud computing service. All the data sits in a data center somewhere and a person’s local computer or iPhone or Blackberry can access that email via a web browser or other specialized program. All the heavy lifting (catching the mail, filtering spam, storage, indexing for search) happens in the cloud. And so it will need to be with customer meter data. Perhaps people could get meter data updates via email. Why not?

Two very necessary functions that utilities are not so good at involve data access and interfaces. In the world of smart grid customers will need user friendly access to data. That doesn’t mean they will visit the utility website every so often and download a csv or pdf file. User friendly means that customers must have access on the platforms, devices and in the format of their choosing. At the computer? Yes. On the mobile phone? Yes. Automatically? Yes. Via text message? Yes. HTML? Text? Yes. Yes. What will customers do with the data? If you’re the utility it really isn’t any of your business. The customers have a right to the data. And that also means they have a right to choose the interface that serves up the data to them. So once open access has been granted the customer can make the choice of interface.

Utilities may choose to make interface options available to consumers. Both Google and Microsoft have been promoting products (Google Power Meter and Hohm respectively) that can serve as an interface for utility customer meter data. But consumers may want to use other interfaces. An iPhone application to display meter data is far from a far fetched idea. How about sharing meter consumption on the Facebook page or Twitter account? Why not? People share a lot of things that you wouldn’t expect them to these days. There are many, many possibilities. Utilities have a few options here. You can try to think of all the possibilities, code applications to meet the needs then release and support them. An interesting idea but not advisable. Or utilities could offer application programming interfaces (API) that allow developers access to meter data given the permission of the customer. Or utilities could just lock the data into their own system giving customers limited access.

If the utility proponents of smart grid want the idea to take off they better seriously consider the API option. Because if you want a technology to take off you need to get people behind it. People will get behind it if they have options for accessing and using their meter data. Remember, the data belongs to the customer as much as the utility. It’s likely that they (or some enterprising software developer) will find a better use for it than the utility will. If you’re looking for some simple examples of the API option see the Twitter API. It allows developers to write applications that access a Twitter users “updates” with the permission of the user. Now think of frequent meter readings as status “updates” that the customer may want to make available to some application for whatever use suits them. Consider the image below which shows the Twitter “connection” window. It shows what applications have been given access to the Twitter updates of a particular user.

Approved Twitter Applications

Why not have a dashboard like this available to a utility customer? There’s no good reason why the customer shouldn’t have these features. Cost might be raised as a potential issue. Remember that utilities are going to have to give access to this data anyway. Giving limited access may end up costing a lot more in the long run if the technologies of smart grid are not sufficiently utilized to offer the promised benefits. Limited access could have a public relations cost associated with it as well. Imagine consumer advocates saying, “There go the utilities again, promising transparency and access to data as a result of new technologies, then failing to follow through.” Cloud computing, with it’s (theoretically) infinitely expandable architecture helps to make it possible.

Smart grid and cloud computing need to go hand in hand in order for the customer focused aspects of smart grid to be successful. Cloud computing offers great opportunities for both the utilities and customers. The technology vendors are out there. The data centers are out there. The application developers are out there. The utility industry just needs to join the party and meet them halfway.

The dollars are flowing to companies large and small. Automotive start ups like Tesla Motors and Fisker Automotive, companies with little track record and no profits to speak of, have scored nearly $1 billion combined in guaranteed loans. Meanwhile established car companies like Ford and Nissan have been granted $5.9 billion and $1.6 billion respectively to further development of electric vehicles. That’s in addition to the government’s purchase of General Motors at a cost of tens of billions of dollars.

Outside the auto industry we’ve seen companies such as Solyndra, a solar power start up based in Silicon Valley that qualified earlier this year for a $535 million DOE loan guarantee. Prior to the loan guarantee Solyndra had been funded to the tune of $800 million in private venture capital financing. At the beginning of September the DOE also announced over $500 million in grants given mostly to large wind power developers. Since then many large utilities across the country have benefited from over $3 billion in smart grid stimulus awards. More recently the DOE has announced more than $600 million for energy storage projects.

If you look at the entire list of what has been funded so far you’ll see that no technology has been left behind. Electric vehicles, solar, wind, smart grid, geothermal, energy efficiency, energy storage  and carbon capture have all received funding. Thus one of the biggest obstacles to the development of new clean energy technologies has been removed. The collapse of the credit markets and oil prices dried up the investment pot. But the U.S. government has stepped in to fill the vacuum. So companies now have access to the capital they need to develop better batteries, construct manufacturing plants, research future technologies and much more.

With the financing obstacle removed for many companies, the only thing that’s left for companies to do now is to deliver on their promises. Electric car manufacturers have promised affordable vehicles that eliminate (or greatly reduce) the need for gasoline use in day-to-day transportation. Solar producers have promised gigawatts of solar facilities across the deserts of the southwest and rooftops across America. Wind power developers have promised clean, reliable, emission free electricity with very low impact to the environment. Smart grid companies have promised a new age of energy information technologies that will virtually eliminate blackouts and give consumers unprecedented control over their energy use and costs. Geothermal developers have promised a vast supply of emission free, uninterrupted baseload power from deep below the surface of the earth. On top of all the promises we’ve heard many times over the past decades there is also the promise of millions of “green jobs” as a result of a new clean energy economy.

The billions of dollars in play right now may only represent a down payment on future possibilities for clean energy development in the United States. Results are important though. If you have an investor who throws in a million dollars most of the time they want to see some progress before they commit more money. In this case the investors are the American people who’ve heard promises about the benefits of affordable electric vehicles and solar technology for decades. If public support for new energy investment erodes in 2010, politicians, especially ones up for re-election, will get the message and adjust their influence accordingly. That’s why it’s so important that clean energy companies show that they can produce the technologies they have promised, with the benefits that they have promised, at a cost that the majority of the public can afford.

In conjunction with their plan for Boulder, Xcel energy has created this video that explains their vision for the Smart Grid. I recommend that you take a few minutes to view the video below if you want to get a better picture of the future of electricity in the home. You can find out more about Xcel’s Smart Grid initiative and on their website which contains several other interesting items including a white paper and some graphics showing a Smart Grid city and home.

Defining Demand Response

Demand response programs pay electric customers to reduce their load during high electric demand hours. This product provides the opportunity for customers to earn money by shifting their electric consumption to off-peak hours. Across the United States the vast majority of the customers for demand response fall into the Commercial & Industrial (C&I) category.

Imagine a manufacturing plant that operates on shifts. During the summers that plant might be able to eliminate their afternoon shift and replace it with an overnight shift, thereby reducing the overall load on the electric system during peak hours of the day. Alternatively, the same plant might have their own generation resources on site that can be utilized in the event that they are called to reduce demand.

C&I customers weigh the financial benefits of the demand response program against the inconvenience and cost of making changes to their electricity usage.

Demand Response Technology

Participation in demand response programs requires the use of advanced electric metering technology. This technology allows a central operations center to communicate with the C&I customer to let them know when to reduce demand.

In order to access the necessary technology demand response providers will contract with companies that aggregate demand response as a resource. Two well known demand response aggregators are Enernoc and Comverge. The companies provide electric customers with the necessary technology and act as an intermediary between the customer and the utilities and electric system operators who run the demand response programs.

Enernoc has posted a video that explains how their system and processes work.

Residential Demand Response

The availability of residential demand response is extremely limited in the United States. There are two main reasons for this. Residential electric prices are rarely tied to the wholesale electric markets in any way. As a result the reduction of demand provides no financial benefits for the residential consumer. Electric meter technology also requires an upgrade. The vast majority of electric consumers have older meters that do not provide the granularity required to track electric consumption changes within the day.

Some customers do have the option to benefit from reducing demand via Time Of Use (TOU) rates. Time of use rates adjust the price of residential electricity based on the time of day when the electricity is consumed. TOU rates are a form of passive demand response because the customer is not obligated to change their habits. As a result, electric system planners don’t have a strong ability to factor the effects of TOU when determining generation schedules.

Bringing residential customers into the demand response fold will require advances in technology and market rules, as well as an investment by local utilities. Such advances generally fall under the umbrella of smart grid technologies.

The Future of Demand Response

I expect demand response to become increasingly popular and eventually make a stronger move into the residential electric market for the following reasons.

• Demand response is considered a clean energy resource since its activation can reduce the output of fossil fuel powered resources
• Demand response will allow many states to meet increasingly onerous electric efficiency requirements that mandate reduced electric demand
• Unlike nuclear, clean coal, and even wind projects, there is no consumer opposition to demand response programs
• Competitive electric markets are expanding the opportunities for providers of demand response in order to meet ever increasing demand
• As electricity prices increase all classes of consumers will demand products that allow the flexibility to control costs via shifts in demand

Wide integration of demand response is going to take some time. But when you compare the effort and cost to siting a nuclear plant or offshore wind farm it’s easy to see why investing in demand response is a better bet than counting on those technologies in the near future.

Date: April 21-22, 2008

Place: Amsterdam Marriott, Amsterdam, Netherlands

Registration: Platinum – £1395, Gold – £1295, Academic – £300

Links: Official Site, Registration