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How Can Smart Meters Save Europe €120 Billion?

October 12, 2009: In the packed King Harald Board Room at the Naval and Military Club in St. James Square, London, today, Ahmad Faruqui and Dan Harris explained to an elite group of industry experts how rolling out smart meters in Europe can save  €6 billion per year, or  €120 billion ($175 billion) over the meters’ 20-year life.  The means is demand response via smart, dynamic prices.  Dr. Faruqui and Mr. Harris are principal consultants with the Brattle Group and made their presentation in the eMeter-sponsored event that included Chris King’s update on the PowerCentsDC smart grid project.

Faruqui and Harris explained to the group of government officials, academics, electricity retailers, and industry consultants (and Nissan, who sees a strong link between smart prices and electric car charging) how they applied Brattle’s econometric model to Europe.  The model includes 49 results from pilots throughout North America and a few from Australia and Europe.  The consultants adjusted their results for Europe to account for much lower air conditioning usage, pulling from pilot data in places like the State of Washington, the San Francisco Bay Area, and Ottawa, Canada, where air conditioning use is also very limited.  They analyzed the UK wholesale market and other European electricity markets in assessing the value.

The presentation was important for two reasons.  Of course, €120 billion in consumer savings is important, period.  In addition, however, this seminar and others like it are highlighting both the importance of the consumer and the benefits to the consumer of smart meters in Europe.  So far, consumers are seeing relatively little benefit from the nearly 50 million smart meters deployed in, primarily, Italy and Scandinavia.  Brattle advocates that all those consumers have the chance to sign up for voluntary smart prices – TOU, CPP, or Peak Time Rebate – so they can start going after some of that €120 billion!

– Chris King

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October 13, 2009 at 3:57 pm

Smart Meter Europe: Spain Jumping Ahead

Two themes marked today’s Smart Meter session in Barcelona.  First, amid tremendous energy and enthusiasm – the show has a record 3,200 attendees – many participants are frustrated by a lack of concrete progress.  The excitement comes from the EU’s directive to roll out smart meters to all consumers by 2022, from the commitments by the UK and others to do it even sooner, and from the active planning and strategy development underway by all of Europe’s major utilities.  The frustration, in contrast, comes from the small number of announced projects.  The crowd was restless, wanting to see less talk and more action.

The second theme, though, is that real progress is happening.  And that was demonstrated when Endesa’s CEO, Jose Luis Marin Lopez-Otero told the audience that Endesa will begin rolling out smart meters in three months, at the rate of two million meters per year.  Endesa is not waiting for all the i’s to be dotted and t’s to be crossed.  And Endesa is publishing its meter design to make it available to others as well, hoping to create a de facto standard, promote more rapid adoption, and reduce costs.  When I later spoke to Senor Lopez-Otero, he said one of Endesa’s main drivers is to get energy usage information in the hands of Endesa’s consumers, so they can save energy and reduce carbon emissions, and available – with the consumer’s permission – to retailers, so they can offer new pricing and service options.  He emphasized the importance of these benefits in light of his experience coming from the telecommunications sector.

Next year, Endesa and a few others will move forward aggressively, and the remaining utilities will begin implementing the plans on which they’ve worked so hard.  Net net?  2010 promises to be a big year on this side of the Pond.

– Chris King

October 7, 2009 at 6:17 pm

Whatever Happened with ENEL, the World’s Largest Smart Meter Deployment?

In the first half of this decade, ENEL deployed 30 million smart meters to all of its customers in Italy, yet we hear very little about the results.  The reason is that ENEL is still working on the software to get more benefits to consumers.

ENEL’s hardware does all the things we ask of smart meters: collect interval data, allow remote connect/disconnect, even have the ability to communicate with smart appliances in a home area network. So far, however, the main benefit has been in utility operations.   ENEL uses its system to read meters remotely, once a month, and to adjust customer power level subscriptions (in Italy, consumers pay rates that depend on the size of their circuit breaker; ENEL uses its system to adjust remotely the permitted power usage, thus saving on expensive manual field visits).  ENEL’s business case already succeeds.

But consumers do not have smart, dynamic pricing options, do not have access to detailed usage data online or via in-home displays, and do not have demand response choices.  The missing ingredient: software, such as eMeter’s EnergyIP and Energy Engage solutions, that enables these options.  Howard Scott of Cognyst Consulting summed up the issue in his blog post on Energy Central:

The key challenge is the word “smart.” No collection of meters or sensors or communication systems makes a system smart. The smarts come from software systems that collect and process the metering data in conjunction with other utility information. Some of the smarts are expected to come from systems that do not yet exist, but a greater challenge is the need to interface with most other software systems currently being operated by the utility. For almost all electric utilities, these systems are not commonly managed and networked.

With its huge investment in smart hardware, it’s time for ENEL to move forward on smart software!

October 2, 2009 at 10:25 pm

Utilities Profit from the Smart Grid, Too

Policymakers are driving Smart Grid to capture the many consumer benefits, including demand response and conservation programs that save money for consumers.  Importantly, utilities also can and do benefit from the Smart Grid, though the right regulatory policies are needed.  Policymakers need to ensure utilities make more money by selling less of their product.

Consumer bill savings and carbon emission reductions result from lower peak demand and lower electricity consumption, and most public utility commissions are requiring utilities to include these programs in their overall resource plans.  Smart meter-enabled consumer engagement software is a low cost way to achieve energy savings – through information feedback – that also increases customer satisfaction.  In addition, PUCs and the U.S. Congress recognize the incentives problem and are developing ways of allowing utilities to earn the same level of profits with lower sales.  The methods include decoupling, rate of return kickers, and putting energy efficiency investments in rate base, allowing earning of a return.  Twelve states have done this already, and most of the rest are evaluating it.  States receiving Stimulus funds from the Department of Energy even had to promise they would consider these options before receiving the funding.

As for utilities, Smart Grid enables them to reduce their operating costs while maintaining or increasing reliability (things like automated outage response and restoration verification).  Smart grid also requires significant investment, which then goes into rate base and increases utility returns.

Smart Grid works best when both consumers and utilities see clear benefits.

September 8, 2009 at 4:54 pm

Smart Grid Improves Reliability Exactly How?

Every press announcement about Smart Grid cites higher reliability as a benefit, but none explains what that means.  And reliability improves in many ways.  One way is that smart meters automatically send outage notifications so utilities don’t have to wait for customer calls; this speeds up outage detection.  Then, a smart meter system automatically checks the power on status after the outage is fixed, verifying restoration.  This ensures no customers are missed in the restoration process.

Another way is that smart meters and networks increase the ability of the generation system to meet peak demand by enabling smart (dynamic) pricing, appliance control, and other demand response programs that reduce peak demand.  Smart meters also promote conservation through energy feedback, further reducing loads on generators.  And just as demand response and conservation help avoid overloading generating plants, they help avoid overloading lines, substations and transformers in the transmission and distribution grids.   This is increasingly necessary as distributed solar and wind generation are added to the power grid and as electric vehicles start adding significant new loads when charging (one utility CEO told me a PHEV is like adding another house to the distribution grid).

Still another way is that smart meters report real-time voltage alarms and ongoing voltage information to enable utilities to plan and operate their networks better.  This knowledge, coupled with real-time and ongoing knowledge of peak loads, leads to reduced line losses and better power quality – with fewer consumer electronic devices getting fried by over- or under-voltage events.

In short, Smart Grid improves reliability by improving outage handling; avoiding generation, transmission, and distribution overloads; and enhancing power quality.

September 1, 2009 at 4:44 pm

Smart Grid Province: Ontario Makes the Vision a Reality

As is customary for our modest neighbors to the north, the Province of Ontario is quietly but aggressively implementing the vision of Smart Grid in the real world. Its latest step is to provide specific rules and cost recovery provisions for utilities to deploy the Smart Grid. Just a couple of years ago, Ontario committed to providing smart meters for all of its electricity consumers – 4.5 million residential and small business customers – by 2010. And Ontario is on target for meeting that goal.

Ontario has also promised to provide smart pricing to its consumers, specifically time-of-use pricing. Toronto Hydro, just this month and using eMeter’s software, turned on time-of-use pricing for residential customers. The vast majority of Ontario residents, in fact, are looking forward to the opportunity to save by shifting load to off-peak times, as we found out in running the Ontario Smart Price Pilot in 2007. With IBM, we surveyed nearly 300 customers in the pilot, and 74% said they would rather have time-of-use prices than their existing, non-time-varying prices.

In its latest move, Ontario has issued guidelines to the distribution utilities to prepare plans to implement the Smart Grid.  The rules require plans that “accommodate the connection of renewable energy generation facilities, and the development and implementation of the smart grid in relation to the licensee’s transmission system or distribution system.”  The rules, issued June 15th, will promote both planning and execution, because they include the deferral accounts, funding guidelines, and planning guidelines needed for utilities to make decisions and develop real projects.

Here’s to Ontario walking the walk.

August 31, 2009 at 4:33 pm

Should All Consumers Get Real-Time Energy Usage Displays?

The London Times reported last week accusations that UK electricity sellers are seeking to prevent consumers from receiving real-time displays of electricity consumption when smart meters are installed. The debate was stimulated by the Government’s proposal that all consumers receive a mandatory, Government-approved real-time display. The energy retailers are not disputing the value of real-time displays; they are simply saying the market should be the delivery mechanisms, and consumers should be the decision-makers.

The energy suppliers are right in supporting customer choice on the form of energy feedback. I have been program manager for various energy efficiency programs and pilots over the past two decades. These programs, throughout North America, have provided choices in pricing (e.g. time of use) and information feedback, including Internet, monthly enhanced reports, and in-home displays. Nothing has been more consistent than that consumers want choices, including the form of energy information feedback.

The stakes are high. Even at $25 per device, in-home displays would cost over $600 million across the UK. And the potential energy savings are even larger. But results are best when the market is allowed to work: how many of us paid attention to MP3 players before the iPod?

Chris King

August 25, 2009 at 4:11 pm

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