Weekly Brief

Will the Smart Meter Deliver on its Promise?

John Burke, CIO, Ambit Energy

John Burke, CIO, Ambit Energy

At the start of 2018 there were 71 million smart meters installed in the US funded by the promise of smarter grids, fewer carbon emissions, and more satisfied consumers. A smart meter infrastructure lays the groundwork for dynamic pricing, demand response, remote meter management, and improved energy forecasting. But, where are we at currently and what will it take to realize this promise?

First, we have to recognize the factors slowing the progress of smart meters: lack of software solutions, consumer privacy concerns, and the “last mile” for real time consumer awareness. In May the Massachusetts DPU decided to delay funding of the state’s smart meter initiative due to the lack of software availability. Incumbent utilities lacked the system capabilities to scale their billing processes with high volume usage generated by smart meters. In addition, the commission sited that non-incumbent energy retailers in Massachusetts also lack the software capability to maintained complex tiered rating products. Given the lack of software available to players, the DPU considered it an unwarranted burden on the consumer to upgrade the meters when the true value to the consumer cannot be realized.

"Smart meter installation, alone, is a necessary but insufficient condition to realize the smart grid"

In California, smart meters have been funded and installed, but the public concern over loss of privacy is slowing adoption of the meters and has the CPUC is fighting a vigorous PR campaign to keep the calm. Most states considering smart meter deployments need to prepare for consumer advocacy push back on privacy.

Finally, the “last mile” of true insight into a consumer’s real time usage is hampered by inadequate technical solutions and delays in processing smart meter data for consumption. Smart meter data is back hauled from the residence to the transmission and distribution provider’s back office. The shortest time frame for consumer facing systems to receive settlement quality data is roughly 4 days. In California, Community Choice Aggregation (CCA) groups contest that it is actually 48 days until they receive true settlement quality data. Given the volume of data and the need to scrub it for inconsistencies, consumer facing systems may not have usage data available for consumers until 5 days after the usage event. This is too late for real time energy usage behavior modification. In addition, the embedded shortwave transmission protocols in smart meters (e.g., Zigbee), intended to sync with in-home usage displays, have performed inconsistently preventing companies or utilities from investing in in-home connectivity devices.

Thankfully the answers to these problems lie in innovation. New, innovative software companies are creating solutions for both managing the vast amount of data transmitted from smart meters and for gleaning insights from patterns in the data. These leading-edge companies are using the same science and technology that companies such as Google, Facebook, and Netflix have been using for years. The gap to deployment is due to the relative young nature of these new software firms and the complex processes and red tape hampering CIOs at utilities from implementing next generation systems (The joke between utility CIOs is that no one ever lost their job for not upgrading). In addition, solutions to data privacy concerns do exist. The approach taken for medical information (though hopefully not as overwhelming as HIPPA), and the new GPPR regulation (General Data Protection Regulation) in the EU can help guide us to meaningful compliance efforts.

Keep the Goal in Mind

Ultimately smart meters provide better, more granular data on energy usage. The true value will be unlocked through data analytics. Data analytics has a hierarchy akin to Maslow’s famous model; it starts at descriptive (how much power is being used and when), then discovery (why are we always short on power in the evening), progresses to predictive (based on yesterday we will likely need to provide this much power tomorrow), and eventually reaches prescriptive (based on pricing levels it would best for you to charge your Electric Vehicle starting at 9:00 tonight). In this context, our real goal is a self-actualized electric grid.

If we assume that the energy providers and the new software companies find each other, then what can we expect? Perhaps an application on our cell phones or home refrigerator that displays our real time home energy consumption broken out by appliance. While pilot projects exist for these energy aware homes, the implementation is far too arduous for the average consumer to adopt or the local utility to take on the cost of supporting. However, the vision of an entire family participating in energy conservation is achievable and starts with the smart meter. Liken it to the fuel gauge in your car; you can tell how much fuel you are using, how much further you can go, and there’s red light telling you when it’s time to get more fuel.

In addition to family awareness, home energy systems will begin to move toward the goal of self-actualization. Based on market spot prices for power, home battery storage levels, or predicted weather behavior a consumer’s energy management system will decide when the pool pump needs to run, when to recharge the home battery, or when to sell power back to the grid.

I perceive 7 steps to grid self-actualization:

• Growth and influence of the new breed of innovative software companies in the energy industry
• Continued installation of smart meters (71M now and counting)
• Standardize the harvesting, storage and security of data transmitted by smart meters
• Common advanced data analytic algorithms and software for turning vast amounts of smart meter data into useful information
• The creation of energy provider programs that drive desired macro consumption behavior (e.g., dynamic pricing that flattens community evening usage peaks)
• Real time connection of smart meter data to the smart home
• Utility provider programs that inform and influence consumer micro behavior

Smart meter installation, alone, is a necessary but insufficient condition to realize the smart grid. Encouraging software innovators to create the tools to understand energy consumption and find synergies with other industries is a requirement. The energy industry is only scratching the surface of the potential of the smart grid and the future should prove to be a very exciting and challenging time for energy providers.

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