A trio of interesting articles to review in this post, all pertaining to smart meters and customers interactions with such. As all three articles note, meters themselves may not change/incent/motivate behavior and, as the first report notes, the information may actually cause people to use more – not less – power. In that case, information is not power; rather, information mean less power. However, we believe that Lynne Kiesling makes the key point in the second article, namely that transactive capabilities of intelligent end-use devices that smart meters enable are the key. The combination of intelligent end-use devices and dynamic pricing, enabled by a smart meter, creates the potential to be so much more innovative, clever, and effective in optimizing individual energy use, and to do so in a much more user-friendly and less intrusive manner.
First, via NPR, a report that some behavioral economists say electricity is so cheap that real-time information might lead people to run their lights and gadgets even more:
“…There are some things that many of us do not do, even though they would save us money, like switch to compact fluorescent light bulbs or buy a new energy efficient refrigerator, or just turn off the lights in an empty room. It’s as if we like wasting money. Now, that’s not true, of course, but it is a hard problem to fix. NPR’s David Kestenbaum from our Planet Money team has more.
DAVID KESTENBAUM (Software Designer, Google): Dan Reicher thinks he knows the solution. Every family just needs to attach this little device to the fusebox in their house. His family did it a few months ago. The device is pretty simple. It just measures the amount of electricity used in the house. He can see the information on a meter in his kitchen or online.
Mr. DAN REICHER (Director of Climate Change and Energy Initiatives, Google Inc.): And every time I go to Google something or look at the weather or sports or the stocks, there sits my electricity use, in real time.
KESTENBAUM: Can you show me right now?
Mr. REICHER: Yeah. Let’s see. I’ll look back.
KESTENBAUM: I need to mention that Dan Reicher works for Google, which wrote the piece of software he’s using. It’s his job to show this stuff off. We met at the climate change talks in Copenhagen, where it was often pointed out that conservation, energy efficiency improvements, those are the easiest ways to begin to combat global warming.
Reicher thinks there’s a simple reason we don’t do these things: We lack information. On a laptop, he pulls up the information, a very detailed graph. You can see exactly when his family wakes up because the line goes up: The kids turn the lights on. His wife uses her hair dryer. Then there’s this other huge spike.
Mr. REICHER: My six-year-old son saw this the other day, and it finally dawned on him. He was looking at our little meter, which normally is at 200 watts, and this thing shoots up to 1,800 watts. He says, daddy, look. And it was simply the toaster, you know, turning electrical energy into massive heat energy to singe this toast.
KESTENBAUM: Every bump or mountain on the chart was a mystery. And he found some easy things he could do to save money.
Mr. REICHER: I kept seeing this big spike, and I began to suspect it was my furnace. So I had my son go in the living room and turn the furnace off using the thermostat, and all of a sudden, within a couple of seconds, I saw this peak just drop precipitously.
KESTENBAUM: It turned out his furnace had a really old, inefficient motor, the thing that blows the heat around the house. So he replaced it. He also got a new refrigerator, which eventually will save him some money. Dan Riker was an assistant secretary at the Energy Department under President Clinton. He and people like him argue if we just had more information, we’ll save money and we’ll be better people and we’ll help the environment.
Mr. REICHER: So at a very general level, we think knowledge is power. And, indeed, in this case, knowledge is less power.
KESTENBAUM: Oh, that was such a – who wrote that line? You wrote that line?
Mr. REICHER: You can send me to the pun-itentiary.
KESTENBAUM: It is true that right now, electricity is kind of a weird commodity. People just get their monthly bill. They don’t know what is costing what.
Mr. REICHER: Imagine going into a grocery store and there were no prices on anything. You simply put it in your basket, and the end of the month, you got a bill, you know, pay $671.15. I don’t think most people would stand for that.
KESTENBAUM: But there is debate about what effect these so-called smart meters would have. George Loewenstein is a behavioral economist at Carnegie Mellon University.
Professor GEORGE LOEWENSTEIN (Behavioral Economist, Carnegie Mellon University): In fact, some of the information that a smart meter would give you might actually worsen your behavior because, for example, electricity is really amazingly cheap. It’s amazingly cheap to air-condition your whole house for a few hours. And if the smart meter is giving you objective information about how much it’s costing you, you might be surprised at how cheap it is rather than surprised at how expensive it is.
KESTENBAUM: Loewenstein says there are a lot of tests going on right now to assess the effect of putting in different kinds of smart meters. Some will do the thinking for you.
Prof. LOEWENSTEIN: Like they shut down your air conditioning at a peak time. And there is some research showing that people are surprisingly willing to go along with something like that.
KESTENBAUM: And that may be the most productive approach, he says: let the machines make our economic decisions for us.”
Via The Energy Collective, an article that adds on to the NPR report:
“…In fact, some of the information that a smart meter would give you might actually worsen your behavior because, for example, electricity is really amazingly cheap. It’s amazingly cheap to air-condition your whole house for a few hours. And if the smart meter is giving you objective information about how much it’s costing you, you might be surprised at how cheap it is rather than surprised at how expensive it is.
I think he’s failing to take into account the probability that electricity prices will increase either (1) if fuel sources become more scarce, (2) if we implement a carbon policy that increases electricity costs, or (3) if we implement renewable energy mandates that increase electricity costs. He also doesn’t take into account the variations in costs of producing electricity over the course of the day, in which case what’s important is not the level of the price, but the variability in the price and how that relates to the variability in the cost of providing the service. Still, it’s a pretty good story.
One other element that is missing from the story, and from Loewenstein’s framing of the question, is the transactive capabilities of intelligent end-use devices that the smart meter enables. Loewenstein doesn’t offer an example of “devices doing the work for you” that is any more sophisticated than direct load control, in which the consumer signs a contract that allows the retailer or the distribution company to cycle off the air conditioner as system conditions warrant. The combination of intelligent end-use devices and dynamic pricing, enabled by a smart meter, creates the potential to be so much more innovative, clever, and effective in optimizing individual energy use, and to do so in a much more user-friendly and less intrusive manner. That’s where the Planet Money team should be focusing their attention, not on direct load control.
We need to move beyond direct load control, which is a top-down sledgehammer in the energy efficiency toolkit. Bottom-up technologies that integrate more directly and subtly into individual lifestyles, such as Direct Energy’s vision that I discussed the other day, are likely to be more effective, more robust, and more sustainable.”
Courtesy of Smart Grid News, a look at the market for residential energy management which many feel s poised to grow dramatically due to increased consumer demand and new government and industry initiatives. As the article notes:
“…The first step in implementing a Smart Grid is building an Advanced Metering Infrastructure ( AMI). A key component of AMI is the smart meter, which is a digital meter capable of processing and reporting usage data to providers and households via two-way communication with the utility offices.
Parks Associates forecasts that there will be over 40 million smart meters installed in U.S. households by 2012 (Figure 1), but installing a smart meter on a residence is only the first step. Questions remain on how best to put together all the Smart-Grid elements in a way that appeals to consumers and employs technology in the most effective manner. The first, most fundamental concern is whether or not consumers will use the smart meter once it is on the house. Smart meters with the proper user interfaces allow consumers to read and respond to real-time household power consumption, but will they be reluctant to pay for these devices? Will consumers enroll in utility programs that employ the full capabilities of these meters?
Parks Associates conducted a national survey as part of its Residential Energy Management service to determine consumer mindset regarding energy management solutions:
- Over 80% of consumers are very interested in learning how to cut their energy costs, but less than one-half want to learn more about Smart Grids.
- 80-85% of households are willing to pay $80-$100 for cost-saving equipment if they are guaranteed to save 10-30% off their monthly electricity bills (Figure 2).
- Only 15-20% of consumers are likely to sign up for time-of-use or demand-response programs; 35% do not want utilities to control systems in their home regardless of the savings potential.
- Less than 5% of households have any type of electronic lighting system, but 55% are very interested in light-dimming systems that can save them money.
Less than 5% of households have any type of electronic lighting system, but 55% are very interested in light-dimming systems that can save them money.
Smart Grids can be potent tools in helping consumers reduce their energy costs, but consumers have several concerns that could inhibit adoption. In order to maximize Smart Grids, utilities and suppliers of energy management solutions must first educate consumers about the benefits of these advanced systems and then package these solutions so that capabilities and advantages are obvious to consumers and easily integrated into their lifestyles.”
You must be logged in to post a comment.