The prosumer chronicles
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- Aug 2, 2019 10:45 pm GMT
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A prosumer is someone who is a producer as well as a consumer
Helping utilities develop programs and policies for the customer has been the primary focus of my career which is now in its 41st year. Initially, I focused on rate design, then on demand-side management, then on forecasting the demand for electric vehicles, then again on rate design and customer choice and finally on designing pilots for testing customer behavior in the context of dynamic pricing.
Of course, I have always been a customer of electricity (and natural gas) all along. In the mid-nineties I shifted to time-of-use rates. More recently I made a significant investment in energy efficiency. And now I have made another significant investment and will soon turn into a prosumer.
In this article, I present my case study and offer it as food-for-thought to utilities who are seeking to reinvent themselves by becoming customer centric.
Part I: The lure of energy efficiency
In 2015, my electric and gas bills hit the $500 mark twice, first in the summer and then again in the winter. That pushed me over the edge. We were empty nesters living in a four bedroom two-story house. After exploring several options, we invested a good sum of money in the local utility’s home energy upgrade program. The process was pretty smooth. We contacted an independent expert at the utility-funded program who reviewed our choices with us and then directed us several contractors who did such work. We hired one of these who specialized in equipment made by Carrier.
This involved replacing the SEER 11 air conditioner with a SEER 18, the 80% efficient gas furnace with a 96% efficient gas furnace, adding attic insulation and sealing the ductwork so the leakage went down from 56% to 8%. We did consider installing a heat pump but it was not cost effective given the electric rates. The contractor told us that they were only being installed in homes with solar panels.
Then came the hard part. Estimating how much the bills had gone down, on a weather normalized basis. A friend helped me do the necessary econometric work using bills going back to 2003. The result: 19%. That yielded a very long payback approaching 20 years.
I wrote a paper for a trade journal about our experience and my wife and I published an op-ed in the LA Times. And, of course, we shared our news with many friends and neighbors. A few said we should have gone with solar. And one said we should have done both. But that was going to be a huge investment. And I was keen on doing energy efficiency first, believing the cleanest kWh is the one that is not generate.
With all the energy efficiency investment, my average monthly electric bill went down from $250 a month to $205 a month. That was still a lot higher than I wanted it to be.
Part II: Investing in solar panels
So this past month I decided to go solar. The system is designed to make me self-sufficient on a net basis with the 8 kW system (comprised of 25 panels rated at 320 watts each) with a payback of 7 years. The utility’s website was quite helpful in estimating system size and savings.
Part III: Investing in a battery storage system
I also went ahead and ordered a 9.8 kW battery to make my prosumer experience more fulfilling (and costly). The combined payback period for solar plus storage is 9 years.
Part IV: Buying the EV
To further enrich our prosumer experience, I decided to buy a Tesla Model 3 sedan. They have become ubiquitous where I live. One day I recalled seeing five Model 3’s in five minutes while driving to Whole Foods. About a dozen friends drove the Model 3 so I solicited their experience. All gave me really positive feedback. I also checked the reviews on Consumers Report and social media and convinced it was a no-lose proposition, took the plunge.
It’s a car like no other: essentially a computer on wheels with “1 screen that rules them all.”
I traded in my two-seater convertible that had faithfully served me since 2005. It had become a tad expensive to maintain, and if I drove it with the top down (which was the best part of the car), my allergies went out of control. But giving it away broke my heart. That car was loaded with so many memories, including the drive on the floor of the Yosemite Valley which we had done the month after we bought it.
Part V: Picking an Electric Rate
Then I had to pick an electric rate for my house. Being an economist who spends a good chunk of time on rate design, I had thought this would have been the easy part. It turned out to the hardest nut to crack and sullied the prosumer experience.
I was currently on a time-of-use rate whose off-peak price was 26 cents per kWh and on-peak price was 37 cents per kWh. A few years ago, I had picked after analyzing my hourly load profile relative to a few rate design options on the utility website. Was that still going to be the best rate?
My friends who drove electric cars were on a whole-house EV rate where the off-peak price dropped to 13 cents per kWh. But the on-peak rate was going to rise to 43 cents per kWh. We keep the thermostat at 72 degrees during the summer. Would the bills rise or fall if I switched to that rate? My new load shape did not exist yet so the utility website was unable to provide me with any guidance. Of course, solar would reduce my afternoon load but by how much and at what time? The vendor could not provide me that information either.
I knew once I got the panels installed, I would be on a mandatory TOU rate with a minimum $10 monthly charge. But the local utility also offered an EV-only rate. Should I look into that? The first thing I did was sent an email to the Tesla salesman. He never responded.
So I called the local utility. I knew from the website there would be a charge of $100 for the separate EV meter. The panel may have to be changed but if was to be changed anyway because of the solar panels, maybe it would only need to be changed once. Which should come first? Good question was the answer.
Then I was told there would be a $5,000 charge for putting the underground line from the pole to my house in a conduit. That was going to be required, per the Green Book. The only Green Book I knew was the one written by the former Libyan dictator. Colonel Gaddafi had written it as a riposte to Chairman Mao’s Red Book.
So that option was no longer on the table. And then there was still the issue of getting a 240 volt outlet installed in the garage. The Model 3 gets 3 miles per hour of charge at the standard 111 volt outlet. With a range of 325 miles, it would take a hundred hours to get the car fully charged. With the 240 volt outlet, the car would be charged in 10 hours. So I reached out my friends and neighbors to see who had installed their 240 volt outlet. I got the names of some vendors, they provided me their bids and I picked one.
But the issue was whether to wait until the solar panels and battery had been installed and the electric panel changed, or to do the panel change out and install the 240 volt outlet first. I talked to the two vendors and they talked to each other. The issue is still being discussed.
Part VI: Did it have to be so stressful?
So there you have it. I have taken on a project that I now have to manage to completion. With a full time consulting job, how do I find time for that? The contractor has to design the system, get the permits from the relevant government agencies and do the construction. I have to take the design and run it past the home owners’ association approval. And then I have to pick the best electric rate.
Eager to reach their clean energy goals, just about every utility today is offering distributed energy resources (DERs as they are affectionately called) to their customers. But it is still the customer who has to go about integrating them, and that is not a minor time commitment. I am certainly not the average customer in more ways than one. So I found the process to be challenging, I imagine so will many others.
There is a gap in the market waiting to be filled: someone should start offering one-stop solutions. Might it be the utility? Might it be someone else? Once that happens, DERs will really take off.
P.S. In the meantime, I am going to the Supercharger and getting the Model fully charged in just one hour (compared to five minutes that it would take to fill up the tank for the Boxster). There is a Starbucks nearby and a pizza parlor. I have noticed several other Tesla owners have figured out there is no better way to kill an hour than to hang-out at one of these two joints. The Internet works and I can check social media an