The Grid is Getting Smarter, but are Customers Keeping Up?
- June 22, 2015
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At the New York Energy Week Smart Grid Roundtable discussion, experts from various perspectives talked about how smart metering and new data sources are changing power grid operations, customer engagement and revenue structures. Price signals are key to altering customer behavior with regard to energy consumption, but a smart meter alone may not be enough to advance many of the lofty goals promised by the smart grid or microgrids.
Smart grid means “an electricity supply network that uses digital communications technology to detect and react to local changes in usage,” according to Google. That’s a pretty good basic definition that sounds fairly simple, but many of the more intricate details are not.
One challenge for New York utilities is how to engage with the Reforming Energy Vision (REV) proceeding and explain things to customers when customer engagement is quite low, Chris Cavanagh, Principal Program Manager at National Grid’s Market Strategy Group told the audience. “We need more than meters, we need to get customers interested,” he said.
The spectrum of customer sophistication was a common refrain among the panelists. For her part, Ozgem Ornektekin, Deputy Commissioner of Energy Management at the NYC Department of Administrative Services said her department’s total annual energy bill – for power, steam and gas – is $850 million and smart meters could a lot to help reduce that amount. Some of the consumers she works with, like hospitals and wastewater treatment facilities, have a sophisticated understanding of their energy use, but others have very little idea. “We need to know what we are consuming in real time,” she said.
Only 500 of the roughly 4,000 buildings Ornektekin oversees currently have smart meters installed, which means she does not get energy consumption data for thousands of buildings until two months after they have consumed it. Real-time communication with building operators is needed to say “this is your cost and this is what you can do to reduce it,” said Ornektekin.
Interestingly, National Grid’s Cavanagh said his company tried time-of-day pricing in the past and customers didn’t like it. But now some of them are asking for it. Time-of-day pricing charges different rates for power depending on whether it’s consumed during peak or off-peak times.
The panel’s moderator Micah Koch, Director of NY Prize and a strategic advisor to NYSERDA, said we are entering an era of transactional energy where a megawatt of storage will be valued differently depending on where it’s located within the power grid system. He joked that “microgrids are the new kale,” and there’s lots of excitement around the concept. However, utilities, regulators and municipalities are still figuring out the best way to integrate these technologies with an electricity system that’s over 100 years old.
For example, Caleb Stratton, Principal Planner for the City of Hoboken said they can’t build a microgrid/storage asset at a scale that does more than respond to emergencies right now. Part of the problem is that there is very little way for them to finance those kinds of distribution upgrades as a municipality, he said. Hoboken is trying to find a way for the local utility – PSE&G – to finance and build this kind of infrastructure. And the utility clearly needs to be involved at some level.
Caleb asked, “what happens if we take 12 MW off the grid?” It helps PSE&G with substation reliability issues but there is a revenue hit for them as well. Importantly however, if they can get the business model right, it’s something that could be widely replicated around the country and perhaps beyond.
Back across the Hudson, National Grid is conducting three microgrid pilot projects in different parts of their New York service area that have varying socioeconomic profiles and populations. These demonstrations are designed to gather information about what is successful and to be scalable so if something is found to work well it can be rolled out on a regional or statewide basis, said Cavanagh. The microgrids all have smart meters and customer-facing technology that allows homes and businesses to see their energy consumption data in real time.
He added that there are two parts to being cost effective: Cost and value. Utilities are getting good at understanding the costs associated with smart and microgrid technology deployment, but more work needs to be done on the value side from the customer perspective. “How do customers value it and what are they willing to pay for it?”
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