Pay Attention Utilities, Your Customer's Relationship With Electricity Is Changing
Deployment of advanced metering infrastructure and automation technologies, coupled with the increased availability of energy data is transforming how consumers understand and use electricity. Utilities need to continue to embrace new technologies to delight their customers.
Today’s energy consumers want more than cheap and reliable electricity from their utilities. Customers want value-added services in the form of instant access to usage and pricing data, as well as the ability to optimize their energy usage programmatically.
Advanced metering infrastructure has enabled customers to access their energy data. With the rise of smart-home devices, machine-learning software, and next-generation communication technology customers will be empowered to control their energy usage automatically. Utilities must work to deploy these technologies at scale and adopt time-of-use pricing across their territories to engage their customers to shed and shift energy use as grid conditions fluctuate.
Advanced metering infrastructure provides customer benefits
In 2009, then President Obama launched the Smart Grid Investment Grant Program to modernize the electric grid, and incentivize utilities to deploy advanced metering infrastructure (AMI) across the United States. AMI facilitates a two-way information exchange with utility customers and, through the deployment of customer-centric software, enables customers to browse near-real-time usage data on their utility’s web portal.
Near-real-time data empowers customers to identify peak energy usage and thereby manage their electricity budget. On the same utility web portal, consumers can turn on high bill alerts to receive a warning when their energy use is trending higher than their average bill and browse personalized energy saving tips based on responses to a home energy assessment. These features deepen digital engagement with customers, which will help build trust in preparation for an automated digital energy platform.
In jurisdictions with AMI, a subset of utility customers have access to time-of-use (TOU) rates. These customers have the opportunity to save money and reduce their environmental impact by shifting their energy usage to off-peak hours when rates are lower or hours when renewable energy is available.
To enable automated home energy management, energy consumers need a smart meter, connected home device and access to TOU rates. Statistics show utilities are making significant strides in technology deployment and regulatory reform:
- As of 2016, 47% of all meters were smart meters, the U.S. Energy Information Administration published in recent data files (EIA-861). Key AMI dockets indicate Hawaiian Electric Company (HECO), Xcel Energy and Entergy will be rolling out smart meters in the next five years as well.
- In 2017, 10% of households in the US are actively managing their energy usage according to Statista, on track to 24% of American households by 2022.
- In 2016, approximately 5% of households have enrolled in TOU rates and looking forward Minnesota, Rhode Island, Pennsylvania, and Missouri are investigating new rate designs, Energy Collective reported. Additionally, California plans to move to a default TOU rate for all residential customers in 2019.
Despite utilities’ best efforts, less than 5% of American utility customers have access to digital energy platforms. Yet Accenture’s New Energy Consumer 2016 research found customers are ready for automated home energy management; 75% of consumers are interested in home energy management systems (HEMS) and 25% of respondents are willing to pay for it. Furthermore, 52% of energy consumers want a program that credits their bill when HEMS makes minor adjustments to their smart thermostat during peak usage hours in the next five years.
Technology enables automated home energy management
Exciting pilot programs that use advanced technologies, such as blockchain and machine learning, empower customers to automate energy management at home. According to their website, Grid+ will arm an energy consumer with an “intelligent agent”, a smart in-home device, to respond to peak demand and TOU price signals by controlling a NEST thermostat, Tesla charger and Tesla Powerwall. During peak summer periods, the intelligent agent may increase the NEST thermostat four degrees, a defined set point, and delay charging a Tesla electric vehicle, after consulting a customer’s Google calendar to understand upcoming transit needs.
During off-peak times, the intelligent agent could direct a Tesla Powerwall to charge up an energy store to use when electricity is more expensive later. In the future, the intelligent agent could buy energy from cleaner or less expensive energy sources, based on preset preferences. This prospect is exciting for an energy prosumer with an intelligent agent, energy storage and an electric vehicle. However, what else can a tech-savvy customer do?
Utilities have started to leverage If This Then That (IFTTT) applets, a set of business logic that brings energy services together to automate tasks based on preferences and set points. For example, IF a utility posts peak demand and TOU price signals to IFTTT, THEN a Wi-Fi thermostat can adjust based on set points, as with the Grid+ model. A customer can also authorize a host of other rules for smart home devices. For example, a customer could delay running a HomeConnect dishwasher, dim Phillips Hue light bulbs, and reduce the temperature of a tado° connected hot water heater in response to peak demand price signals.
Technology platforms encourage energy consumers to make smart energy decisions. By setting personalized preferences and rules on digital energy platforms, customers can drive energy savings and reduce their environmental footprint with the resources they already have in their homes.
The Next Decade
Utilities should catch up with smart meter deployments and time-of-use pricing to enable customer choice and control. In the last decade, customers have learned to trust their utility as an energy advisor by gaining access to their energy data and helpful features such as high-bill alerts and personalized energy tips. In another decade, we can and should expect utilities to catalyze customers to use predictive in-home assistants to manage energy use based on their personal preferences.
By Jessica Bloom, Principal Product Manager at Oracle Utilities and Fall 2017 Clean Energy Leadership Institute Fellow. Jessica is a motivated and thoughtful leader with a passion for technology, energy and sustainability. She is dedicated to delivering innovative solutions to add business value and positively impact the community.
These thoughts are entirely her own and in no way represent Oracle.