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Home Energy Management with or without an Advanced Metering Infrastructure - Part 2

An Alternative to AMI

According to Parks Associates, approximately 45% of all U.S. households will be served by smart meters by the end of 2015. As few as 10% of those meters, however, will be enabled for two-way communications between a home area network (HAN) and the utility's back-end processing system. Other analysts predict more or less smart meter penetration and HAN capabilities, but the result is the same: Effective residential demand response programs require two-way, near-real-time communications to provide system operators with the ability to monitor demand response actions, just as they do with conventional generation.

Fortunately, there already exists a ubiquitous, reliable and secure two-way data communications network suitable for DR that is available in every utility's service area to virtually every home and is already installed in the U.S. in 63% of them: the Internet. The penetration in larger residences with the highest potential return on the DR investment is even greater. And broadband penetration will only continue to increase as digital subscriber line (DSL), cable modem, third- or fourth-generation (3G/4G) cellular communications, and satellite services are expanded, and competition among these alternatives lowers subscription rates.

All that is needed for utilities to take advantage of the Internet is a dedicated gateway, as shown in Figure 2. The gateway provides continuous two-way communications between the utility and the consumer's home energy management system devices, such as a programmable communicating thermostat (PCT) or an in-home display (IHD). The gateway establishes a secure "service entrance" into the home by connecting both to the broadband modem (via Ethernet) and to the ZigBee, Wi-Fi or other HAN. The gateway is configured for secure, encrypted communications between the utility's DR application and the in-premises system, whether a PCT and/or IHD, and if the utility chooses, optional direct load control, enabling these loads to receive dynamic pricing or direct command and control signals.

Figure 2: Shown here is a wireless ZigBee HAN served by both a broadband Internet gateway and an AMI network. Note the ability to control other loads, including the charging of electric vehicles, which will be supported in future versions of SEP.

Astute readers may be wondering what happens when a home has both a utility-provided smart meter and a consumer- or utility-provided Internet-HAN gateway? The latest version of SEP 1.1 (technically version 1.1.1) includes a provision for more than one Energy Service Interface (ESI), which is the gateways into the HAN. With SEP, in addition to the gateway function, each network must also have trust center and network coordinator functions; the smart meter (the point of demarcation between the utility and the premises) normally provides all three functions. Support for multiple ESIs enables the trust center function to have different gateways into the same HAN in a secure fashion, thereby changing the HAN from a utility's AMI-limited interface into a robust consumer platform that preserves the integrity of the utility's program while enabling shared control with the consumer. The main advantage for the utility of having an Internet gateway is the ability to implement additional applications, particularly those requiring higher bandwidth than the AMI supports.

Maximizing Customer Buy-in

With ubiquitous two-way communications over the Internet and mature home energy management standards, the only potential obstacle to residential demand response is consumer acceptance. With many consumers now willing to make the change, the real key to broad acceptance is simplicity. Since most consumers continue to have difficulty programming home appliances like microwave ovens and digital video recorders, how can they be expected to make the optimal tradeoffs necessary to balance energy consumption with personal comfort? How many degrees should they raise the thermostat during peak price periods in the summer? Is it safe to temporarily shut off the water heater, refrigerator and/or pool pump, and if so, for how long? What other loads might be shed instead of or in addition to these to achieve greater savings without sacrificing comfort? And how much will that one extra degree of comfort cost?

The best home energy management systems make these and other choices automatically and prudently based on an individual customer's general preference, while also providing a mechanism to help the consumer "tweak" that preference. For example, some customers will opt for maximum cost savings and be willing to tolerate considerable temperature variations, while others would be willing to sacrifice personal comfort for the "political correctness" of reducing their carbon footprint. And while a few will be willing to pay whatever it takes to stay cool and take a hot shower, many if not most will choose a middle ground compromise between comfort and cost. There is no "right" or "wrong" choice, of course, as consumers decide guided by both their wallets and conscious.

The ideal home energy management system would, therefore, operate something like the dial on an old-fashioned thermostat, enabling users to "crank down" the cost or "crank up" the comfort -- or chose something in between favoring one or the other. For those consumers who are enthusiastic about home energy management, optional, more in-depth capabilities are already available on some systems. These include, for example: switches and outlets for controlling other loads; opening and closing curtains to increase or reduce solar gain; sophisticated energy management displays, potentially as dockable stations; Web portals showing detailed usage information that provides energy insights; and mobile device applications that enable users to check and change settings while away from home, perhaps from a second or vacation home that also has its own remotely-controllable HEM system.

Operational simplicity combined with good customer communications works. And not just in pilots either. Oklahoma Gas & Electric had such tremendous success with its pilot that the utility is now embarking on large-scale roll-out of almost 40,000 customers by the end of 2012, with more to follow. Pike Research calls OG&E's demand response program "one of the most advanced initiatives in the industry to date" and the firm's forecast of a 38% annual growth in residential DR services over the next five years reveals an expectation that other utilities will shortly be following OG&E's lead.

Protecting the Investment

Utilities choosing not to implement AMI now may still wish to deploy effective DLC programs using paging, FM RDS or even an Internet Gateway. But what happens to the assets used to implement these DLC programs when the utility does ultimately deploys its AMI? With the right solution: nothing. These networks can continue to coexist indefinitely without stranding any assets provided they are properly designed. Existing radio-based DLC programs can continue unaffected, or optionally be transitioned over time to the HEM system by installing a new load switch or upgrading the radio. In situations where two-way HAN communications is built into the smart meter, new residential DR customers will not need a gateway to participate in DR programs. Those who already have a gateway, however, can continue to participate with no changes owing to the multiple ESI capability built into the SEP standard.

While SEP version 1.1 is fully backwards-compatible with SEP version 1.0, this will not be the case with SEP 2.0. Such situations occur often as standards evolve to add more sophisticated capabilities. But the new standard already includes a gateway function that will enable interoperability with SEP 1.x devices, which is all that is needed to avoid stranding assets. In other words: As long as the assets can continue to serve their original purpose, they need not be stranded. Of course, the new, enhanced functionality may not be available for those devices, but they can continue to function as before until being fully depreciated. The key to future-proofing is not from ensuring assets are fully upgradeable, but by ensuring that assets can continue to be useful over their entire economic life. The SEP 2.0 gateway function supporting version 1.x devices is expected to built into future PCTs, IHDs, broadband Internet gateways and potentially other devices, thereby fully protecting all utility (and consumer) investments in existing home energy management technology.

Beyond the investment protection afforded by these provisions in the SEP standards are the many techniques vendors use when designing products to accommodate change. A common one is the ability to update devices with new software, preferably "over-the-air" via the wireless HAN (a capability already specified in SEP version 1.1). Another is a modular design that lets consumers add new capabilities by plugging a new module into an open slot, or by replacing an existing module with a new one. Such "upgrades" can be about as simple as changing the battery or memory card in a digital camera.


The reality is: Utilities and their regulators no longer have any good excuses for postponing residential demand response programs, even on a large-scale. The benefits are clear, and the downside risk can be made minimal -- with the right approach. To be sure, there are numerous details to get right. In its Grid Modernization Issues with a Focus on Consumers, the Critical Consumer Issues Forum (sponsored by the Edison Electric Institute) cited 30 such considerations. And the Smart Grid Consumer Collaborative offers additional guidance in its Excellence in Consumer Engagement recommendations. But the other (consumer) side of the meter, whether "smart" or "dumb", is no longer an impediment to progress.

While it is risky to claim any technology is fully "future-proof" with so many advances occurring on so many fronts, home energy management is now about as future-proof as anything can get. The standards are solid and proven in practice. Available solutions are now mature, and most have designs that will survive changes over the foreseeable future. With the consumer side of meter ready to go, the many benefits of residential demand response are now within reach of any electric utility.

Not implementing residential demand response, by contrast, will force utilities to continue to struggle with increasing demand. There will be more stress on an already-overloaded infrastructure. There will be more customer dissatisfaction from rolling brownouts and blackouts. And wholesale power rates will probably increase with little or no means to reflect those fairly on consumers who lack the ability to control their own usage without DR tools.

With comprehensive standards now supporting control of all major residential loads, the worst case scenario for utilities is that some programmable communicating thermostats or in-home displays might need to be replaced at some point in the distant future. So what? Most customers probably remember replacing that old analog thermostat with a programmable digital model they bought at the hardware store, and they will likely understand (with proper education) the need to now replace the digital one with a PCT. And ten or more years from now, after benefiting from smarter home energy management, they may even be eager to replace that (by then) old PCT with a shiny new one offering artificial intelligence or some other must-have feature.

The public seems to understand something many in the electric utility industry often overlook (or consciously ignore): times change. And they are surprisingly (or is it understandably?) willing to change when the gain outweighs the pain. Such is the case today with residential demand response as a "killer application" -- with or without AMI.

Louis Szablya, P.E.'s picture

Thank Louis for the Post!

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Bob Amorosi's picture
Bob Amorosi on Apr 27, 2012 6:00 pm GMT
Great pair of articles, it's about time someone pointed out the desire and readiness of consumers to the utility industry.

The simple reason most utility companies are reluctant to advance this stuff with their customers is cost recovery. Most utility companies are not interested in becoming the Home Depot of energy management tools for consumers willing to purchase them. Utilities would rather provide such tools to ALL their customers, with cost recovery from added charges to everyone’s bill, or with government handouts. Trouble is they don’t have cost recovery to do this on a wide scale.

The root of the problem of cost recovery is in utility regulation. Our politicians and regulators need to implement reforms that will permit utility companies more options for cost recovery. Until this happens, don't expect anything more than pilot programs from our utility companies.

Jose Cano's picture
Jose Cano on May 4, 2012 6:00 pm GMT
Very instructive articles.
Len Gould's picture
Len Gould on May 4, 2012 6:00 pm GMT
I agree reluctantly with advocating communication via customer's internet service ONLY in those rare cases where otherwise adequately intelligent metering systems were installed without sufficient two-way secure networks of their own. HOWEVER, that is a tiny proportion of the numbers quoted in the article, and the cost of swapping those dumb meters out would serve the utilities right. The utilitty-to-HAN interface belongs in the meters, and IF a third party network service company occasionally turn out to be the most logical data carrier, then fine, connect it to the meters. Otherwise, its simply another excuse for the utility to refuse to provide the customers with adequate access to their own meter data (what form will they perhaps get it back, massaged probably, from the utility's database, on what intervals, with what delays?)
Len Gould's picture
Len Gould on May 4, 2012 6:00 pm GMT
Regulators need to figure it out, meter data belongs to the customers FIRST, to be shared with the utility on a terms-of-service agreement basis.
Jack Ellis's picture
Jack Ellis on May 5, 2012 6:00 pm GMT
I respectfully disagree with all of you.

First, the sole purpose of an electric meter should be to record consumption, and it should ideally be designed to record consumption on the smallest practical time interval (five minutes or less). There should be a way for those consumers who want data from the meter to obtain it as close to real-time as possible without having to ask permission from their utility and without necessarily having to use their local utility's web site.

Second, utilities that are rolling out AMI should have been required to use existing data communications networks instead of going through the costly and time-consuming process of reinventing the wheel. Wired telecom networks are ubiquitous and more reliable than electric distribution. There's no excuse for allowing utilities to recover the cost of a wholly duplicative network.

I also think it's a mistake to assume utilities are going to be the dominant providers of energy management services. In fact, if consumers are unwilling to spend their own money on devices that control the biggest energy-consuming devices in their homes, it's likely they won't use a cost-free device provided by their utility. I sure don't want to be paying for expensive door stoppers.

Of course, none of this works without time-varying rates. If regulators are unable or unwilling to implement sensible, time-varying rates, then they need to stop talking about demand response, Smart Grid, demand management and all of the other consumer-facing policies aimed at either increasing the utilization of existing electric plant or avoiding the need for additional electric plant, because without time-varying prices, consumers lack the information and the motivation to make more intelligent electricity usage decisions.

Setting aside some of the more esoteric ideas for coordinating demand and supply to mitigate the variability and uncertainty of renewable energy production, the single biggest challenge in demand management facing most utilities in North America is air conditioning load. One way to deal with the problem is by encouraging residences and commercial office buildings to run their air conditioners (or whole house fans or box fans facing outward) during the night to precool the structure. I can personally vouch for the effectiveness of this idea. It can be done with inexpensive timers or programmable thermostats that cost less than $30 and require NO communications device. I don't understand why this very simple, cost-effective idea is not being widely advertised by utilities, regulators and consumer advocacy groups. But then again we are talking about electricity, where it seems nothing is as simple as it could be.

Jack Ellis, Tahoe City, CA

Bob Amorosi's picture
Bob Amorosi on May 7, 2012 6:00 pm GMT
"if consumers are unwilling to spend their own money on devices that control the biggest energy-consuming devices in their homes, it's likely they won't use a cost-free device provided by their utility."

I'm afraid you are right about this Jack. The best customers to provide these tools to are the ones willing to purchase them themselves. Sadly, this is not going to happen when such tools must communicate somehow with data measured by the smart meter on the customer's house, because the utility company MUST be involved to enable and permit this function. So I repeat, utility companies generally are not interested in doing this for individual customers on request. Most are not set up to deal with individual customer services this way, particularly when it comes to cost recovery of such services, because regulation prevents it. Regulation allows only uniform cost recovery from ALL customers, not just some of them.

As for air conditioners being the biggest problem for residential demand management, this has been true historically. In future however I suggest that charging of electric vehicles will become an even bigger load management problem if our governments and automakers achieve their goals of commercializing vast numbers of electric vehicles as the primary means to wean the public off volatile oil prices. And I don't think using simple timers to manage vehicle charging would sit too well with a customer when they need their vehicle batteries charged NOW, not hours later when a timer allows them to.

Bob Amorosi's picture
Bob Amorosi on May 7, 2012 6:00 pm GMT
BTW, some utility people have estimated that if an entire street or neighborhood were to use electric vehicle recharging at their residences, the added demand profile of the neighborhood would be equivalent to adding an additional air conditioner load to every house on the block. This scenario is not unthinkable in less than 5 or 10 years from now. Chew on that one Jack.

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