Smart grid 2.0: the role of consumers in grid modernisation

Juliet Shavit considers what 2018 might look like for utilities looking to transform their businesses and invest in new technology, and why the customer is key to the decision making and planning.

The last meter is in – now what?

Utilities learned an important lesson during the rollout of smart meters – that customers would not be passive participants in the technology decision. Further, that educating customers before, during and after the deployment about the benefits of technology advancement was beneficial to all parties. Of course, now that many utilities have achieved recovery for advanced metering infrastructure (AMI) deployment efforts, questions are raised once again about the continued need to engage customers in the dialogue around technology advancement and investment. One would think that the lessons learned in Bakersfield, California nearly a decade ago would have remained strongly engrained in the minds of utilities. But, new grid modernisation efforts are proving otherwise.

Utilities that have successfully deployed AMI are now faced with some important questions, namely:

1. What do they now need to do to optimise these investments?
2. What are the benefits to consumers to make these technology advancements
3. How much will it cost to educate consumers and what is the risk/benefits analysis of doing do?

Let’s take a closer look at the current dilemmas facing utilities looking to further undergo transformation in the area of grid modernisation and the role of the consumer during the process.

How can utilities optimise AMI investments?

A key mistake utilities made when they built their AMI business cases was to assume that technology transformation would end with the last meter in, and when the networks were optimised. Of course, regulators needed a defined timeline and cost to approve AMI, but any technologist would understand inherently that technology transformation is a process—one not ordinarily a one-time deal. That is because, of course, digital infrastructure must be upgraded and maintained as technology advances.

Furthermore, those networking companies that promised transformation of the grid through AMI should have mentioned that the smart meter network is simply a platform from which transformation blossoms. It is the backbone for new applications to run over it. The end game was never just understanding customer energy use.

What are the customer benefits of grid modernisation?

The conversation around smart technology is an ironic one. Why does one assume that enabling equipment with a wifi capability or plugging into the Internet makes something smart? IoT has most certainly brought about the introduction of smart solutions, and enabling infrastructure to respond in real-time to a changing landscape does make something smart, but an important piece of the equation is how utilities deploy this kind of infrastructure or utilise advanced technologies to modernise the grid. This means that smart people must know what to do with smart technologies to solve real world problems.

In the case of the grid, reliability and security remain top priorities for modernising the grid. While those functions may not necessarily rely on customer engagement, customers most certainly can understand the benefits of those investments.

Yet, kWh reduction is an example of a component to grid modernisation that involves people making intelligent decisions to understand, manage and control their energy use. While automation helps, choosing to automate homes through use of smart home appliance or smart devices is a responsibility that falls on the consumer. So, while customers may not see the need to protest in the streets about self-healing networks, there are significant benefits to those utilities that keep the benefits discussion going with customers, as well as the responsibility to educate, empower and sometimes arm customers with the tools and technologies necessary to help them participate in a sustainable smart energy lifestyle.

What are the benefits to consumers for these technology advancements?

As mentioned above, lower energy bills are not always the primary benefit to consumers when it comes to grid reliability. This means that utilities should be careful about what they promise in their messages. However, understanding that their communities are safer and more resilient from any kind of threat—whether that is man or nature made—is a real benefit that should be articulated to consumers around grid modernisation. Furthermore, environmental benefits around carbon reduction most certainly can be seen as a benefit to consumers.

So, for those utilities and policy makers who are tasked with allocating funds for grid modernisation, or approving business cases related to these investments, it is wise to ensure that the customer is not left behind. Consumers can be the largest proponents of these advancements and play a critical role to both deployment of new technology and adoption of it.

How much will it cost to educate consumers?

Isn’t this always the trick question. Rather than put a dollar amount next to the grid modernisation line item, perhaps it is wiser to calculate a price per customer that equates to a percentage of the overall technology investment. If customers are indeed necessary to the success of grid modernisation, that technology education should be part and parcel to the funding of any grid mod business case.

What are the risks of not educating consumers?

One can already hear the naysayers in the room. They are the same utilities that felt it was completely appropriate to put smart meters on homes and businesses without letting anyone know. These are the same utilities that say, “there is no need to educate customers about operational investments of the utility.” Those are the same utilities that spent three times as much money on crises communications when their customers complained of higher bills and/or their meters caught fires.

One can argue that the risk of lack of education is twofold—one is the slow adoption of behavioral change, and the other are the costs associated with crises communications should customers decide they have been taken advantage of.

Advice for utilities and policymakers

The new year is upon us and one of the great advantages that the Internet and advanced technology has brought us is the ability to communicate better, louder and more directly than ever before. For those utilities and policy makers who are struggling with how to address the needs of customers during the grid modernisation process, it is best to remember the power of the customer has never been greater. Whether it is the ease and wide availability of social media or the ability to reach regulators more directly and profoundly than ever before—the voice of the customer is loud and wants to be heard. Best to harness it for its ability to improve our energy future, not wait for what happens when it is ignored.