Green Ovations: Innovations in Green Technologies
by Zac Canders, Science Applications International Corporation (SAIC)
Smart Grid Customer Acceptance | Understanding Utility Customers Today to Support the Smart Grid of Tomorrow
Meter automation and the broader smart grid are fundamental prerequisites to improve efficiency, reduce the environmental impact of our energy usage, and promote green initiatives. Policies are in place nationwide at several levels supporting – even requiring – the deployment of smart grid. However, many obstacles must still be overcome. Some are technical, such as creating new electric operating system algorithms to optimize and manage generation down to in-home automation. Others are policy driven; for example: How will critical loads be prioritized for supply and disconnection when the grid is under stress? What rate structures give customers fair combinations of incentives and benefits to change consumption patterns? To what degree will critical peak events allow customers to accept or decline participation? Most of these obstacles can be addressed with known and proven approaches, but another domain of obstacles has cropped up that could challenge progress and may be less readily resolved: customer acceptance.
Smart grid is in its very early stages, driven by basic economic value and by policy. The progress to date of projects funded by the American Recovery & Reinvestment Act, as well as various other implementations across the United States, have shown the industry the need for customer education and active early participation by utilities to support new technology adoption. Specifically, many of these utilities have asked their customers to accept smart meters placidly, without realizing that some customers will vigorously protest. For decades, utilities conducted infrastructure upgrades with minimal customer involvement, concern, or reaction; so the industry assumed customer acceptance was static. Utility customers benefited from accurate meters, improved billing services, and responsive call centers. Utilities conducted metering implementations as infrastructure improvements to reduce operating costs, so the selected technologies went relatively unnoticed.
Before There Were Smart Meters
The transition from meter readers to mobile automatic meter reading (AMR), to one-directional fixed networks, and finally to two-way advanced metering infrastructure (AMI) saw little, if any, customer involvement or engagement. The cost savings and associated benefits from technological improvements of the meter-to-cash business process were the primary justification. The utilities realized cost savings through the automation of meter data collection, analysis, and data sharing across various internal systems and then passed these savings on to their customers. Early metering implementations were supported by relatively simple business cases that clearly spelled out investment value in terms of workforce and vehicle reduction, increased meter accuracy, new mechanisms for revenue assurance, and more detailed usage data to support innovative rate structures. Typically, utilities deemed justifying the metering implementations to customers as external to the business case, as cases rested principally on the operating benefits of the technological upgrades. The fact that the investment generously benefitted customers, too, was not reflected in the business case or investment justification, so utilities did not require or seek customer participation.
Metering in 2012
Smart metering is different. Unlike AMR and AMI meters, smart meters communicate with a customer’s appliances, and include a service switch to remotely enable or disable the entire electric service. Justifying smart meters to utility constituents, regulators, and customers has not followed the traditional utility business case, implementation, or customer communication models. While electric utilities are still in the business of moving electrons in reliable, secure, safe, and environmentally responsible ways, they now face increased scrutiny of operation and maintenance costs, pressures from their boards to deliver increased financial performance, and an emerging trend to encompass customer requirements into smart grid business cases. When operations, maintenance, and system improvement costs rise, prices have to be adjusted to continue to serve customers’ energy needs. Regulated and non-regulated utilities must always act responsibly and keep their customers’ best interest in mind. A regulated utility will not set their prices to recover the costs of things regulators deem unnecessary, and a non-regulated utility can’t accept the risk of spending capital on consumer-type services that cannot be justified.
Many of the initial smart metering business cases did attempt to quantify savings associated with customer education, motivation, and participation in utility programs enabled by smart metering. Specifically, online presentment of a customer’s usage data, current as well as historical, provides the avenue required to understand energy patterns, cost, and environmental impact. For those customers that choose to take advantage of it, this means to explore energy usage could drive energy management decisions. This data granularity and frequency of reporting requires the technological advancements of smart meters. Because some customers object to smart meters, it consequently requires well-designed marketing and communications campaigns to inform and educate customers.
The new educator role has required utilities to approach smart metering with various marketing techniques that were previously limited to niche research in the utility sector:
- Traditional Utility Marketing: Print flyers, radio broadcasting, and news coverage
- Benefits: Proven approaches to identify, satisfy, and keep customers informed and engaged in utility programs and services
- Risks: High start-up costs associated with testing, launching, and managing campaigns
- Social Media Marketing: Facebook, Twitter, public forums, focus groups, and YouTube
- Benefits: Reach niche audiences that are typically passionate and engaged in subject matter. These mediums provide a forum for customers to respond with opinions and ideas. Low cost to test, launch, and manage campaigns that have potential for high impact and visibility
- Risks: Not reaching target or entire audience. These are non-traditional marketing approaches for utilities and may be challenging to design, implement, and determine cost-to-customer impact benefits. Audience and input may be difficult to manage as campaigns may reach individuals outside of service territory
For example, some U.S. utilities are studying the opportunities of, or even transitioning from, monthly register reads to smart metering solutions that gather residential usage data at intervals such as hourly, 15 minutes, or even five minutes. Customers can visit secure on-line portals that present their smart meter usage data for analysis, comparison, and associated consumption costs. Through the comprehensive marketing tools listed above utilities are providing their customers with resources to become more educated, participate in the management of their monthly energy bills, and understand and accept the realities of smart metering. Additionally, the use of traditional and social media marketing is providing these utilities with insight into the diverse communication preferences, levels of energy involvement, and attention to the green decisions each customer may, or may not, have.
The Dynamic Utility Customer
Utilities are beginning to realize that today’s utility-customer relationship is extremely dynamic, and the terms of customer acceptance are not the same for all. Coupled with the reality that regulated utilities are not mandated to behave more like customer-driven businesses intensifies the problematic approach to addressing and managing customer concerns and specific groups questioning utility investments. As time goes by, regulators may see the need for utilities to spend money on more customer-focused programs and communications.
For example, a few utilities have been asked by their regulators to explore, or offer, smart meter opt-out programs to address customer concerns and debates that surround health, accuracy, and privacy. Others have decided against providing opt-out. These decisions provide significant evidence that customer involvement can shape and even transform utility services. The opponents of smart meters have utilized non-traditional marketing strategies to spread their concerns to nationally visible levels. Specifically, these groups have developed websites, news articles, and social media campaigns that highlight their following claims:
- Health: Smart meters produce radio frequency (RF) emissions that may be harmful.
- Privacy: Regardless of communication medium, when the utility obtains interval data reads, customers may become vulnerable to misuse that could expose those data and compromise the customers’ privacy
- Accuracy: Higher bills potentially associated with accuracy of meter measurements.
Smart Meter Customer Acceptance
While the specific strategies to address customer concerns surrounding smart meters have varied by utility, most can be addressed through some form of active customer education. To address RF concerns, utilities have referenced numerous studies from globally recognized organizations like the Federal Communications Commission, the California Council on Science and Technology, and the World Health Organization that provide conclusive evidence that the levels of smart meter RF emissions are well below recognized safety standards. Utilities have addressed privacy concerns through online educational links detailing the encryption and security standards in place to protect and manage customer usage data. Utilities have addressed accuracy claims with traditional programs to independently test and validate meter accuracy. Utilities are starting to learn that education is a key tool to smart meter understanding and acceptance, and this will hold true for future smart grid initiatives.
Today’s Smart Meter Challenges Are Tomorrow’s Smart Grid Opportunities
Meter automation produces benefits greater than its cost for many utilities just by improving basic energy delivery and utility operating efficiency. Future smart grid capabilities that leverage the smart metering infrastructure can produce very large additional efficiencies and environmental benefits through customer involvement. A major lesson learned from smart metering implementations is that involving customers in energy decisions requires involving them in the supporting technology choices. While some customers’ insistence on opting out may not be limited to smart metering, the notion of opting out may be here to stay. Demand response, critical peak pricing, home automation, time of use rates, and automatic load control will require additional investments in grid infrastructure as well as marketing and communications campaigns to raise customer awareness. If current customer dynamics hold true, the ascendant importance of customer education will continue as well.
Smart Grid Customer Acceptance
To support broader smart grid acceptance, customers must have the tools, resources, and options to manage and realize energy savings, have a meaningful environmental impact, and change wasteful consumption habits, or to do none of those things, if that is what they choose. This requires utilities to accept that not all customers share the same energy goals, and not all customers are affected by the same marketing and educational options. Utilities must support various means to communicate smart grid opportunities, provide technology options, and address current and future customer concerns and questions. The lessons learned from today’s smart metering implementations highlight tomorrow’s smart grid opportunities.
- Health: In-home displays, smart applications, and load control technologies will likely leverage wireless communications. Customer questions and concerns will persist.
- Privacy: Sharing of data associated with customers, smart appliances, plug-in electric vehicles, or distributed generation assets will become a concern.
- Accuracy: The accuracy of metering technologies to support plug-in electric vehicles and other time of use specific devices may raise discussions and, in some customer groups, anxiety.
In-home displays, direct load control devices, programmable controllable thermostats, and smart appliances represent the range of emerging in-home technologies that may enable customers to leverage the capabilities of their smart meters and become increasingly effective in the daily management of their energy. Cross-industry collaboration among vendors, utilities, and customers may continue to require comprehensive customer education and awareness to guarantee not only device interoperability, but also meaningful experiences that encourage, or even automate, customer participation. Understanding individual customer drivers and reacting appropriately will continue to be a major challenge in the pursuit of energy efficiency.
Smart grid collaboration among the energy generator, supplier, utility, and customer is required to enable automation and ultimately realize spectacular efficiencies. The connected grid vision is obtainable only when customers have the means to become involved, and that cannot happen without education from the entities that provide their energy. Smart meter implementations serve as a clear indicator that utility customers are becoming increasingly dynamic and the terms of acceptance are not the same for all. Going forward, the marketing, communication, and educational opportunities utilities choose to provide may also require an understanding from the start that some customers may not be interested or will disagree. Customer acceptance has emerged as an important predictor of the efficiencies that can be obtained through smart grid.
About the Author
Zac Canders is a project manager at SAIC with extensive experience leading design, development, configuration, implementation, and support of smart grid solutions and services across the United States. He has provided his expertise at the country’s largest investor-owned utilities and municipalities, where he directly managed advanced metering infrastructure, meter data management, complex electric distribution, and enterprise resource planning projects. Canders holds a BS in electrical engineering and biomedical engineering from the University of Rhode Island, an MBA from Suffolk University, and is in the process of completing a MSF from Bentley University.