Building a Smarter Grid and Meeting Customer Expectations
By Bill Kenworthy, Direct Energy
It’s no secret that the U.S. electricity grid is getting old. A recent survey conducted by Utility Dive, found that more than one-third of utility executives indicated that aging infrastructure is the biggest challenge facing the industry. That’s not surprising given that the Electric Power Research Institute (EPRI) estimates that modernizing the U.S. electricity grid will cost upwards of $476 billion over the next two decades.
While power infrastructure has slowly deteriorated, customer expectations have dramatically skyrocketed. Just as with the telecommunications and banking industries, technology has been the main driver for customer expectations in the energy industry. Nearly 80 percent of U.S. customers now expect personalized energy management insights and advice directly from their energy company.
So, how can a utility build a 21st century grid while meeting and exceeding customer expectations?
Technology offers one simple and straightforward solution. By harnessing the energy-saving insights provided by real-time data analytics, utilities can cost-effectively boost the U.S. electricity grid’s efficiency, reliability and resilience while simultaneously meeting heightened customer expectations.
But this they must first ask: What do customers actually want from their energy provider?
Increasingly, customers across all sectors-residential, commercial and industrial-are looking for the same thing: empowerment. A recent Accenture report found that nearly two-thirds of energy consumers want to gain greater control over and insights into their own energy use. And with an ever-increasing number of connected energy devices, including smart meters, smart thermostats, smart phone applications and wireless, circuit-level sensors, more energy data than ever before exists.
For residential and small business customers, the Nest Learning Thermostat has been one of the early, popular and successful examples of how real-time energy data analytics can help customers use energy more efficiently. Multiple independent studies have shown that, on average, Nest has helped residential customers save 10 to 12 percent on heating bills and about 15 percent on cooling. Such energy savings directly translate into meaningful value for customers.
The Nest Learning Thermostat isn’t the only way residential and small business customers can save. Innovative behavioral demand response programs-those programs that alert customers with real-time personalized feedback on ways to save energy during times of peak demand-have proven they can help reduce peak load, ensuring greater grid reliability and saving customers money on their energy bill. In fact, one recent report covered in Greentech Media, found that behavioral demand response helped customers reduce peak load between an impressive 3 and 5 percent this past summer.
Even more critical are commercial and industrial (C&I) end users, which according to the U.S. Energy Information Administration (EIA) use most of the world’s total energy. These end users have even more options to save energy, improve their operations and boost their bottom line.
Traditionally, C&I users have had opportunities to maximize their energy spend through locking in low natural gas and electricity rates, improving their business or plant’s energy efficiency and, in some cases, participating in regional demand response programs.
Those certainly are important ways to save money and energy. A U.S. Department of Energy (DOE) study found, however, that C&I users still have a lot of room for improvement. The DOE reported that there are around 5.5 million commercial buildings in the U.S. and, on average, each building is still about 30 percent inefficient.
So, how can utilities help commercial buildings systematically reduce energy waste? By using real-time data analytics. Now more than ever, large end-users have access to cutting-edge technology that helps them better understand their operations while pinpointing energy waste.
Take Panoramic Power for example. The company, which now analyzes 5 billion data points per month and counting, offers wireless electricity monitoring for business end users. The wireless sensors that clip directly onto circuit wires capture device level data in real-time and process the data in an analytics platform. On a basic level, the technology, which is projected to save 12 percent for businesses on energy and operational insights, allows operators to see how they can become more energy efficient, how their equipment is functioning and how they can improve their overall operations.
This type of energy-saving technology is part of the oft-mentioned and growing Internet of Things (IoT), which is a powerful concept that will fundamentally change business models as various applications mix data for specific purposes. With that said, there are still two challenges facing data technology providers today.
First, there’s an awareness gap. People don’t yet understand all of the technology that is available to them. The second is an interface problem. As more and more things continue to integrate with sensors and become connected, there will be a struggle to determine the best central application for managing information. After all, who will want separate apps for their refrigeration, HVAC, lighting and other equipment?
The IoT is coming and is, in many ways, already here. Today, the newest HVAC equipment has sensors built-in. Hundreds of thousands of pieces of machinery still don’t have sensors, however. We’re essentially in IoT version 1.0 now, where it’s the “Internet on Things.” In the future, machinery will be constructed with built-in sensors and we will live in IoT version 2.0, where it will be the “Internet in Things.”
Building a smarter electricity grid and meeting customer expectations across all sectors are major challenges facing the industry today. With real-time data analytics and the proliferation of data technology, however, we can cost-effectively help customers use energy more efficiently and save more money-one insight at a time.
Bill Kenworthy is director of business development for Direct Energy. Direct Energy is a North American retailer of energy and energy services.