We are living through a ground swell of broadband communications expansion. Recent estimates place the current number of broadband households in the United States at 93 million. This number continues to exhibit steady growth. On the other hand, the number of mobile LTE subscriptions, though currently smaller, has seen recent growth that can only be characterized as dazzling. This ongoing growth of bandwidth and the associated expansion of smart phones, tablets and other connected digital devices is impacting every aspect of society. It is expected that the number of things connected to the Internet will soon dwarf the number of people connected.
Machine-to-machine connections on the Internet are expected to see tremendous growth as well. As an example, the market research firm Parks and Associates predicts that by 2017, 45% of all new U.S. cars will come with embedded cellular modules. While this expanding connectivity will certainly empower many opportunities for utilities (as well as other organizations), it represents an entry point for new competitors and business models into the electric energy space.
What are some of the opportunities? The Holy Grail benefit of smart grid has been demand response (DR). In a time where the fastest-growing generation sector is weather-dependent renewables, the interest in controllable load resources continues to be great. The ever-growing number of DR ideas is a reflection that interest is not waning.
However, DR has its challenges with customer acceptance. Keep in mind that DR is the equivalent of rolling blackouts at the appliance level. Customers generally aren’t too keen about blackouts of any variety. Additionally, Parks’ Director of Consumer Analytics John Barrett stated his research indicates that customers typically value safety and security features above energy management options when considering smart home offerings. This finding suggests customers do not always see the value of DR programs and that utilities may wish to combine energy management options with safety and security services in order to make them more broadly appealing.
Schneider Electric may have a way to address customers’ growing interest in smart digital devices while providing utilities with an end-to-end DR solution for air conditioning. Schneider’s Yann Kulp, vice president of strategy and business development, says the company’s Wiser programmable thermostat allows customers to view local weather information (originating from Schneider’s own weather service), receive real-time messaging from their utility and enjoy a consistent experience across smart phone, tablet and PC interfaces.
Other utilities have moved away from such end-to-end thermostat solutions and are supporting “Bring Your Own Device” programs to give customers more selections. In such instances, utilities are less concerned with the type of thermostat and are instead focused on DR results. While this type of program may diminish a utility’s control, it allows customers to choose the thermostat with which they are most comfortable.
One of the more intriguing presentations that I heard recently was given by Kevin Meagher, vice president and general manager of smart homes with Lowes. It was perhaps the most insightful in terms of understanding the potential evolution of the smart home space. Meagher said that in response to current connected home trends, Lowes has launched a new smart home product category. He says Lowes’ goal is to make this product line simple, affordable and scalable. Meagher believes Lowes will help drive uniformity in the smart home space simply because of the influence the mega-retailer has on its suppliers worldwide. Lowes offers two smart home kits will work with Lowes’ Iris smart home hub, one focuses on safety and security, the other on energy management. Meagher said the first kit currently out sells the second by a factor of 4-to-1.
Lowes’ efforts are further confirmation that the consumer side of smart grid is moving fast, and that forces other than utilities and their regulators are defining the space. A few years ago, I would not have imagined smart grid as a do-it-yourself option from a big-box retailer. Secondly, the potential for DR may well rest on the willingness of utilities to proactively engage in and influence this quickly developing marketplace. What does it all mean? For me, there are four keys:
- Digital information communications technologies are transforming life today and will transform our future.
- Technological change is occurring at a phenomenal rate
- Energy management options available to customers continue to multiply as do the type, number and variety of supplier providing those options.
- In an age of unprecedented digital technology growth and proliferation, electric utilities may soon find themselves called upon to interface with a multitude of advanced home and building energy management systems if they wish DR to continue to develop as a viable energy resource.
Editor’s note: Insights above were sparked by contacts and comments gleaned from the 2014 Smart Energy Summit held in Austin, Texas and hosted by Parks and Associates.