Expanded relationships between customers and utilities will define the energy future.
Pacific Gas and Electric Co. (PG&E) is staking out the next frontier in the rapidly evolving U.S. energy industry. With more than 4 million smart meters deployed to date and an ongoing deployment of some 14,000 smart meters a day, PG&E is already driving the largest deployment of automated metering in the country. Now the utility is looking forward on several fronts to leverage this important investment to build a new, more sustainable energy future for Northern and Central California.
The future will include a rapidly growing portfolio of utility-scale and distributed renewable power generation, the rapid adoption of electric vehicles and an increasingly informed, engaged and empowered energy consumer. Perhaps more than many people appreciate, a sustainable energy future will require deep change in the individual and collective relationship with energy and — as a necessary consequence — the relationship with utilities.
PG&E is mapping out the path to this new relationship with its customers. The journey will take years to complete, but the path forward is becoming ever clearer.
A New Focus on Sustainability
Like other utilities, PG&E is working harder than ever to achieve three fundamental goals: affordable energy, reliable service and environmental sustainability. For more than 100 years, PG&E's business has been almost entirely about procuring affordable energy and delivering it to homes and businesses safely and reliably. While that continues to be its focus, the utility is now also focused on providing this service sustainably.
A sustainable electric system relies heavily on clean, renewable energy sources. Increasingly, the electricity PG&E delivers will be generated by large solar plants and wind farms that take advantage of the West's ample sun and wind, and — to a lesser extent — by a growing volume of distributed generation, principally solar photovoltaics (PV), deployed on customers' homes and in community neighborhoods. PG&E procures some 15% of its electricity from these sources today. That percentage is targeted to rise to 33% by 2020, as mandated by a recent executive order from California Gov. Arnold Schwarzenegger.
PG&E's growing reliance on clean, sustainable energy sources is introducing ever-more intermittency in energy supply into the Northern California grid. Renewable resources generate electricity only when the sun is shining or the wind is blowing, which is both variable and, to some extent, unpredictable. As the North American Electric Reliability Corporation noted last year, “Variable resources, for example wind generation, often need a ‘dance partner,’ which can provide operational flexibility to maintain reliability” when energy output fluctuates. “Demand response can provide all or a portion of the flexibility required for this integration.”
Therefore, a sustainable electric system in Northern and Central California requires PG&E's customers to play an active role in the electricity grid. The days when customers use electricity without awareness of or concern for its current availability are waning. Increasingly, PG&E customers will be given the information, tools and resources to play an active part in maintaining the balance between electric supply and demand on the sustainable grid. As it becomes available, utility-scale storage such as pumped hydroelectric generation, compressed air energy storage and sodium-sulfur batteries will provide somewhat of a buffer in this balance, but active customer energy management also will be needed.
Building a Sustainable Electric Grid
PG&E's SmartMeter program for automated meter reading lays the foundation for a sustainable electric system in which customers are actively engaged in maintaining the balance between electric supply and demand. The SmartMeter electric system includes a two-way radio-frequency communication network that connects the SmartMeter electric meter to PG&E's operations. The meter records customer electric use hourly for residential customers and in 15-minute intervals for business customers, enabling an unprecedented visibility of customer energy use. The meter also can receive information and control signals from the utility that will make possible a range of new customer programs and services in the future.
Notably, PG&E's meter includes robust solid-state circuitry that can be remotely upgraded, providing a great degree of flexibility in the future to accommodate technical innovations. In addition, the upgraded meter includes both a home area network (HAN) gateway and a remote connect and disconnect, load-limiting switch.
The HAN gateway will provide a platform through which the customer can obtain near-real-time energy-use information or automate home energy use to take advantage of a range of new rate options, including demand-response programs and variable electric prices. The remote connect and disconnect load-limiting switch adds an important element of control to the electric meter and will enable customers to benefit in the future from voluntary load control programs and new service options such as pre-pay electric service.
Expanding Customer Relationships Today
Like many utilities, PG&E enjoys a close relationship with its larger-business customer segment. Assigned account representives build solid relationships with these customers and provide an interface to the range of PG&E energy programs and services. For these customers, PG&E has long been a true energy partner in the quest for ever-greater energy efficiency and energy savings. Leveraging its new SmartMeter infrastructure, PG&E is already taking early steps to build a similar kind of relationship with its residential and small- and medium-business customers. PG&E is providing these customers online access to their detailed energy-use data and offering new rate programs that reward them for reducing their electric use during times of especially high electric demand.
Residential and small- and medium-business customers with SmartMeter gas or electric meters have online access to their detailed energy-use data daily for gas and hourly for electric. For the first time ever, these customers can know in detail how much energy they are using at different times of the day or night. With this information, they can gain insight into their energy-use habits, identify energy waste and make changes to enhance the value they receive for every dollar they expend on energy. The power of this online energy-use data will grow over time as PG&E implements new analytical tools customers can use to gain deeper levels of awareness and understanding of their energy use.
Residential and small- and medium-business customers with SmartMeter electric meters also have access to a new voluntary rate program. In the summer of 2008, PG&E successfully rolled out its SmartRate program to 10,000 customers with active SmartMeter electric meters. Enrollment in SmartRate grew to 30,000 customers in the summer of 2009.
SmartRate is the first automated metering infrastructure (AMI)-enabled critical peak pricing program for residential and small- and medium-business customers in the United States. It offers customers an opportunity to save by conserving or shifting their electric use away from peak hours on PG&E-called SmartDays — no more than 15 of the hottest days in the summer. In line with industry predictions, customers on the SmartRate program reduced their energy use during peak periods by an impressive average 16.6% in 2008 and PG&E expects a similar result for 2009.
Both the online access to detailed energy-use data and the SmartRate pricing plan represent very early steps in what will evolve to be a new and deeper relationship between PG&E and its residential and small- and medium-business customers. It will take time, perhaps years, for the new relationship to take shape, but PG&E has begun the journey.
A New Relationship with Customers
Looking forward, PG&E envisions a new and deeper relationship with its residential and small- and medium-business customers, moving beyond the provider of a commodity service to becoming a trusted partner on energy.
PG&E is working actively to test and pilot technologies that will leverage the HAN gateway embedded in every SmartMeter electric meter. This gateway — a low-power radio that can communicate into the customer premise — will enable PG&E's customers to deploy a range of next-generation energy management equipment. The equipment can range from simple devices that display the real-time use and cost of electricity to more-complex in-home energy control devices that, together with a new generation of automated appliances, enable the customer to automate their energy use to achieve their preferred trade-off between comfort, convenience and cost.
When used together with new demand-response programs and rates that vary the price of electricity over the course of the day, these in-premise energy automation systems can save customers money. And, they can make it easy for customers to play an active role in balancing the intermittency of an increasing volume of intermittent, renewable resources.
Beyond enabling next-generation customer energy management, HAN capability will be leveraged to support two new important developments: the advent of electric vehicles (EVs) and the rapid expansion of customer-owned generation, typically in the form of solar PV. Both trends will have a significant impact in PG&E's service area. Already PG&E connects 40% of all the residential solar PV systems in the United States. Northern California, especially the Bay Area, is widely viewed in the automotive industry as an early adopter market for electric vehicles, which will become widely available in the next several years.
The HAN gateway in the meter can be leveraged to connect smart inverters to the PG&E network, providing the utility with critical information on locally generated electricity being fed into the electric grid. This information will be needed to actively manage the distribution network within designed technical specifications and to provide PG&E early information on where distribution grid management and control equipment must be deployed to reliably integrate concentrations of solar PV.
EVs will introduce a large new load onto the PG&E electric grid. This load must be actively managed, both to avoid overtaxing the grid and to ensure they yield a benefit to the electrical system. If EVs charge during peak times, they will exacerbate PG&E's already high peak demand. If, on the other hand, EVs charge during off-peak times, they will help level electric demand and lead to a more efficient use of existing generation capacity. The HAN gateway in the meter will be critical in connecting smart charging devices to the PG&E network inthe smartest manner possible.
As it builds out these new capabilities over the next several years, PG&E will be working to take an integrated approach across all its service offerings. The utility is building the capability to offer integrated demand-side management (IDSM) — solution sets that integrate technology, pricing plans, demand-response programs, energy-efficiency offerings and other services that are tailored to the energy needs and wants of clearly defined customer segments. Leveraging these IDSM solutions sets, PG&E will be able to partner more effectively with its residential and small- and medium-business customers to facilitate their transition from passive consumers of an undifferentiated energy commodity to active participants in a sustainable electric system.
On the Horizon
As PG&E continues its massive AMI deployment, the utility is looking to the horizon and toward the future. It sees the emergence of a deeper and closer relationship with all its customers. In the future, PG&E will play the role of trusted advisor and partner in energy management not only for its largest-business customers, but also for the much-larger number of residential and small- and medium-business customers. PG&E will provide all of its customers with targeted programs, tools and resources to raise their energy awareness, increase their insight into how they use energy and help them use energy more wisely.
Customers will benefit from greater value from every dollar they expend on energy. Society will benefit from a sustainable electric system capable of integrating growing volumes of intermittent, renewable electric generation. Building a sustainable electric system is a task that will take years, even decades, to realize fully. PG&E and its customers are taking the first important step toward a sustainable economy based on clean, renewable energy. PG&E is looking toward the horizon with a clear sense of its commitment to a sustainable world. It sees significant change and even larger opportunities for its customers and its home state of California.
Jana R. Corey (email@example.com) is currently responsible for leading PG&E's Customer Energy Management (CEM) efforts, including the evaluation and integration of emerging CEM technologies, the development of PG&E's CEM business model, and the company policies that support PG&E's participation in the rapidly evolving CEM space. Corey previously served as director of PG&E's SmartMeter Advanced Metering Infrastructure project. She has BSEE and MSEE degrees from UCLA, and a MBA from Stanford Graduate School of Business.
North American Electric Reliability Corporation www.nerc.com
Companies mentioned in this article:
Pacific Gas and Electric Co. www.pge.com