Most experts agree that building a smarter electric grid is essential to improving energy efficiency and reducing CO2 emissions, because a smart grid would both help to integrate renewable energy sources into the system and encourage much more efficient consumption of power. But in order to achieve this at the household level, everyday consumers need to adopt and commit to the idea of a smart home and a smart grid. How can advocates, governments, utilities, and vendors get consumers on board?
That’s the question that a panel moderated by Robin Carey, CEO of Social Media Today (which runs The Energy Collective), explored yesterday here at Gridweek 2010 in Washington, D.C. Roger Kohlmann of the German Association of the Electricity and Water Industry, Devin McCarthy of the Canadian Electricity and Water Industry, Osamu Onodera of Japan’s New Energy and Industrial Technology Development Organization, and Kevin Lauckner of Honeywell Utility Solutions all contributed their thoughts on consumer adoption of smart metering and smart grids. Perhaps surprisingly to some, each of them acknowledged that serious challenges exist regarding consumer attitudes to smart grid.
In a way, this shouldn’t be the case – or at least many thought it wouldn’t be. Most smart grid models involve variable pricing models that charge more or less for power depending on supply and demand at given times. Consumers are able to adjust their usage to avoid high peak prices and take advantage of cheaper power during the less busy hours. Thus, there’s a financial incentive for using energy efficiently. Everybody wins.
But in some early implementations, the public has reacted with more resistance than anticipated. Mr. McCarthy, for example, illustrated the backlash that Ontario has faced after adopting an ambitious mandate to establish a smart grid. In actual practice, he has found that the financial incentive to save a few cents here and there on electric bills, which are already relatively cheap, has in many cases not been sufficient to change consumer habits. In Ontario in particular, some misperceptions about smartgrid, fueled by inflammatory newspaper headlines, led to rhetoric protesting against politicians forcing homemakers to do their chores in the middle of the night – which they of course were not. Meanwhile, electricity prices continued to rise for unrelated reasons, and the combined result was a less-than-grateful public.
Insufficient financial motive and failures in communication seem to be the major factors. As Mr. Kohlmann pointed out, the cost of a household smart meter itself can sometimes exceed the savings recouped in the near term. Furthermore, the households with the biggest discretionary power loads – say, a hot tub – are likely those that are least worried about saving on electric bills, because those are the households that can afford hot tubs. This leaves some lower-income households with the perception that smart grids impact them disproportionately.
In the Q&A portion following yesterday’s session, the panel really started to explore potential solutions to the problem of customer perception. Most, even Mr. McCarthy, are optimistic that with better communication strategies and the right incentive models, public attitudes will turn around and consumers will engage with smart grids. Mr. Laucker of Honeywell believes that the trend toward ever more expensive energy, coupled with Time-of-Use tariffs, will encourage adoption. Mr. Osamu agreed, and stressed that government, vendors, and utilities need to cooperate to better communicate the benefits of smart grid implementation.
As Mr. Kohlmann shared, Germany has an obligation to introduce flexible tariffs by the end of this year – the major challenge being identifying the correct spread, or variation between rates. In Quebec, two different tariff systems, referred to as TOU and TOU+, are now in place. Regulators and utilities in the U.S. and worldwide would likely do well to watch these experiments closely to determine which market models encourage the right behavior. Experts see smart grids as a great tool to reduce both energy use and costs to the consumer, but it’s vital that consumers also appreciate these benefits.