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The Smarter Home – How about the regulated utility’s role?

TIME Magazine recently published an extensive series of articles in its July 7th special report called The Smarter Home. The various articles showcase a range of consumer technologies that can be remotely controlled—or control themselves (e.g., the NEST thermostat)—to improve the home environment and consumers’ daily lives.  The overall theme that can be gleaned from this issue is that wireless technology is providing an important platform that will increasingly allow people to interact with their gadgets, appliances, and various home systems to provide them better services.

TimeBut where is the electric utility in all of this? Noticeably absent was the electric company in these articles—save one, the piece about The Pecan Street demonstration project funded in part by Austin Electric. Of note too is that in the one page piece on “Which company will control your home?” (p. 52) electric utilities and energy service companies are startlingly absent—regardless of whether they are regulated or public power entities. Instead we see telecoms, start-ups, DIY retailers, appliance manufacturers, and the “tech titans” Google, Apple, and Microsoft listed among the options most likely to provide such services.

Is the industry missing the boat? Perhaps the TIME authors were unaware of programs, such as thermostat direct load control and pilot energy information systems where several leading edge electric utilities are already involved. But even so, it does raise the issue of why as a group energy companies—and particularly regulated electric utilities—are not more widely represented among those entities that are pursuing these new services offerings.

To determine why and what role electric utilities are, and can, play in this market, DNV GL is conducting several internally-funded research projects to better understand the emerging technologies, business models, and opportunities for electric utilities to be engaged in this rapidly evolving marketplace. Specifically, one area of promise is Big Data and how it can be used to provide new and better services, while improving management of the grid.  To that aim, the TIME issue touched upon the increasing penetration of smart meters—about 40 million in use today—as providing an unprecedented opportunity to “track electricity at least once an hour” (where in actuality, such systems can provide vastly more granularity than that) and notes the sea-change of data capture that such systems will provide over “how data-poor the electricity business has been for most of its existence” (p. 78).  But the authors stop there, and fail to touch upon the wide range of ways in which such technology can change the relationship between customers and electric service providers—concepts that were at the heart of the Obama Administration’s funding of smart meter conversions to the tune of billions of dollars.

Certainly major increases in energy efficiency are noted as a potentially significant outcome of these technology changes with lower bills noted more than once as what may drive consumers to adopt them.  Not mentioned though is the significant role played by utilities in encouraging energy efficiency over the last two decades.  How is the industry adapting to this relatively quick and dramatic shift in the market toward consumer services, with many new entrants in an area that used to be the sole purview of the electric utility—home energy management? In what ways will regulation need to change to enable such alterations in how energy is used and managed to secure the financial health of the industry, as well as be of benefit the overall electricity grid? These are topics that are front and center in the research being done at DNV GL and in the services we are providing to our clients. But in the meantime, let’s hope that the next major article in the public press about this topic gives more attention to the role of the electric utility, which is after all source of the juice that powers all those gadgets in the first place.

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