Do utilities spend enough time talking to their customers about the costs of doing nothing to modernize the grid? In times of mass customer revolts against simple, radio-controlled smart meters, it’s important to take a look at those negatives, if only to get people used to the idea that prices do rise over time, and doing nothing only makes it worse.
Guido Bartels, general manager of IBM's Global Energy and Utilities business, is the latest voice of stern warning, telling Israel’s Globes news service that the world will see electricity prices rise 400 percent by 2050 if nothing is done to bring power grids up to speed.
But here’s the rub: doing something doesn’t actually halt price increases, it only slows them down to merely rising 50 percent over that time. That's good news, right? But it’s hard for utilities and their regulators to quantify those “avoided costs” in smart grid business cases. The costs of deploying them are spelled out in per-customer rate increases.
Sure, smart grid also helps in maintaining grid reliability, replacing old infrastructure, and managing renewable energy on a massive scale. The Electric Power Research Institute (EPRI) predicted last summer that smart grid investment of $338 billion to $476 billion could yield $2 trillion in benefits by 2030 (EPRI is also the source of Bartels' price data). But again, ratepayers are going to see those upfront costs first, and will be impatient for their benefits to start rolling in.
How does the customer get involved in that? Bartels, a longtime champion of the smart grid who currently serves as chairman of the Global Smart Grid Federation, says the group is going to rely on getting customers connected via the technology of their choice. As he told Globes, “Electricity too will have to enter the world of ICT. We will have a generation of consumers who will not agree to be passive.”
Certainly the smart grid has already seen its share of far-from-passive protest against introducing money and energy-saving smart grid technology -- i.e., smart meters -- anywhere near their homes. We’ve also seen utility regulators in Maryland, Illinois, Michigan, Indiana, Hawaii and elsewhere order utilities to redraw their smart grid plans to push customer benefits and services higher up in their to-do lists.
Will home energy management technology come in to rescue the utility-customer relationship? Right now, results are all over the map, with pilot projects showing everything from big savings to little or nothing in return for their involvement. Getting customers to pay the several hundred dollars it costs to deploy their own home energy setups seems unlikely, unless it’s packaged in home internet, phone or TV service from Comcast or Verizon, or as part of a service for a thermostat you bought at a Home Depot or a Lowe’s home improvement store, for example -- all routes that are being explored.
Otherwise, utilities are going to have to foot much of the bill through incentives or direct support. How will these devices prove the value of the costs they’ve avoided? Answering that will take much bigger deployments than we’ve seen to date, though we've got some big ones underway in Oklahoma, Arizona and Canada's Ontario province, to name a few.
Eventually, customers with energy management tech that works, whether connected to a smart meter, broadband or some other link to the utility, will start comparing their bills to neighbors who’ve done nothing to prepare for the smart grid, and will start noticing a difference. Whether that leads to more protest or an “a-ha” moment for the do-nothings remains to be seen.