Friday, November 11, 2011

What I didn’t hear at the GridWise Global Forum

Attend enough smart grid conferences and you will become very familiar with various industry truisms that are almost guaranteed to be uttered by more than one of the speakers. One of these clich├ęs is the notion that “customers must be engaged” if the smart grid is to realize its full potential.

But how do utilities engage customers on something that the industry itself has such difficulty defining? More often than not, the benefit of smart grid for consumers is described in terms of “savings” both in terms of energy—with its implied virtue—and more importantly, money.

Such was the case this week at the GridWise Global Forum in Washington, DC. The two-and-a-half day conference opened with remarks by US Secretary of Energy Steven Chu and included a lineup of speakers from a range of companies and institutions, several of whom repeated the savings mantra.

Wednesday’s session on “Smart Grid and the Regulatory Landscape: Evolution or Revolution” featured a panel including current and former regulators as well as a policy officer from the telecom industry. Verizon’s Kathy Brown emphasized how important customer choice is/will be to the success of smart grid investments, specifically in who people buy their power from.

This remark, which Brown reiterated more than once, struck me as profoundly uninformed. Was she not aware of the experiments in retail choice undertaken by so many states that produced so few customers for alternative suppliers?

Which brings me to my point…

I would submit that the reason most (residential) customers didn’t switch when given the opportunity is the same reason most of them now have such tepid interest in what smart grid can do for them. They don’t care because they have never cared. They’ve never had to think about their electricity supply, and asking them to engage with their utility via demand response, rooftop solar or time-of-use rates presupposes that they have an interest in power in the first place. They simply do not perceive a need to change.

Even if we put this conundrum aside and focus on the “savings” argument, the industry still has a major hurdle to overcome.

Residential customers on traditional rate schedules are insulated from the true cost of power. In addition, the customers who would stand to save the most from smart grid (i.e., those who consume the most) are the least likely to feel the pinch of a high utility bill. A 20% savings simply doesn’t create enough of an incentive to *start* thinking about electricity.

Now, if every residential customer were placed on a TOU rate, it might begin to break this customer inertia. But of course that would not be advisable, and as New York PUC commissioner Maureen Harris noted, it would also be illegal in her jurisdiction.

So, we come around again to where we began: how do you get someone to care about a service that they have taken for granted their entire life? How does the provider of that service—bound by law to supply it reliably, safely and affordably, forever—convince the consumer that they even have a role to play in the process?

I didn’t hear a response to this question at the GridWise Global Forum, but I don’t mean to suggest that there is a straightforward answer. I certainly don’t have one. But I think it’s clear that we need to move beyond the “save money” argument and start thinking about how to first get people interested in where their electricity comes from. Once we have their attention, we can begin to think about how to frame the benefits of smart grid in terms that will resonate with customers.

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