COMMENTS OF TENDRIL NETWORKS, INC.
Office of Science and Technology Policy Forum:
Consumer Interface with the Smart Grid Blog
March 12, 2010
“We are on the cusp of a new energy future,” President Obama declared last fall. Development of the smart grid, he observed, is expected to create tens of thousands of new jobs, save consumers more than $20 billion over the next decade and reduce the annual losses of $150 billion from power outages. It will increase renewable energy production, support electric vehicles and reduce carbon pollution.
Tendril agrees and we welcome the opportunity to contribute to this dialogue initiated by OSTP. We believe that the smart grid will serve as a platform for innovation enabling new industries to flourish, creating new jobs and keepin the nation the leader in global competitiveness.
To seize this opportunity requires leadership. It also requires coordinated action among the various federal agencies, state regulators and policy makers that have jurisdiction over these efforts. It requires accelerated deployment, involving both funding and the elimination of policy barriers. The Administration has an opportunity to lead this transformation and, in the words of the President, “make the energy future we dream of a reality.”
Experience tells us core to all innovation is open access to information. Consumer markets thrive with transparent and healthy competition. We believe this energy future will include new rates and business models that reflect the real-time economic and environmental costs of energy. It will bring forth innovative new technologies that automate customer transactions and provide services we are only beginning to understand.
As Tendril CEO, Adrian Tuck, observed in recent Senate testimony, “The consumer market is a powerful force for change. But like all markets, it will only be truly effective when it has accurate and actionable information. Federal policy, supporting entrepreneurs and American competitiveness, can provide that information and support innovation.”
Our comments are offered in the spirit of seizing this opportunity for the nation.
1. Should the smart meter serve as the primary gateway for residential energy usage data, price data, and demand response signals? What are the most important factors in making this assessment, and how might those factors change over time?
The smart meter is a vital component of the smart grid, but there is no reason to believe that it will or should remain the only gateway for residential energy usage data. Further, we do not believe that there is a need to stipulate a single gateway. Multiple interfaces and pathways for information exchange will best support market innovation.
In order to address this question, we believe it is helpful to distinguish between different kinds of information. For example, the information needed by a consumer to save energy in real time is different from the information the utility needs to generate an accurate billing statement. Many of the current discussions regarding smart grid seem to assume that all information types will utilize the same communication system, but that may not be required or advisable in order to encourage the market to develop. We see four broad classes of information for which different “gateways” may be suggested.
1. “Actionable” Information – This is the real-time information needed by consumers to implement control strategies in the home. Examples include a direct signal from the meter or information about the current sources of generation. In order to be effective, it is most important that the information be timely and sufficiently granular, though it may not be essential that it is precise. It may be sufficient to have a one-way flow information, which can mitigate many security concerns. Currently, an expedient source of this information is directly from the meter or from a signal provided by the meter.
2. “Revenue” Information – This is historical information that is required in order to generate an accurate bill for retail services. This information must be verifiable and precise, but does not need to be collected continuously. A meter data management system can be utilized as the source of this type of information. (For example, a business-to-business interface, such as Open Automatic Data Exchange (OpenADE) can be used to transfer revenue-quality data to energy service providers.) In most cases it may not necessary to utilize a two-way communication system or to have high bandwidth networks.
3. “Transactional” Information – This is real-time or forward-scheduling information that enables market transactions or control signals to be sent, received and verified. Demand response signals fall into this category and require two-way flows of information in order to verify that the ‘transaction’ was completed. Looking ahead, vehicle charging transactions (especially for roaming vehicles) will rely on this kind of information. In some, but not all, situations it will be important that the communication be conducted in real time.
4. “Analytical” Information – This is historical information on consumption and price that allows analysis of a time series of usage data. The depth of analysis being conducted will determine the need for granularity. For example, in order to understand how energy use varies through on a daily or weekly basis, 15-minute or longer interval data may be sufficient, whereas understanding the impacts of specific devices or appliances may require shorter time intervals. Two-way communication is not required in most cases and communication likely does not need to occur in real time, but likely will benefit from high bandwidth networks.
The most important factor in making assessments about the appropriate information gateways is the kind of information being communicated and its application. Without question, these needs will evolve rapidly in the years ahead, which is why we believe that attempting to specify a single gateway today would be imprudent public policy that will most likely restrict innovation.
In all cases, we believe that is critical that the consumer have access to each class of information. However, this does not mean that they must have access in the same way or through the same systems. For example, while 15’ interval data that is available after some delay (24 hours, typically) is appropriate for analytical purposes, it is entirely insufficient for implementing control strategies and therefore is not ‘actionable’ information.
2. Should a data gateway other than the smart meter be used for all or a subset of the data described in question 1?
There is no question that there should not be a single designated gateway for accessing and exchanging data. As we’ve described above, there are various kinds of information and a wide range of applications. It is difficult to imagine that a single gateway will be capable of accommodating all of the information needs today or in the future.
Tendril research fundamentally confirms what others have observed through this online forum. Consumers respond to technology with intuitive interfaces that respect their needs for control, authority and privacy. These needs are not likely to be met by a single consumer interface. While the foundation of a smart utility network is likely to remain the AMI network in the near term, we believe that consumers and energy service innovators should have the ability to take advantage of a wide range of communications and data technologies. Limiting the market to a single architecture will not encourage innovation.
As an earlier posting in this forum declared, “Flexibility in the way information flows is central to that innovative future.”
3. If the smart meter, via the utility network, is the primary gateway for the data described in question 1, will consumers and their authorized third party service providers be able to access the data easily and in real time?
We believe that the smart meter can provide a valuable source of real-time information. There are standards in place and under development (such as OpenADE and OpenHAN) that can facilitate this access by consumers and their authorized third-party service providers. However, as we have stated, we believe that the smart meter and the utility network should be viewed as only one of many potential pathways for data.
Enabling easy, real-time access to energy usage data, price data, and demand response signals will be greatly enhanced by consistent data access policies. Establishing strong federal leadership and coordination regarding data access will provide a strong platform for market innovation in the near term.
4. Who owns the home energy usage data? Should individual consumers and their authorized third-party service providers have the right to access energy usage data directly from the meter?
Consumers and authorized third parties must be provided real-time information in order to bring the smart grid to life. We believe that the Energy Information and Security Act (EISA) of 2007 establishes a powerful policy foundation for the smart grid. This Act declares it the policy of the United States to “support the modernization of the Nation's electricity transmission and distribution system” in order to achieve a range of goals, including “provision to consumers of timely information and control options.” Achieving this goal requires direct, real-time access to meter data.
The question of “ownership” of home energy usage data is common in smart grid policy discussions. We believe that it is best to consider the application of certain “uses” and “rights of access” (with attendant responsibilities and obligations) rather than ownership. In our opinion, “ownership” implies mutual exclusion of access and use that does not reflect real-world situations.
At this point, there is no consistency at the federal or state level with regard to data access rights. Tendril’s CEO highlighted this need during recent Senate testimony when he stated, “Getting clarity at a federal level about what the rights should be for consumers to get access to their energy information is critical.”
We believe firmly that the consumer is the primary source of consent for the disclosure of any personal information. Certainly, the utility requires access to metering and usage information in order to perform basic functions related to the generation and delivery of energy (billing, reliability, system operations, etc.). This right of access carries obligations to protect that confidential data from inappropriate disclosure or uses that are not related to the primary operation of the electric system. In this respect, utilities are custodians of information and have obligations to treat that information confidentially, responsibly and in accordance with consumer expectations.
Similarly, the consumer requires access to usage information in real time in order to manage their home energy usage and contribute to smart grid functions. Consumers also have rights to control disclosure of information for secondary uses. Smart grid technology and applications raise new questions with regard to the new level of detailed information generated by advanced metering technology. In this regard, we believe that the meter provides a useful demarcation point between where the utility has a right to access and where the consumer has a reasonable expectation of privacy.
For example, the data stream available from real-time metering information can be used to identify individual appliances and occupancy patterns of individual consumers. The ability of the utility or any third party to access or use this information does not establish a right to use this information absent consumer choice.
We agree with an earlier posting that observed, “It is incumbent upon regulators and legislators (sate and federal) to establish rules to outline the permissible uses for each entity who uses the data to ensure the consumer’s data is not compromised.”
5. How are low-income consumers best served by home-to-grid technology?
Low-income consumers are well-served by the smart grid in many ways. First, studies have repeatedly confirmed that direct access to energy usage information results in reduced consumption. Insight into what drives energy bills and the ability to take immediate action will empower all consumers to control their energy costs. Numerous studies confirm that this kind of “energy awareness” prompts consumers to reduce their consumption.
Second, it is well understood that the typical flat rate structure that applies to most consumers in the United States results in potentially pernicious cross-subsidization. Consumers that cost less to serve subsidize consumers that cost more to serve. Peak load demand drives disproportionate costs in annual energy expenditures. A report issued by the Government Accountability Office in 2004 observed that, “Although the 100 highest priced hours of the year account for only about 1% of the hours in a year, they can account for 10-20% of the total electricity expenditures for the year.”
We believe that low-income consumers are, by and large, low-cost consumers to serve and are not the largest contributors to peak demand. However, there is little publicly available data that can be used to analyze how low-income consumer might benefit from more equitable rate structures. We believe that another opportunity for federal leadership is to analyze the potential cost savings from (1) reduced energy consumption from “energy awareness”, (2) reduced cross-subsidization across customer classes and (3) reduction in peak load demand.
It is our observation that the majority of decisions regarding how the low-income population is enabled with new technology will be made by state-level regulators. These regulators require verifiable information that can be included in their decision-making records. A tremendous opportunity for federal leadership lies in assessing and analyzing the cost drivers in the electricity system that can help state regulators make informed decisions.
We further believe there are opportunities for federal leadership to align current weatherization programs and other low-income support mechanisms by encouraging greater access to information and technology. A federally supported rebate program could greatly accelerate the deployment of home energy monitors, bringing benefits to the low-income community and advancing the market. As an earlier posting suggested, “regulators should look to LIHEAP-type programs to distribute in-home displays that will give low-income consumers information to control their energy usage.” We agree and believe there are existing models for how consumer rebates can accelerate technology transformation.
6. What alternative architectures involving real-time (or near-real-time) electricity usage and price data are there that could support open innovation in home energy services?
Tendril believes that multiple architectures are both possible and desirable. The smart meter can be a valuable gateway into the home, but it is only one of many. There are many other communication pathways that are ubiquitous today, most notably broadband, cable and telephone. Regardless of the specific pathway, open innovation will be supported by access to information according to open standards.
The FCC has indicated that its National Broadband Plan will include strategies to encourage innovation and increased energy efficiency. We strongly support the FCC’s initial recommendations regarding the National Broadband Plan. In particular, we support the integration of broadband into the smart grid and provisions to ensure consumer access to information.
7. Some appliance manufacturers have announced plans to market Smart Grid-enabled appliances in late 2011 provided that appropriate communication standards are defined in 2010. What standard data communications interfaces(s) should be supported by appliances and the smart meter or data gateway so that appliance manufacturers can cost-effectively produce smart appliances that can communicate with the Smart Grid anywhere in the nation? How can communication between smart appliances and the Smart Grid be made ‘‘plug and play’’ for consumers who do not have the skills or means to configure data networks? If gateways or adapters are needed, who should pay for them: The utility or the consumer?
Key to all of future smart grid scenarios is the degree to which the consumer is engaged in this transformation. Tendril fundamentally believes that if the smart grid does not provide a compelling value to the consumer, it will never reach the full potential envisioned. The value of the smart grid does not stop at the meter. Therefore, it is imperative that smart appliances are supported. National policy established in EISA anticipates the “integration of ‘smart’ appliances and consumer devices.”
Federal and state agencies have the opportunity to complement their existing retrofit and energy efficiency programs with smart-grid capable devices and strategies. This includes the promotion of open standards and programs that certify devices and appliances as “smart-grid capable.”
In our view, energy efficiency is best measured across at least two dimensions. On the one hand, we can and must focus on improving the throughput efficiency of the electric system and the buildings it serves, including programs to fund improvements in insulation, caulking and replacing appliances. On the other hand, we must also consider the real-time market and environmental information that can drive true transactional and behavior changes. The impacts of these changes can drive tangible energy efficiency and environmental benefits.
Federal leadership can drive the adoption of smart appliances and smart devices in the home. Direct consumer rebate programs have proven effective in driving adoption of new technologies. The transition to digital television provides a very relevant and recent example. We believe that a consumer rebate program targeted at home energy management systems and smart appliances will accelerate the introduction of new technologies and help consumer realize the benefits of the smart grid today.
Standards exist today that allow smart appliances to be integrated into the home. Most notably, the Smart Energy Profile 1.0 can support the near-term deployment of appliances and devices.
Conclusion
We believe the transformation of the energy economy will be every bit as great as the transformation of the information and communication economy we have witnessed over the past 20 years. We see similar sustained wealth and job creation opportunities for the nation if we seize the initiative. The current Administration should seize on this opportunity by (1) providing clear, consistent federal policy, especially regarding data access, (2) providing leadership and coordination of various agency and state efforts, and (3) implementing rebates and other consumer programs that will bring tangible benefits to every American.
This leadership is needed today. The pressing challenges and national priorities to create clean energy, high-value jobs, electric vehicles and global competitiveness require that the smart grid be more than merely a more efficient set of wires. The smart grid must be a platform for innovation.
As the President stated last fall, this conversation is, “A debate between looking backwards and looking forward; between those who are ready to seize the future and those are afraid of the future.” We agree with his conclusion: “We’ve always been a people who were unafraid to reach for that more promising future.”
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