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Smart Grid and Consumers

July 1, 2010

The zone of interaction between the smart grid and the consumer has been
characterized as “the great unknown.” Yet ready or not—with the smart grid rapidly
taking shape, a rush of companies swarming the market, state mandates kicking into
effect, and actual deployments being built out—the smart grid is now poised to plunge
headlong into this largely unexplored land of consumer demand. Yet so far, despite
optimistic reconnaissance gathered from pilot projects and other preliminary tests, real-
world expeditions into the new consumer frontier have met with a host of problems—
from cost overruns to consumer resistance. So perhaps at this point it would be prudent
to step back and reassess this terra incognita.

The smart grid is currently conservatively valued at just over $20 billion in the United
States and over $70 billion globally. Yet only about 10% of this amount is accounted for
by consumer applications—mostly smart meters. The smart grid will only truly achieve
its goals if it establishes positive two-way communications between utilities and
consumers. This means that residential applications and services must necessarily gain
significantly in share before the smart grid can realize its visionary promise.

This study presents a wealth of insights into smart grid/consumer dynamics. It examines
the issues involved in building positive two-way communications interactions, and the
intrinsic negative resistance that can be expected. With a focus on residential
applications and services, it provides an in-depth analysis of advanced metering
infrastructure, smart meters, demand response, dynamic pricing, home energy
management systems, home area networks, smart appliances, popular communications
platforms, and futuristic technologies. The competitive situation is also discussed,
showing how giants like Cisco, Duke Energy, and Google are entering a fledgling field
so far dominated by relatively recent startups, such as Enernoc, Control4, and a flock of
other companies. Other areas covered in this study include product and marketing
trends, recent smart grid deployments, and consumer surveys regarding smart grid
acceptance.

Table of Contents
Chapter 1: Executive Summary
Introduction
Need for This Study
The Smart Grid: Three Major Sectors
Applications/Software Sector Focus of Study
Eight A/S Categories
Smart Meters
Advanced Metering Infrastructure (AMI)
Demand Response
Dynamic Pricing and Time-of-Use Pricing
Home Energy Management Systems
EIDs
HANs
Smart Appliances
Electric Vehicles
Consumer Issues
Consumer Issues: Costs/Savings
Consumer Issues: Smart Meters
An Obvious Response
Education and Customer Relations
Consumer Issues: Privacy
Consumer Issues: Safety/Health
Consumer Issues: Distributed Generation
Consumer Issues: PHEVs
Consumer Issues: Marketer Momentum
Appliance and Software (A/S) Marketers
Marketers: Smart Meters
Marketers: Advanced Metering Infrastructure
Marketers: Demand Response
Marketers: Home Energy Management Systems
Table 1-1: Selected List of HEMS Marketers
Marketers: Home Area Networks
Marketers: Smart Appliances
Applications/Software Trends
Projected Number of U.S. Smart Meter Installations
Projected Number of World Smart Meter Installations
Communications Network Trends
Residential Demand Response Likely to Grow
Dynamic Pricing Trends
HEMS Trends
Compelling, Engaging EIDs
HAN Trends
Vast HAN Possibilities
Table 1-2: Selected List of HAN Applications by Category
Category
Applications
 Media Possibilities
Global Giants Enter HAN
Smart Appliances: AHAM Definitions
Appliance Giants Forging Ahead
Fuel Cell Trends
Electric Vehicle Trends
Vehicle to Grid (V2G)
EV Charging Infrastructure
Consumer Surveys
Little Consumer Awareness of Smart Grid
Bright Spot: Consumer Concerns over Energy Costs
Market Size and Projections
Overall Smart Grid: Size and Projections
Table 1-3: Overall Smart Grid Market: Size and Projections, 2009-2014 (in billion
$)
Category Size/Projections: Smart Meters
Table 1-4: Smart Meter Category: Size and Projections, 2009-2014 (in billion $)

Chapter 2: Introduction
Need for This Study
Two Key Terms Described and Defined
Description: Smart Grid
Smart Grid vs. Dumb Grid
Table 2-1: Smart Grid Benefits: Positive and Negative
Smart Grid Still in Its Infancy
Definition: Consumer (Residential Focus)
Figure 2-1: Number of Electrical Accounts by Consumer Class (in Millions)
Average Residential Electrical Consumption
Table 2-2: Average Residential Electrical Consumption and Pricing, 2008
Two Other Important Terms
Electric Utilities
Distributed Generation (DG)
The Smart Grid: Three Major Sectors
Applications/Software Sector Focus of Study
Three-Sector Interactions
Grid Infrastructure
Three-Tier System
Four North American Power Interconnections
NERC
FERC
ISOs and RTOs
Grid Infrastructure Problems and SG Solutions
Transmission Problems
Maintenance Problems
Efficiency Problems
Interconnection Problems
 Peaker Plant Problems
Information and Communications Technology (ICT)
Overview
Information Technology
Hardware
Software
Grid Visualization Hardware and Software
Multiple Resolution Views
Layered Information
User-Specific Views
Analytical/Decision Software
Engineering Analysis Software
Mapping Software
Distribution Management Software
Storage Management Software
Meter Data Management Software
Outage Management Software
Renewable Energy Management Software
Security Management Software
Communications Technology
Communications Platforms
Power Line Communications
Broadband Over Power Lines
ZigBee
RF Mesh Networks
WiMax
Z-Wave
Comparison of Communications Platforms
Table 2-3: Selected Smart Grid Communication Technologies
Smart Sensors
Applications and Software
Eight A/S Categories
Smart Meters
Advanced Metering Infrastructure (AMI)
Demand Response
Interruptible Tariffs
Direct Load Control (DLC)
Manual and Automatic DR Programs
Dynamic Pricing and Time-of-Use Pricing
Home Energy Management Systems
EIDs
HANs
Smart Appliances
Electric Vehicles

Chapter 3: Consumer Issues

Overview
Into the Unknown Zone
The Land of Consumer Demand
The Smart Grid Is Utility-Oriented
Debunking the Internet Analogy
Business Relation with Utilities
Popular Appeal Necessary for Success
Utility Benefits
Greater Reliability
Reduced Overhead/Administrative Costs
Fewer Customer Service Issues
Consumer Benefits
Personal Empowerment
Increase Intelligence
Advance Civilization
“Saving” Benefits
Saving the Environment
Saving the Grid
Saving Money
Skeptics on Consumer Benefits
Countering the Skeptics?
Consumer Issues: Costs/Savings
Overview
Minimal Money Savings
Expensive Equipment
Utilities Pass-Along Costs
Future Savings?
Consumer Issues: Smart Meters
Overview
Backlash in California
Reverberations
First-Stage Consumer Burdens
Smart Meters, Dumb Rollout
Independent Audits Ordered
Unaddressed Problems
Smart Meter Controversy Spreads
Questions of Accuracy
Sowing Suspicions
Little Transparency
No Opt-Out
Generating Paranoia
Pushback
Ambiguities in the Savings Claims
Savings Not a Straightforward Proposition
No Visuals, No Savings
The Off-Peak “Fairy Tale”
 A Look at Time-of-Use Pricing in Canada
Table 3-1: Sample Utility Bill: Before and After Time-of-Use Pricing (3/09 vs.
3/10)
Table 3-2: Sample Electricity Use by Time-of-Use Period, March 2010
Shifting Rationale
Alarm in the SG Industry
Fear of Organized Opposition
TURN’s Smart Meter Critique
Barreling Ahead into the Unknown Zone
An Obvious Response
Resisting an Adversarial Relationship
Poor Utility Customer Relations
Reasons for Negative Relations
Improving Customer Relations
Educational Efforts
The Consumer Enlightenment Model
Table 3-3: Smart Grid Benefits: Positive and Negative
Utilities Begin to Get the Message
The Question of Education
SG Educators Appeal to the Future
SG Educators Disregard the Current Economy
Recommendation
Consumer Issues: Privacy
Overview
Consumer Issues: Safety/Health
Overview
Consumer Issues: Distributed Generation
Overview
Consumer Issues: PHEVs and Fuel Cells
PHEVs
Fuel Cells
Consumer Issues: Marketer Momentum
Miscellaneous Consumer Issues
Convenience Issues
Entertainment Issues
Customer Service Issues
Energy Efficiency Issues
Employment Issues

Chapter 4: Appliance and Software (A/S) Marketers

Overview
Number of Marketers
Size of Marketers
Smart Grid Specialists
Corporate Giants
Where Are the Clean/Green Tech Marketers?
 Partnerships and Alliances
Marketers: Smart Meters
Table 4-1: Selected List of Smart Meter Marketers
Marketers: Advanced Metering Infrastructure
Table 4-2: Selected List of AMI Marketers
Marketers: Demand Response
Table 4-3: Selected List of Demand Response Marketers
Marketers: Home Energy Management Systems
Table 4-4: Selected List of HEMS Marketers
Marketers: Energy Information Displays
Table 4-5: Selected List of EID Marketers
Marketers: Home Area Networks
Table 4-6: Selected List of HAN Marketers
Marketers: Smart Appliances
Competitive Profiles
Itron
Table 4-7: Selected List of Itron Partners
Landis+Gyr
Echelon Corp
Silver Spring Networks
Trilliant
EnerNOC
Comverge
GridPoint
Cisco Systems
Google
General Electric
Intel

Chapter 5: Applications/Software Trends

Trends: Smart Meters
Projected Number of U.S. Smart Meter Installations
Deployments Planned or in Progress
Table 5-1: Utility Smart Meter Deployments Planned or in Progress, 2010
Projected Number of World Smart Meter Installations
Nations with Advanced Smart Meter Programs
The Ongoing Accuracy Controversy
Open Questions on Communications and Functionality
Greater Speed
Retrofitting AMR Meters
Trends: Communications Networks
Overview
Wired Approaches
Wireless Long-Distance Approaches
Table 5-2: Long Distance Wireless Communications Platforms
Wireless Short-Distance Approaches
 Flexible Communications Options
Trends: Demand Response
DR Statistics
Three Scenarios: 2009-2019
Questioning the Scenarios
Residential DR Likely to Grow
DR Marketers with Residential Programs
DR Marketers Entering Building Management
Trends: TOU Pricing
Trends: Dynamic Pricing
Table 5-3: Dynamic Pricing Pilot Projects and Rate Structures, 2010
Trends: HEMS
Shifting Category Boundaries
Statistics on Energy Information Displays (EIDs)
EIDs and Savings Percentages
Fall-Off in Engagement
Compelling, Engaging EIDs
New EID Products
Trends: Home Area Networks (HANs)
Overview
Logical Endpoint of A/S Development
Vast HAN Possibilities
Table 5-4: Selected List of HAN Applications by Category
Media Possibilities
Global Giants Enter HAN
Table 5-5: Selected Global Marketers Interested in HAN Development
Competition Could Quickly Heat Up
Marketing-Oriented Questions on HAN
Brief Focus: Control4
Brief Focus: 4 Home Control
Trends: Smart Appliances
2001 Statistics: Energy Use of Home Appliances/Devices
Figure 5-1: Percentage of Electricity Use by Appliance/Device, 2001
2009 Statistics: Soaring Home Electronics Energy Use
Implications
Smart Appliances: AHAM Definitions
Smart Appliances: Inhibiting Factors
Appliance Giants Forging Ahead
Demand Response Capabilities by Appliance
DR Appliance Programs
Smart Appliances: Projections
Brief Focus: GE
Brief Focus: Whirlpool Corp.
Trends: Fuel Cells/Other
Fuel Cells
On the Horizon
 Thermoelectric Technologies
Thermoacoustic Technologies
Trends: Electric Vehicles
Overview
EVs Are Coming
EV Challenges/Opportunities
Major EV Challenge: Load Control
Other Worries
Solution: Off-Peak Charging
Vehicle to Grid (V2G)
EVs Necessitate Dynamic Pricing
EV Problem Areas and Issues
Table 5-6: Electric Vehicles: Problem Areas and Issues
Focus: EV Charging Infrastructure
Two States with Advanced Charging Plans
Charging at Work and Home
Economic Questions about Charging
EV Charging: Companies/Products
Brief Focus: Better Place
Charging Infrastructure Rollouts
Trends: Marketers
Competitive Marketer Trends
Cooperative Marketer Trends
Fight the Power
Kaleidoscopic Partnering Activity
Table 5-7: Selected Examples of Smart Grid Partnering Activity, 2009/2010
Table 5-8: Selected Trilliant Partners
Alliances and Coalitions
Brief Focus: The Smart Grid Consumer Coalition
Duke Energy: A Contrarian Approach to Collaboration

Chapter 6: Surveys and Deployments

Consumer Surveys
Smart Grid? Never Heard of It
Bright Spot: Consumer Concerns over Energy Costs
Attitudes Favorable among the SG-Aware
Surveys on A/S Categories
Smart Meters: Vague Awareness
Demand Response Resistance/Indifference
HEMS: Open to the Idea
Willingness to Pay for HEMS
But Not Nearly Enough
HAN Has Growing Appeal
Utilities Surveys
Oracle Survey Shows Utilities Lagging
GTM Survey on Utilities
 Microsoft Survey on Utilities
Deployment: SmartGridCity (Boulder, CO)
Overview: An Ambitious Effort
Phase I
Phase II
Advancements on the Utility Side
The Next Phase: Consumer Integration
Consumer Services
Most Services Not Yet in Place
Testing Dynamic Pricing
Financial Problems
Legal Problems
Unresolved Financing Questions
Deployment: Pecan Street Project (Austin, TX)
Overview: A Methodical Effort
Origins
Needed: New Business Model
Recommendations Emerge
Most Vexing Problem: Profit from Efficiency
The Distributed Generation Problem
Relevant Recommendations
Seven Parameters
Recommendation: Testing/Pilots/Demos
Recommendation: Promote PEVs
Recommendation: Dynamic Pricing
Recommendation: New Business Model
Recommendation: Flat-Rate System

Chapter 7: The Smart Grid Market

Market Size and Projections
Overall Smart Grid: Size and Projections
Table 7-1: Overall Smart Grid Market: Size and Projections, 2009-2014 (in billion
$)
Category Size/Projections: Smart Meters
Table 7-2: Smart Meter Category: Size and Projections, 2009-2014 (in billion $)
Category Size/Projections: Demand Response
Table 7-3: Demand Response Category: Size and Projections, 2009-2014 (in
billion $)
Segment Size/Projections: In-Home Displays
Table 7-4: In-Home Displays Segment: Size and Projections, 2009-2014 (in
billion $)
Category Size/Projections: Home Area Networks
Table 7-5: Home Area Networks Category: Size and Projections, 2009-2014 (in
billion $)
Category Size/Projections: Smart Appliances
 Table 7-6: Smart Appliance Category: Size and Projections, 2009-2014 (in billion
$)
Category Size/Projections: PHEVs and Fuel Cells
Smart Grid Investment Estimates
Factors In Future Growth
Overview
Imperative to Upgrade the Aging Grid
Sheer Marketer Power
Technology Drivers
Ecological Driver: Climate Change
The Grid and Weather-Related Incidents
Ecological Driver: Resource Limits
Inhibitors: The Economy and Consumer Demand
Political Drivers
Government Stimulus
Regulation
Rule Changes Rewarding Efficiency

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