PROJECT EASY GREEN

Not too far in the future, the refrigerator will be able to tell you if your food is spoiling or text you if you left the door open. A robotic vacuum can feed the dog. The washing machine can steam dry your clothes overnight.  Additionally, many of these next generation appliances will also be able to communicate back to smart meters to take signals from utilities and turn themselves on at night when energy prices are low, or enable homeowners take part in demand response programs.

Intelligent people working across the smart grid space regularly tout the promise of smart appliances. The cheerleaders argue that it is just this sort of technology that will seamlessly allow the average American to reap some of the benefits of the smart grid. People will be able to enroll in programs to save energy while saving money. It all sounds glorious. But it’s being completely oversold.

Smart appliances are cool — very cool. The first wave coming on the market this year is also very, very expensive. It will likely be years, if not decades, before these models make it into the bulk of American homes. New EnergySTAR appliances, often far more affordable though less intelligent, are significantly more efficient than their counterparts from even five or 10 years ago. It is far more likely that products like electric vehicles and plug-in hybrids, which are currently only trickling into a few garages, will reshape the average person's relationship with their utility more than a Wi-Fi-enabled dishwasher.

The broad gains that can be had through improving efficiency for most appliances do far more for peak shaving than the ability to shift the loads to the evening. Standards that have been in place since the 1980s have reduced peak demand by at least 15 percent compared to the situation that would exist if there had been no standards, according to the Appliance Standards Awareness Project.

While there is a coolness quotient and a convenience factor that will come with the ability to set the dryer or defrost cycle to run at night, the advantage of these machines communicating to the utility is limited, because, with a few exceptions, appliances simply aren’t the energy hogs they used to be.

“How many do you have to control to get some real benefits?” asks Andrew deLaski, Executive Director of the Appliance Standards Awareness Project. “If you’re talking about fridges and dishwashers, you’re going to have to touch an awful lot of them.”

A regular top-loading washing machine on the market (EnergySTAR Qualified, but priced the same as many that are not) uses about 160 kWh per year — at an estimated cost of $12 to $17 annually. Fancier appliances that are more efficient and/or have technology to wash clothes as well in cold water as they can in hot water use even less energy. Top-of-the-line models can easily run into the thousands of dollars.

Offering smart features is often about differentiation, and not about cost savings or smart grid capabilities, according to deLaski. He says the real price of appliances has not increased substantially in the last few decades and so manufacturers are looking for other ways to make their products shine on the showroom floor.

If the cost is low enough, Wi-Fi or ZigBee-enabled communications capabilities will be put into most models sooner than later. In the short term, however, most consumers will make purchases based on EnergySTAR ratings and other smart features, and not based on whether the dishwasher can talk to the utility. For some buyers, the tipping point may be just one cooler add-on.

One area where standards — and potentially, smart features — could have more impact is in air conditioning. Central AC is the single biggest electricity user in most homes, and the models today already use 30 percent less than models from 2000. New standards are coming in June that will cut that figure by another 8 percent, said deLaski.

Even with the latest standards, communications devices that would allow utilities to adjust air conditioning compressors could reap real benefits for peak shaving. The Sacramento Municipal Utility District is doing just that. Dave Watson, Smart Grid Lead at Lawrence Berkley National Laboratory, said they were working on pilots with SMUD to cycle compressors off while leaving the fans running in 20-minute increments so that comfort wasn’t sacrificed. It is these sorts of no-brainer home smart appliance applications that are likely to get market uptake in coming years.

Another area where vast improvements in standards could reap tangible benefits for peak, without people having to do anything, is water heaters, according to deLaski. Standards that were issued by the Department of Energy last year will address some of those issues, he said.

The increased efficiency achieved through standards improvement holds a lot of promise. DeLaski noted that although refrigerators have gone through five new standards since the late 1970s, the most recent one still saw another 25 percent improvement from the preceding standard. “There is the potential for additional improvement” across most appliances even today, he said.

Would a Wi-Fi chip in each and every appliance in America help shave peak if everyone participated? Sure. Should these new and expensive appliances be held up as the convergence of smart grid and the home? Probably not. The choice, control and visibility that consumers will have with new home technologies in coming years are not to be underestimated — just don’t hold up the smart dishwasher as the finest example of them all. Besides, efficiency improvement might be easier than changing consumer behavior. “The standards are going to happen,” said deLaski, “and they’re going to develop peak savings.”

In the meantime, at least the vacuum can remember to feed the dog.

During a break at The Networked Grid, a programmer from a utility in Australia offered up a story about an unnamed utility that was giving away iPads as part of a pilot to help people track and reduce their home energy use. Some people in the pilot returned the iPads, as they couldn’t believe the utility would offer something for nothing. They were sure that the cost of the iPad would eventually show up on their bill.

Although the details of that particular story are fuzzy, the lack of trust that most consumers have in their utilities is crystal clear. There is more than a whisper that utilities might be left just holding the wires while other companies cash in on goods and services that the smart grid will enable. To make sure that doesn’t happen, there will need to be a revolution in the relationships between most big utilities and the people they serve.

“Who does the customer trust?” asked Chris Villarreal, Regulatory Analyst in the Policy and Planning Division for the California Public Utility Commission.  “People just don’t trust their utilities for one reason or another.”

When Nick Hunn, Development Director of Onzo, a U.K.-based company that provides customer solutions to utilities, talks to customers, he hears one message. “The first thing they say is they don’t trust the utility, the second thing they say is they don’t trust the utility, and then the third thing they say is they don’t trust the utility,” he said at The Networked Grid on a panel about dynamic pricing.

To combat that fact, many utilities have hired Chief Customer Officers — but there is still a chasm between top-level corporate speak and a meaningful change in how utilities interact with their customers. But some investor-owned utilities say they’re listening more than ever. “We hear from customers that they don’t feel they don’t have control over their bill,” said Karen Zelmar, Director of Pricing Products for Pacific Gas &Electric. Zelmar, who is looking at dynamic pricing options for PG&E customers, did not address the fact that the utility seems embroiled in a neverending public relations nightmare over smart meters.

Many large utilities are working on the trust issue — but the question is whether they’re moving fast enough. Ogi Kavazovic, VP of Marketing and Strategy for OPower, told Greentech Media that some of the utilities he talks to really don’t seem to get it. But that’s exactly what has kept things humming for business models like OPower. The company, which provides behavior modification techniques to help homes cut power consumption, can come in and offer tailored information to residents, allowing utilities to achieve reductions averaging 4 percent. There is a chance some utilities will never really 'get' their customers, but they’ll hire the people who do — such as OPower, Aclara, Google PowerMeter, eMeter or others (the list grows seemingly every day). The most successful utilities, however, will be the ones that integrate customer satisfaction into their organizational DNA.

Providing information is the first step for many utilities in rebuilding the trust with those that they sell power to — and then from there they could offer services to move far beyond efficiency gains in the single digits. The next step is keeping the ball rolling in a meaningful way. “So much of what happens is that people are engaged for one month, then they carry on how they were before,” said Hunn. “Being nice to the consumer is really important if you’re deregulated.” If the utility isn’t nice enough, there are plenty of companies waiting in the wings to fill that gap.

Two weeks.

That is the average duration between the time when a consumer gets a smart thermostat for controlling energy use in their home to the time when they begin almost completely to disregard it, according to Recurve co-founder Matt Golden.

Recurve’s data point — which the company obtained as part of an effort to better understand home energy habits — was an early signal in 2010 that home area networking or HAN was going to be tougher than expected. Back in 2004 and 2005, many companies claimed consumers would cut their bills by 5 percent to 15 percent if presented with timely, accurate data from LCD screens or other devices and ways to control their appliances.

The figure turned out to be ambitious. Last May, Accenture unfurled a study that said consumers spend only six minutes a year studying their utility bill.

Meanwhile, vendors like Silver Spring Networks and Tendril began to phase out or minimize HAN hardware (like in-home screens) in favor of smart phones to cut costs. VCs like Vinod Khosla began to say that home networking would become redundant with the advent of super-efficient appliances. Microsoft this year began to shift out of home automation and into commercial buildings.

Concurrently, HAN-less concepts began to gain ground. Opower gets consumers to reduce power consumption by 2 to 3 percent by sending them simple reminders — no household hardware required.

“This is how 90 percent of us will experience the smart grid,” Ogi Kavazovic, vice president of marketing and strategy told us back in February. “The 2 percent to 3 percent is without smart meters.”

Dynamic pricing and prepaid bill programs can help, too. Consumers on prepaid programs with the Salt River Project, the Arizona utility, curb their bills by up to 8 percent, according to David Green, executive vice president, customers and markets, of Elster Solutions. Their behavior is adjusted through information but without HAN hardware.

So is HAN dead? Some hardware devices might be, but HAN as a concept isn't. The opportunity is too great. Homes consume approximately 20 percent of all of the energy in the U.S. — and that energy isn’t generally used efficiently. Khosla is right: new appliances will be far more efficient. But that won’t prevent someone from leaving the light on in the garage. Shifting clothes drying and refrigerator defrosting to off-peak times and turning down heaters will require some form of HAN-like intelligence.

Demand response programs, incredibly popular with regulators and utilities, have only touched a small fraction of the population, and DR is really just HAN as a service. In the same Accenture study, 52 percent of consumers said they’d cede some thermostat control to utilities if it would cut their bills by 20 percent or more.

DR programs have another huge, inherent advantage: utilities pay for the hardware. Deregulation — separating power production from retailing — will also bring service expertise and customer demographics to power delivery. Simply put, a retailer might be more willing to try home automation and DR-like efficiency programs than utilities. Marks & Spencer, the famed London department store, has started to offer solar and efficiency services.

"It's not a matter of whether home energy management technology will fly; it's a matter of what form it will take and how it will be delivered. There's a lot of activity in the sector. A lot of different delivery models and form factors are being tested. Consumer engagement is key. The winners will be the ones that deliver good savings and great user experiences,"  says Chet Geschickter, Smart Grid Analyst at GTM Research and author of a recent HAN research report.

It’s going to be a subject we debate at The Networked Grid on May 4 in San Francisco. Participants include Adrian Tuck, CEO of Tendril, Eric Dresselhuys of Silver Spring, Greg Guthridge of Accenture and Ogi Kavazovic from Opower.

Hope to see you there.