Philip Lewis and his VaasaETT consultancy have undertaken what is described as the first global survey of smart grid project ROI. While most of the analysis has been done, the final report has yet to be released. Lewis will be sharing some preliminary findings at Ventyx World on Wednesday, June 12 in San Francisco, but I spoke with him recently about smart meters, regional differences and the persistent importance of good customer communication.
Q: Most people in the US, even within the industry, would probably equate smart grid with smart meters—is that true in other regions as well?
A: There is definitely a stronger relationship in public perception between smart grid and smart meters in the US, but there’s a reason for that. The US programs we looked at are primarily concerned with improving the efficiency, resiliency and cost impact of the electrical system. That puts the focus on the distribution level, and therefore also on meters. European programs tend to be more about integrating renewables and “greening the grid,” or with improving cross-border interconnections. Those priorities have implications more at the transmission level.
Q: Can you have a smart grid without smart meters?
A: The short answer is, “yes.” There are some smart grid projects that don’t include meters. They get their data from other sensing technologies, often in very creative ways. Customer-focused applications, though, typically do involve smart meters so those projects that don’t include meters are usually more grid-focused and “invisible” to the end user of electricity.
Q: Utilities in the US have faced significant challenges in communicating the benefits of smart meters and of smart grid more generally. How do the successful initiatives gain public support?
A: Well, to begin with, the US consumer is far more trusting of his or her utility than the average European. In fact, there was a survey done in Sweden that put power companies 25th out of 26 industries. That’s due in part to some heavy handed pricing practices—and we’ve seen that in Australia as well as Europe—but also there simply isn’t the same level of engagement between utilities and customers in Europe when it comes to smart grid. Regardless of where the given project is going on, though, the programs that succeed are the ones that reach out to customers from the beginning, even before any equipment is deployed. It’s much easier to build customer support by bringing them into the fold at the outset.
Q: Is there a difference in how commercial and industrial customers are treated versus residential?
A: Yes, generally speaking, larger customers are seen more as partners, and the customers themselves see the utility as working with them. At the residential level, the communication from utilities may not hit the right messages and that can really derail what otherwise might be a good program with very real consumer benefits.
Q: So, what makes for a successful smart grid project?
A: There is a very wide range of programs we are examining in this study in terms of both cost and scope so it’s hard to generalize. That said, we find again and again that the most successful projects from an ROI standpoint tend to be the most comprehensive. They may or may not involve smart meters but they all come out of a deliberative process that is more holistic in its approach. Flexibility is also key. Customers expect the network to respond to whatever demands are placed upon it, and this I think is where utilities can bring them into the process by making it clear that what they’re doing is building a future-proof grid that will meet those expectations. There will be benefits for both the utility and the customer, but it’s essential that that balance be communicated from the beginning.