Will cyber-sensitives reveal the future of energy efficiency?

By Elisa Wood

February 29, 2012

The US economy is three times larger than China’s, yet when it comes to developing a clean energy industry, China keeps besting us. The US came in second – again – to China this quarter in Ernst & Young’s much-watched renewable energy ranking released February 28.

But there is one clean energy segment where the US leads: demand response.

Demand response comes into play when there is high demand for power straining the electric grid, usually hot summer days. Utilities or grid operators give factories and other businesses a payment in return for decreasing their energy use during these peak periods. As a result, demand response not only averts blackouts, but also saves us money, since it is far cheaper to conserve energy when the grid is strained than it is to generate more power.

An American-grown industry, demand response is now gaining international attention. EnerNOC, a Boston company that provides demand response services, finds itself increasingly explaining the concept abroad, according to Gregg Dixon, senior vice president of marketing and sales. The company now serves about 12,000 businesses, colleges, hospitals and other large energy users, not only in the US, but also in Canada, the United Kingdom, Australia and New Zealand.

Other demand response companies, Comverge, Johnson Controls, Silver Spring Networks, Wipro and Honeywell, also report international expansion, according to Pike Research, which expects the $1.3 billion global market for demand response to see a compound annual growth rate of 37% by 2016.

So demand response is clearly a success story, at least when it comes to reducing use of energy by companies and large institutions. The next frontier for demand response is the homeowner. And unfortunately, that might be a tougher market to crack. The average person shows little interest in taking the time to cut back on energy use during peak periods.

“The concept from an economist’s point of view makes sense. But unless it is managed for us in a very simple way, I just don’t see people using it. And I’m a zealot on this stuff,” Dixon said.

A recent report by the American Council for an Energy-Efficient Economy underscores the problem. It turns out homeowners aren’t saving a lot of energy, even when new energy gadgets give them real-time feedback on the costs.

These home gadgets, which include display monitors, smart meters, and web interfaces, are meant to encourage people to cut back during peak periods, when energy prices are high. But ACEEE found homeowners achieved only a 3.8% overall savings in nine pilot programs it studied. Four of the pilots showed peak period savings of up to 11.3%. The programs were conducted in the US, UK and Ireland.

There is, however, one intriguing exception, a group that does respond. ACEEE isn’t quite sure who they are, but calls them cyber-sensitives. They do not fit into any one demographic box; they are not a certain age or income. But they represent a swath of the population that achieves energy savings of up to 25% when given devices that offer them real-time feedback on their energy use.

Some in the energy industry believe household demand response will never be accepted beyond the cyber-sensitives. Others see this group as a starting point for further study that may reveal what encourage us to save energy, whether it is costs, comforts, green altruism or even an emotional or intuitive response to technology, says ACEEE.

It’s hard not to draw a parallel between these energy information gadgets and the early days of personal computers. At first the computer was viewed as a device that would largely be used in business, much as demand response is today. Then came Steve Jobs and we all know the rest of the story. If demand response companies can capture the attention of households, as they have businesses, maybe the US will find its got its new Apple.

Elisa Wood is a long-time energy writer whose work can be found at RealEnergyWriters.com

Looking forward to the day smart grid dies

By Elisa Wood
May 25, 2011

The title of this blog might strike you as kind of weird, especially this week. After all, the Electric Power Research Institute made the news with a study showing that smart grid is going to be far bigger than we first thought.

Smart grid in simplest terms brings to the electrical grid the digital intelligence of computers and the Internet. Just seven years ago EPRI expected smartening the grid to cost $165 billion. But its new report says that the 20-year investment may be nearly three times as high, $476 billion. That’s a lot of new business for utilities, information technology companies, smart grid vendors, engineering firms, demand response providers, and the myriad of other enterprises that can help with this massive rebuild and reboot of the US power system.

Most important, the benefits to society will far outweigh the costs, possibly amounting to $2.028 billion, EPRI says. To put that in perspective, if we do not smarten the grid, the average electric bill will probably rise by 400 percent over the next two decades; if we do, it will likely go up by only 50 percent, according to Clark Gellings, EPRI fellow, quoted in a Fox News article.

Smart grid will bring enormous efficiency and new function to the way we generate, distribute and use electricity. I won’t go into details here but imagine (if you are old enough) the capabilities of today’s home computers compared with the typewriters they originally replaced. That’s the kind of technological leap smart grid promises for the entire electrical system.

So why has EPRI pushed up its estimate of smart grid costs? Inflation played a role. But the larger reason is that smart grid, well, just keeps getting bigger. Initially energy planners envisioned smart grid bringing better efficiency, reliability, security and other features to power production and delivery. But they’ve realized that smart grid can do a lot more than that. Smart grid can help integrate renewable energy, cut our electricity use, exploit full potential of the electric car and create new power storage opportunities.

Smart grid even appears to be paving the way for consumers to manage their energy use through energy home automation – should it take off. Skeptics say it won’t. They doubt any but hardcore conservationists or Scrooges will want to get into the nitty-gritty of aligning their home energy use with the rise and fall of power prices daily. But again, going back to the home computer analogy, the common refrain 30 to 40 years ago was that few people would bother buying a home computer. Maybe a computer would have value for writers, engineers or those with home offices. But otherwise why spend the money? And today, of course,hardly an American is without one. Most of us did not envision how much the computers could offer us back then; we may be short-changing smart grid the same way.

So now that I’ve explained the wonders of smart grid, why do I say I look forward to its demise?

Not long ago I listened to a Green Builder Media’s webinar with Guy Kawasaki, a VC and author of Enchantment: The Art of Changing Hearts, Minds, and Actions. Kawasaki talked about the kind of customer service and marketing that makes a business ‘enchanting.’ One word of advice, he said, is that builders should stop marketing themselves as ‘green.’ Why? Because being green, he said, is no longer a service that is above and beyond customer expectations. Its commonplace; the perception is that every builder is green or at least should be. (Note that he lives in California.)

Some day this will happen to smart grid. The big box stores will stop slapping ‘smart’ on appliances, since they will all be smart. Utilities will no longer install smart meters. Just meters. Studies will no longer appear measuring the size of the smart grid. Its intelligence no longer an oddity, we’ll drop the ‘smart’ adjective. When the smart grid simply is the grid, then this industry will have arrived.

See “Exporting US Energy Efficiency,” by Elisa Wood and Lisa Cohn athttp://www.realenergywriters.com/products/.

Northeast US a smart energy testing ground

By Elisa Wood

August 19, 2010

Ben Franklin’s saying, “Out of adversity comes opportunity” seems to characterize the energy sector in US Northeast. Electricity rates are among the nation’s highest. Population density leaves scant room for new power plants and transmission lines. And the region has little indigenous generation fuel.

So what’s the good news?

“This is why a very large and well spent push for energy efficiency and energy conservation has taken place in the Northeast,” says Ron Tabroff member of the Institute of Electrical and Electronics Engineers (IEEE) and former chairman of its Power & Energy Society, Boston Chapter.

In fact, the Northeastern states make up a large portion of a thriving East Coast energy efficiency market, spurred by about $8.6 billion in incentives being distributed by utilities and state and local governments, according to “Energy Efficiency Incentives for Businesses 2010: Eastern States” by RealEnergyWriters.http://www.realwriters.net/rew/rtlnkpr.htm

IEEE is an organization known for its love of technological advancement – it publishes nearly a third of the world’s technical literature in electrical engineering, computer science and electronics. So it is little surprise that IEEE has a keen eye on the emerging smart grid and the new openings it creates for energy efficiency.

Real-time meters, appliances that ‘talk’ to the grid, and other smart applications offer both macro and micro remedies to the kind of strain and high prices faced by the Northeast electric grid, Tabroff says.

On the macro level, if these devices curb peak usage of electricity, they should result in less need to build and operate expensive peaking generators. That means less pressure to raise electricity rates, now up to 19.4 cents/kWh for households in Connecticut, the Northeast state with the highest rates and second in the nation to only Hawaii.

On the micro level, the consumer will have the ability for the first time to purchase electricity on sale. Digital displays placed in the home will reveal the ups and downs in electricity pricing over the course of the day. You can choose to do your laundry when it’s cheap, or cut back on air conditioning when electricity prices are high.

Smart meters are now making their way into Northeast households through pilot programs. A big question to be answered is whether or not people will take the time in their busy lives to act as personal electricity managers. Tabroff is confident consumers will as they “make the link between these devices and their electricity bill.”

And if they do not, no worries. Down the road, technology geeks are figuring out how to solve that one too. The next wave of smart electrical devices will act as our personal electricity shoppers. These include refrigerators programmed to defrost when electricity prices are cheap and dishwashers instructed not to turn on until the electric grid offers up a good deal.

The opportunity is great for engineers and energy service companies in the Northeast, where support is strong for new smart energy programs . The large investment the region is making into these technologies make it a testing ground. It’s a region for the world to keep an eye on.

Visit www.realenergywriters.com to pick up a free Energy Efficiency Markets podcast and newsletter.

How well is clean energy weathering the recession?

By Elisa Wood

March 5, 2009

The clean energy industry may not be popping the champagne cork, but it is at least holding the bottle in hand. While not unscathed by the recession, the industry sees growth in several sectors, according to recent reports.

For example, use of smart meters—a key technology for better energy management and efficiency – is increasing at a rapid clip. A study by ABI Research, “Advanced Metering Infrastructure (AMM and AMI),” forecasts that the number of smart meters installed worldwide will reach 76 million this year, up from 49 million in 2007. Smart meters will benefit from an estimated $4.5 billion that the US plans to spend on smart grid initiatives as part of the federal stimulus package.

“We don’t think that the economic crisis is having a significant effect,” says Sam Lucero, senior analyst for ABI Research. “Utilities’ smart metering deployments are typically multi-year plans developed in the context of regulated market environments, and not terribly susceptible to short-term economic fluctuations.”

Press reports indicate that two other energy-cutting products are poised for significant growth this year. Moneynews.com quotes analysts who say demand response companies are likely to see recovery in 2009 following a dramatic fall in stocks of some leading companies. Meanwhile, industry insiders say they expect continued expansion for combined heat and power, a resource that has won new federal tax incentives and state support. See my article in the January/February issue of Cogeneration and Onsite Power Production magazine for more details.

Not all the news is good though. Greentech Media and the Prometheus Institute for Sustainable Development project that the global market for photovoltaics will shrink 15% this year to $12 billion. This is solar energy’s poorest performance since 1994, according to the report. At the same time, Lux Research says this year’s solar shakeout – caused by oversupply of cell and module capacity – will push solar prices closer to grid parity and precipitate expansion.

Meanwhile, expect to read a lot more about the clean energy sector in the coming year. William Brent’s Search for Cleantech reports that members of the media foresee heightened coverage of the cleantech sector in 2009 (and it certainly wasn’t light coverage last year.) Seventy-five percent of bloggers, mainstream newspapers, magazines and broadcasters surveyed say readers and editors will demand more coverage of the sector. So while the champagne may not be flowing yet, the information certainly is.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Electricity use falls because of efficiency

By Elisa Wood

October 30, 2008

Electricity sales can gauge the national economic health. An ailing economy uses less electricity because is produces fewer goods and services. Sometimes, however, electricity sales fall for a good reason – efficiency.

Such is the case in the United States, according to a recent statistics released by the North American Electric Reliability Corporation (NERC). The organization annually assesses how well the grid is likely to perform over the next several years.

The 300-page report has a lot to say, but this headline jumped out at us: Demand Response Projected to Offset Nearly 80% of U.S. Peak Demand Growth in 2016; Significant Growth in Energy Efficiency Projected.

NERC forecasts that North America will offset 34,000 MW through demand response – a kind of efficiency program where customers are paid to reduce energy use when the grid is under strain. In addition, conventional energy efficiency programs are expected to cut electricity use by 11,000 MW. As a result, total electric demand will drop 3.3%, NERC said.

Demand response will become “a critical resource” to help us keep the lights on over the next ten years, according to the report. Our economy is becoming increasingly electrified, but we are unwilling to build more energy infrastructure. “Many coal plants have been deferred or cancelled, nuclear plants are becoming more and more expensive, and transmission lines increasingly difficult to site,” NERC said. Demand response will help bridge the gap between our electricity needs and our power resources.

Further, demand response is a good “dance partner” for wind energy, a resource that NERC forecasts will grow 750% by 2017. Wind farms offer a clean source of energy. But they only create electricity when the wind blows. Demand response can serve as wind’s partner during these times, reducing energy use to make up for the loss and averting a greater ramp-up of fossil fuel generators.

Our demand for electricity will still grow over the next several years, as our use of computers, cell phones and other electronic devices increases — but not as much as we had thought. Last year, NERC forecasted a 17.7% growth in summer peak demand; this year it puts the figure at 16.6%. The organization attributes much of the change to efficiency. We’ve figured out how to do more with less, a good economic move.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

What's Cool about Air Conditioning

By Elisa Wood

July 24, 2008

Conservationists often mock Americans for their love affair with the car. But the air conditioner appears to be a growing rival for our affection.

Twenty years ago only about one-quarter of US residences had central air conditioning; by 2005 it was up to 62%, according to the United States Census Bureau. http://www.ahrinet.org/ARI/util/showdoc.aspx?doc=703.

As a result, for a handful of hot days, we use enormous amounts of electricity. We must build expensive power plants to ensure that we have enough electricity to run the air conditioners, even though the power plants aren’t needed for the rest of the year. Our grid operators usually use the least expensive power first. But with demand so high, even the dirty and high priced plants are called upon. With everything running full tilt in the heat, the system is vulnerable to outages.

The problem reveals itself again and again each summer, most recently last weekend in New York City, where Consolidated Edison found itself delivering dry ice to keep Brooklyn customers cool after they lost power. A heat wave sent demand for electricity soaring to the second highest level on record.

I live in the southeast, so I am as enamored with the air conditioner as anyone. The good news is that the energy efficiency marketplace is spurring innovation to help avert grid problems brought on by our use of central air conditioning.

One rapidly growing innovation is demand response, which offers businesses payment to limit electricity use when the grid is under strain, reducing the likelihood of power outages. Companies might dim lights, delay expensive manufacturing processes until a time of day electric demand is lower, or engage in other energy reduction strategies. The approach is becoming so popular, hardly a week goes by without word of new major demand response deal. For example, EnergyConnect, an Oregon-based demand-response provider recently signed up Yahoo! As a result, when demand peaked July 10 on the PG&E system, Yahoo! reduced power its electricity use at its corporate headquarters and data centers in northern California by 1 MW, enough power to serve 750 homes. http://energyconnectinc.com/news/press-releases/2008/07/microfields-energy-connect-launches-relationship-with-yahoo/

On the other side of the country, in New England, demand response is also becoming increasing important. In fact, ISO New England reports that demand response makes up 10% of its resources (the majority of other resources are power plants) and the number could grow to 13% by 2011. http://www.iso-ne.com/nwsiss/nwltrs/outlook/2008/outlook_july_2008.pdf

In addition, central air conditioners are being built to better and better efficiency standards. Their efficiency has increased a minimum of 30% over the last two years, according to the Air-Conditioning, Heating, and Refrigeration Institute. This efficiency, however, can be lost if the air conditioners are not installed and maintained properly and used conservatively. To help solve this problem AHRI, utilities, energy efficiency groups and others recently created the 2 Degree Pledge http://www.2degreepledge.org/. The campaign encourages consumers to reduce thermostat temperatures two degrees in the winter and increase them by 2 degrees in the summer. The site also offers customers a zip code search of certified air conditioning technicians.

It looks like our love affair with the air conditioner isn’t going away any time soon. Eighty-nine percent of new houses completed in 2006 had central air, according to the U.S. Census Bureau. Air conditioners, like computers, cell phones and other electric gadgets are bringing about a new round of electrification in our society. They make life easier and more productive. Let’s make more of them – and more ways to use them efficiently.

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast.

Efficiency Guru: The Behind-the-Scenes EE Revolution

By Reid Smith & Elisa Wood

When consumers open their electric bills and see rates going up and up, it’s natural for them to ask, “Why isn’t anything being done?” Truth is, an enormous behind-the-scenes revolution is taking place when it comes to energy efficiency.

To get an inside look, we recently spoke with one of the industry’s long-time gurus, Steve Cowell, chairman and CEO of Conservation Services Group in Boston.

Much of the action is happening on the state level where industry players are hammering out ways to lower costs by reducing energy consumption. In most cases, the goals are aggressive and could increase efficiency investments by 2.5 to 3 times what we have today, says Cowell.

Industry insiders often talk about efficiency as the invisible power plant. If you need 50 MW of new power, you can build a new generating facility. Or you can find ways to reduce energy use by 50 MW. That’s like building a virtual power plant. The virtual power plant saves ratepayers money because a 1% reduction in load during high peak periods can reduce wholesale electricity prices by 10%, according to the Electric Power Research Institute.

Cowell sees three ground-breaking efforts in the works to increase the use of efficiency: portfolio standards, procurement, and demand resources in forward-capacity markets.

Energy efficient portfolio standards require electricity providers to meet a set amount of their annual demand through efficiency measures. In other words, the state decides to cut back on energy use by say 15% by 2015 -- the goal set by New York. State officials then work out a regulatory or legislative strategy to reach the goal. This isn’t always easy. What programs should the state push to encourage more use of efficient light bulbs by homeowners, better refrigeration in supermarkets, smart meters by businesses? And who should be in charge of the programs: utilities, a state authority, cities?

A second way to implement energy efficiency is to use the so-called procurement approach. Some people describe this as making energy efficiency the “first fuel.” When a utility needs more power, it must look first at increasing efficiency. “If there’s something cheaper on the efficiency side, you’d have to buy that first,” Cowell explains.

The third approach involves using energy efficiency—such as demand resources—in a forward capacity market. The objective of the forward capacity market is to purchase sufficient capacity to operate a reliable system for the next year at competitive prices. Traditionally, only power generators were allowed to bid in such markets. But ISO New England recently allowed demand resources to compete head-to-head in its auction. Two-thirds of the selected resources were demand resources. This was a huge “win” for energy efficiency in New England, says Cowell. (See our March 6 newsletter, Blog: “Negawatts beat megawatts in New England,” March 6, www.realenergywriters.com)

Whatever method states choose to bring more efficiency to the power grid, the goal is the same. “At the end of the day, when a customer is looking for help to lower their energy use, they will see a unified plan, easy to use, with known technologies,” Cowell says.

For businesses and consumers who are seeing their electric bills skyrocket, we hope that day will come sooner rather than later.

Visit Reid Smith and Elisa Wood at www.realenergywriters.com and subscribe to their free Energy Efficiency Markets newsletter.