If you drive a car, it is likely that you can quote the miles per gallon statistics for your vehicle. In some cases, you might even have a rough idea what your dollars per tank value is. But do you know your home’s peak electricity use per kilowatt-hour cost? In other words, do youknow the effect of how what appliances you use and when you use themcost you?
Toyota’s Prius introduced the mass-market concept of providingrealtime and longer term data about how driving habits impacted fueluse. In summer 2008, when record gasoline prices were at the pump,America became obsessed with miles per gallon and gained a clearunderstanding of a dollars per tank value. Since then, many majorautomakers have incorporated their own versions of either an average or realtime mile-per-gallon readout to new vehicle models.
Part of the reason why connection between the use and cost is easier to make with autos is partially because consumers pre-pay for theirenergy and partially because they prepay for this energy frequently, on average three times per month. What if Americans prepaid for their electricity like their gasoline and had access to realtime information about how their electricity isbeing used? Would this information help provide not only a deeperunderstanding for the value of electricity, would it also help create a better understanding of the value of residential solar energy?
While prepay electricity service in common in other parts of theworld like Central America, rural United Kingdom, South Africa, andmany others, it is a relatively newer entrant to the US marketplace,where it is currently targeted toward customers with poor credit or who have had hard time keeping up with their bills. According to a recentarticle by Greentech Media, some prepay electricity services are available in Arizona and North Carolina.
In Texas, the First Choice Control First program couples Smart Meters with the prepay program to help customers plan and make informed decisions about theirelectricity use. Until this program rolled out, most prepay retailersestimated how much a customer used, rather than tallying exactly.Prepaid customers wanting to conserve didn’t see much immediatebenefit, and had no feedback telling them when their accounts would hit zero. With the prepay and Smart Meter coupling, prepaid homeelectricity consumers can begin to gain a better understanding of their realtime and average energy use vs. cost statistics.
So why does this all matter?
In the 1950’s, total residential electricity usage in the US was 288 billion kilowatt-hours. In 2001, household electricity use was four times that at nearly 1,140 billion kilowatt-hours and quickly growing since. Growing demand for electricity has createdurgent need for new generating capacity often times meaning thebuilding of more coal, natural gas, and possibly nuclear generatingfacilities. Or, utilities need to prioritize putting aggressiveconservation strategies in to place to reduce the need for newgenerating facilities.
A study released in February this year conducted by Lawrence Berkley National Laboratory of Oklahoma Gas& Electric (OG&E) customers showed that people willsignificantly conserve electricity during peak demand if given priceincentives and tools to modify usage. According to a 2009 study filed by the Federal Energy Regulation Commission, if 60 to 75 percent of customers stay on dynamic pricing rates orparticipate in demand response/reduction programs like Smart Meters,the nationwide reduction in peak demand would be 138 GW by 2019,representing a 14% reduction in peak demand for 2019 compared to ascenario with no demand response programs. This would equate toavoiding construction on many generating facilities.
According to Ken Devore, director of Southern California Edison’s SmartConnect program, US utilities have deployed more than eight million smart meters with 60 million expected by 2020. This represents a significantpotential for prepaid electricity programs to roll out nationwide andemerge into a wider marketplace outside of the traditional credit-poorconsumer markets. If marketed correctly, these programs could helpconsumers better understand the cost of the electricity usage in thecontext of appliance usage.
As a corollary, this has a great potential to better contextualizethe value of designing residential solar energy as a conservationmeasure that can reduce demand during peak hours of use, as opposed tomany more traditional solar design approaches which aim for bestyear-round production. At the recent Greentech Media Solar Summit, Fong Wan, VP of Energy Procurement for PG&E, delivered a keynoteoutlining how predictability of output and the buffering and storing of output from solar and wind resources would be key to their growth as viable energy generation options. As the penetration of solar becomesmore dense on the grid, utilities will likely begin to require morestringent requirements for how the output of those systems, fromresidential up through utility-scale solar, match the demand fromenergy consumers.
At least on the residential side, prepaying coupled with thefeedback from Smart Metering could have an enormous potential torevolutionize the design and understanding of the value of home solarenergy systems.
Illustration Credit: Christian Science Monitor/Bennett