Selling the Smart Grid: A Report from the Front Lines

Anne Evens is executive director of CNT Energy, a Chicago-based “think-and-do tank” that drives ideas and action in such areas as dynamic electricity pricing, building performance, and regional energy planning. Since 2007, CNT Energy has managed pilot real-time energy pricing programs for both of Illinois’s electric utilities, Residential Real-Time Pricing for ComEd and Power Smart Pricing for Ameren. This past fall, based in part on those results, the Illinois General Assembly passed legislation to develop a $3.2 billion smart grid statewide over 10 years.

What role has CNT Energy played in the dynamic pricing of electricity?

CNT Energy pioneered residential real-time pricing (RRTP) in the United States, and we now run the largest electricity-pricing program in the nation (Illinois’s). We started working with a small group of customers, a couple thousand, in 2003 to see if the concept of hourly pricing could benefit residential customers. And we found that it could: customers as a group saved 10-15 percent on their bills. Annual evaluations have found that those savings are maintained over time.

Could the types of customers who participated skew the resulting savings?

We saw broad participation from all demographics, and they all benefited. It’s really a question of where the marketing was directed that we saw participation. Customers were interested in reducing their bill, reducing their environmental footprint, or were interested in how they used energy.

What sort of patterns of usage did you see?

Typically what we did was educate people about price patterns. Like most other commodities, when there’s high demand, prices go up. So in the hot summer months, residential and commercial air conditioner use go up. Prices are lower in the winter, typically, when there’s less energy consumption.

We found that just by engaging people and getting them to think about how they use electricity (like sending alerts when use and cost are at their highest), they shifted their peak demand.

What lessons have you learned?

The key finding is that residential customers are interested in choice. They understand that prices are variable and that they can benefit from pricing structures that motivate them to shift their consumption and reduce their load.

In Illinois, because of the smart grid legislation, millions of new customers will be using real-time pricing, whether they like it or not. What challenges does that present?

The main challenge will be to communicate well and clearly with customers. Things change quickly, and a lot of people still don’t have a sense of what a smart grid is. That will take some time and repeat messaging. The other thing is that in our deregulated market, you see a lot of alternative retail energy suppliers (ARES). So clear and consistent messaging there will also be really important.

We’re hopeful that funding will be used to provide that messaging.

What advice do you have for smart grid advocates looking to increase participation rates in voluntary RRTP programs?

That it’s really important to design programs with end users in mind. A lot of times these programs get designed from the utility’s perspective. The program has to be simple to use, and you have to provide the information tools, but the struggle is really with the right information. You don’t want to overwhelm people. Teach customers about the data and then give them access to more information if they want it.

Also, offer regular, monthly updates on what customers are saving. For people who are running pilot programs and want to expand, the realization is that you have to have a large enough scale to have impact.

What’s the future for smart grid technology?

There has to be investment in our infrastructure. In order to make significant headway in clean energy and efficiency, we need improved technology. We also need to improve the reliability of our grid. I think it’s inevitable. It’s important that we all work together to design a system that works for consumers and not just utilities. The other huge opportunity for improved infrastructure is the ability to make clean-energy technology and renewables more cost-effective.

Feature photo:  cc/Linda Cronin