Monday, November 3, 2014

California Net Metering Debate

August 2014 - Added Def. Value of Solar
October 2014 - Added link to LBL Study Financial Impacts of Net-Metered PV on Utilities and Ratepayers: A Scoping Study of Two Prototypical U.S. Utilities

The solar industry and the state’s utilities disagree over just what impact net metering has on electricity rates, utility costs and grid operations.




Navigate this Report
Back to Markets & Pricing Index
1. Background

2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Criteria
7. Next Steps
8. Companies/Organizations
9. Links

1.Background
  • AB-327the controversial California bill that tackles residential electricity rate reform and solar net metering policy in one fell swoop, was approved by the state Senate on Sep 9, 2013 and the Senate revisions passed the Assembly on Sep 12.   Gov. Jerry Brown has indicated his support.

  • Utilities have long argued that net metering doesn’t adequately compensate them for the costs they face in supplying solar-equipped customers with grid power while the sun isn’t shining. Too many net-metered customers could force utilities to raise rates on all non-solar customers, and eventually lead to a death spiral for utilities that end up paying out more than they’re taking in from their customer base. They argue that poor rate payers who cannot afford solar end up subsidizing rich home owners who have the capital to invest in roof top systems.

  • Solar advocates, by contrast, point to studies that show that net metering of distributed solar power is a net asset, rather than a liability, to the grid at large. Those benefits can stretch from lowering the average cost of electricity for all users, to helping meet the state’s aggressive goals to supply more and more of its power from renewable resources in the coming years.

  • Under current California low, Net Energy Metering (NEM) allows solar owners to roll their meters backward for every kilowatt-hour they send to the grid (up to the point where their bills zero out). The return they get on the electricity they generate is the same retail rate they pay for what they consume. Since the top electricity tiers are very expensive, solar can be very competitive.

  • NEM for California's IOU's is currently capped at 5%. Utilities and the CPUC have disagreed how the 5% should be calculated.

  • The California Solar Initiative was structured when it was launched in 2007 as a ten-step incentive program, and we are now at step ten. There is not another incentive program that will replace that.


2. Acronyms/Definitions

  1. ABx 1 - During the energy crisis, the Legislature passed ABx1 (Keeley, 2001) to protect California ratepayers from rampant price fluctuations due to a dysfunctional wholesale electricity market. ABx1 1 authorized the Department of Water Resources (DWR) to issue revenue bonds to purchase power at such prices the department deemed appropriate, on behalf of the cash-strapped investor-owned utilities (IOUs) which couldn't keep up with the volatile wholesale prices. Among other stabilizing efforts, ABx1 1 included a provision that prohibited the CPUC from increasing rates for usage under 130% of baseline(tiers 1 and 2) until DWR bond charges were paid off. Those charges continue.

    Because rates in the two lowest tiers were frozen, increased costs for generation, distribution, transmission and new programs created by the Legislature and the CPUC, have been disproportionately borne by those customers whose electricity usage falls in the upper tiers.

  2. SB 695 - In 2009 SB 695 (Kehoe) was signed into law as an urgency statute. Among its provisions, the bill removed the freeze on tier 1 and tier 2 rates and intended to allow for gradual rate increases through 2018 at which time the caps for those increases would sunset. Different formulas were created for Non-CARE customers and CARE enrollees.

    As a consequence, beginning Jan 1, 2010, the CPUC could grant increases in rates charged to non-CARE residential customers for tier 1 and 2 rates by the annual percentage change in the Consumer Price Index from the prior year plus one percent, but not less than three percent or more than five percent per year. Increases in tier 1 and 2 rates for the residential CARE program were statutorily tied to annual cost of living adjustments for CalWork's benefits not to exceed three percent per year. The IOUs were also permitted to add a third tier of rates for CARE enrollees. Prior to SB 695, CARE enrollees were subject to charges under only the first two rate tiers.

    The provisions of SB 695 resulted in three to five percent increases on tier 1 and 2 rates for non-CARE customers and resulted in a commensurate decrease in rates for tiers 3, 4, and 5. The rates for CARE enrollees in tiers 1 and 2 have not increased due to the suspension of COLAs for the CalWork's program, except for the addition of a third tier for CARE enrollees in the PG&E service territory. The rate adjustments, overall, were revenue neutral to the IOUs.

    In PG&E service territory the gap between tier 1 and tier 5 decreased by 17 cents, but tier 5 was still 2.65 times higher and 21.88 cents per KWh more.

  3. Rate History Since SB 695
    PG&ETier 1 Tier 2Tier 3Tier 4Tier 5CARE1CARE2CARE3
    Mar-1011.8813.5028.5642.4849.788.329.569.56
    Jan-1112.2313.9128.0138.9838.988.329.569.56
    Jan-1212.8514.6029.5233.5233.528.329.5612.47
    May-1313.2315.0431.1135.1135.118.329.5613.97
    .
    SCETier 1 Tier 2Tier 3Tier 4Tier 5CARE1CARE2CARE3
    Jan-1012.1614.1520.8224.3227.828.5310.6716.04
    Jan-1112.3514.3423.8027.3030.808.5310.6718.24
    Jan-1212.6015.5123.8027.3030.808.5310.6718.17
    Jan-1312.8515.9827.2231.2231.228.5310.6720.76
    . In the SDG&E rates which took effect on Sep 1 2013, the rates for tiers 3 and 4 increased more than 20% going to more than $0.34 per kWh in tier 3 and $0.36 in tier 4. A recent notice to customers from SDG&E's president reported the expected impacts - if a bill is now $250, then it will increase to $325 in September. A $100 electric bill will rise to $115. .

    SDG&E
    Tier 1 Tier 2Tier 3Tier 4CARE1CARE2CARE4CARE4
    Mar-1013.4115.4927.1629.1610.0511.7117.0817.08
    Jan-1113.8115.9528.1530.159.9611.6216.9916.99
    Jan-1214.3316.5824.8326.839.9511.6116.9816.98
    Jan-1314.7617.0824.5028.509.9511.6116.9716.97
    Sep-1314.7617.0834.6736.379.9511.6116.9716.97
    .
  4. SB 743 (Steinberg/Padilla) - modifies the index to which CARE enrollee rate increases are tied to strike CalWorks and add the Consumer Price Index.

    The rates for CARE customers in tiers 1 and 2 have not increased due to the suspension of COLAs for the CalWorks program. Consequently, assistance to CARE customers is far greater than intended.

    On Sep 12, the energy provisions were deleted and the bill was changed to streamline CEQA for a new downtown Sacramento sports arena.   Status: Passed Senate and Assemby Sep 12, 2013,

  5. AB 1755 (Perea, 2012) - authorized the CPUC to approve a fixed charge for residential customers beyond the statutory caps on rate increases for Tier 1 and Tier 2 customers. Status: Senate Floor Inactive File.

  6. CARE - California Alternate Rates for Energy - Program to discount rates for low-income gas and electric customers defined as those with incomes no greater than 200% of the federal poverty level and permits no more than three rate tiers.

    Currently, CARE customers are to receive a 20% discount off of their electric and gas bills. However, because of the cap on Tiers 1 and 2, the effective discount can be much higher if CARE customer is using more than 130% of the baseline allocation. In some instances, Pacific Gas and Electric (PG&E) has reported providing discounts in the range of 60% off of the otherwise applicable bill. (See IOU Charts below)

  7. Cross Subsidies - Recovering costs incurred by one group of customers from another group of customers. For example, California has an explicit policy to shift the cost of the CARE program discounts to all non-CARE customers

  8. Economic Efficiency - Obtaining maximum consumer satisfaction from available resources. In the rate design context, economic efficiency is achieved when pricing reflects the marginal cost of generating and delivering electricity, including externalities.

  9. Externality - A cost or benefit that is not included in the market price of a good because it's not included in the supply price or the demand price. Pollution is an example of an externality cost if producers aren't the ones who suffer from pollution damages. Externality is one type of market failure that causes inefficiency.

  10. Fixed Charges - In the spring of 2010 PG&E, as part of its triennial rate case, PG&E applied to the CPUC to establish a fixed customer charge of $3 for all non-CARE residential customers, and $2.40 for all CARE enrollees. Although the CPUC recognized a growing disparity in rates, they rejected the charge on legal and policy grounds and characterized it as "the most significant change in residential electric rate design in the last decade."

    Legally the CPUC opined that the statutory caps on rate increases for tier 1 and 2 residential customers included any new or increased fixed rate charges. They specifically found that the commission was "prohibited by law from approving PG&E's customer charge to the extent the total bill impacts exceed these statutory limitations on baseline rate increases.".

    Sacramento Municipal Utility District imposed, for the first time, a fixed charge of $10 per residential customer in 2012, which was increased to $12 this year, and there are plans increase the charge $2 per year for 3 to 4 years. Why the tool is critical now is not readily apparent; the costs of electric service now labeled as "fixed" are not new. The IOUs argue that the lack of a fixed charge has caused high usage customers to pay unfairly high bills and created an artificially attractive market for customer-owned generation because the highest tier rates are far in excess of cost. A fixed charge would bring down upper tier rates but the lack of a fixed charge didn't exacerbate the upper tier rates, the rate freeze on tier 1 and 2 customers is largely to blame.

  11. GRC - General Rate Case - Proceedings currently take place every three years before the CPUC. The GRC will set the base revenue requirements for electric/gas operations. These base revenues recover the utility's operation and maintenance expenses, depreciation, and taxes and provide a return on invested capital.

  12. Market Rate Net Metering - The user's energy use is priced dynamically according to some function of wholesale electric prices. The users' meters are programmed remotely to calculate the value and are read remotely. Net metering applies such variable pricing to excess power produced by a qualifying systems.

    Market rate metering systems were implemented in California starting in 2006, and under the terms of California's net metering rules will be applicable to qualifying photovoltaic and wind systems. Under California law the payback for surplus electricity sent to the grid must be equal to the (variable, in this case) price charged at that time.

  13. Marginal Cost - The cost of providing one additional unit of a good or service. In the electric utility context there are several types of marginal costs – energy, generation capacity, transmission capacity, and distribution capacity. The change in utility costs resulting from an additional customer or additional use of energy or capacity, or the change in costs related to a change in output. The CPUC uses marginal costs in allocating the utility’s revenue requirement to customer classes, and as reference points in rate design. In the California ratemaking context, short-run marginal costs would reflect current market conditions (e.g., over- or under- capacity situations), while long-run marginal costs would include the entire cost of new facilities.

  14. NEM - Net Energy Metering - An electricity policy for consumers who own renewable energy facilities (such as wind power and solar power), and allows them to use generation whenever needed, instead of just when generated.

    The rules vary significantly from place to place: if net metering is available, if and how long you can keep your banked credits, and how much the credits are worth (retail/wholesale). Most net metering laws involve monthly roll over of kWh credits, a small monthly connection fee, require monthly payment of deficits (i.e. normal electric bill), and annual settlement of any residual credit. The treatment of annual excess generation ranges from lost, to compensation at avoided cost, to compensation at retail rate. In California, excess generation is rolled over indefinitely.

    There is considerable confusion between the terms "net metering" and "feed-in tariff". In general there are three types of compensation for local, distributed generation:

    1. Feed-in Tariff (FIT) which is generally above retail, and reduces to retail as the percentage of adopters increases.    See my post -  Feed-in Tariffs (FIT)

    2. Net Metering - which is always at retail, and which is not technically compensation, although it may become compensation if there is excess generation and payments are allowed by the utility. Net metering only requires one meter. A feed-in tariff requires two.

    3. Power Purchase Agreement (PPA) - compensation which is generally below retail, also known as a "Standard Offer Program", and can be above retail, particularly in the case of solar, which tends to be generated close to peak demand.


  15. Net Purchase and Sale - A different method of providing power to the electricity grid that does not offer the price symmetry of net metering, making this system a lot less profitable for home users of small renewable electricity systems.

    Under this arrangement, two uni-directional meters are installed—one records electricity drawn from the grid, and the other records excess electricity generated and fed back into the grid. The user pays retail rate for the electricity they use, and the power provider purchases their excess generation at its avoided cost (wholesale rate). There may be a significant difference between the retail rate the user pays and the power provider's avoided cost.

  16. Rate Cost Components: In California, rates are unbundled into generation, distribution, and transmission components based on key costdrivers for each component.
    • Generation Costs: Costs related to generating power to produce electricity. Typically defined in terms of capacity costs (e.g., $100/kW) and energy costs ($0.08/kWh).

    • Transmission Costs: Costs associated with the transmission system for moving power long-distances or at high voltage, regulated primarily by FERC.

    • Distribution Costs: Costs associated with distributing power to customers (e.g., poles and wires, meters). Typically defined in terms of capacity costs ($/kW) and customer costs ($ per customer)

    • PPC - Public Purpose Charges: Costs associated with a variety of programs, including energy efficiency, demand response, solar and distributed generation, low-income and medical needs


  17. Tier Rates - Residential electric rates in California's IOU territories are generally designed in a four or five-tiered structure based on the customer's quantity of electricity usage. Within prescribed usage tiers, the amount of electricity consumed is priced at increasing per-unit rates. Tier 1 is the customer's "baseline" - the level deemed necessary to supply a significant portion of the reasonable energy needs of the average residential customer; Tier 2 applies to usage between the baseline and 130% of that amount. Baseline levels vary depending on the climate of the region (e.g. hotter regions have a higher baseline).

    This multi-tiered conservation pricing structure grew out of the energy crisis. Prior to that time, a two-tier pricing structure was common.
    PG&E Tier Rate History  Source: TURN

  18. TOU - Time-of-Use Rates - (See my post Dynamic Pricing)  With time-based rates, utilities charge different prices based on the time of day electricity is used. The different charges should reflect the ups and downs of wholesale power prices due to supply and demand. In hot climates, power is typically most expensive late summer afternoons and early evening hours, when heavy air-conditioning use causes spikes in electricity use. With time-of-use or TOU rates, energy charges are higher during the hours of peak demand but lower at all other times.

    This creates financial incentives for consumers to shift energy use to the less expensive off-peak hours, which relieves the strain on energy supplies. However, customers in the hot climates cannot shift air conditioning use to another time of the day like they can their laundry.

    Peak demand dictates the size of generators, transmission lines, transformers and circuit breakers for utilities even if that amount lasts just a few hours a day. Power generation which is able to quickly ramp-up for peak demand often uses more expensive fuels, is less efficient and has higher marginal carbon emissions. Most natural gas plants in California's fleet are older and lack the fast-start technology, consequently they must idle until needed to meet peak demand and in that stand-by mode continue to produce emissions.

    TOU rates are advocated by many environmental groups who argue that the rates help rein in peak demand and avoid building new power plants. Some electric utilities similarly advocate for TOU because the rate reflects the principle of cost-causation and requires customers to make decisions about energy use when it has the highest cost and encourage customers to shift significant amounts of energy use away from the peak hours when power is most costly.

    TOU metering is a significant issue for solar power systems because they produce energy during the daytime peak-price period, and produce little or no power during the night period, when price is low. When this is the case, the effective output of a solar panel is increased, as more electricity can be consumed than is produced.

    • In Nov 2011, the CPUC approved a decision imposing mandatory time-variant pricing programs on small business customers of PG&E in two stages, beginning in November 2012.

    • In Dec 2012, the CPUC approved a decision imposing mandatory time-variant pricing programs on small business customers of SDG&E starting in November 2014, with an optional program commencing in November 2013.
  19. Value of Solar - The basic concept behind value of solar is that utilities should pay a transparent and market-based price for solar energy. The value of solar energy is based on:
    1. Avoiding the purchase of energy from other, polluting sources
    2. Avoiding the need to build additional power plant capacity to meet peak energy needs
    3. Providing energy for decades at a fixed price
    4. Reducing wear and tear on the electric grid, including power lines, substations, and power plants x
  20. Source: Institute for Local Self-Reliance

    Value of solar is not like net metering, where producing energy reduces your electricity bill just like turning off a light. As adopted, Minnesota’s value of solar formula includes all of the basic components of the theoretical policy, however, the overall adopted policy had some good elements that were lost in the legislative process.

    Source: Institute For Local Self-Reliance


3. Business Case
  • Utilities argue: "An electricity bill’s per-kilowatt-hour charge has three primary portions, the generation portion of the charge, the amount for that kilowatt-hour to actually be generated, the transmission portion of the charge, the part you pay for the use, construction, maintenance, etc., of the transmission line between the generation station and the local substation, and the distribution charge that is very similar to the transmission portion but is for the distribution system that actually allows the electricity to be delivered. NEM customers avoid paying non-generation components of rates for the portion of their electricity."

    Instead of NEM, SCE would like a “buy-all/sell-all (BA/SA) model” in which customers pay standard retail rates and get some payment for every kilowatt-hour they produce. BA/SA, however, would reimburse not the retail rate but only the generation portion of the retail rate.

  • Solar advocates argue: "Cost in our electric infrastructure in California is driven by peak demand. There is a huge benefit to reducing peak, and that is what the residential rooftop solar supported by NEM does. There are costs, but there are also benefits, and it works out that it is not really a subsidy.”

    A study on the cost-effectiveness of NEM in the Pacific Gas and Electric (PG&E) service territory by Crossborder Energy that concluded that, “on average over all customer classes, NEM does not impose costs on non-NEM customers,” adding, “on average, over all customer classes, NEM may now be cost-effective throughout the investor-owned utilities’ territories.”

  • SB 327 As Ammended
    1. Requires the California Public Utilities Commission (PUC), when it approves changes to electric service rates charged to residential customers, to determine that the changes are reasonable, including that the changes are necessary in order to ensure that the rates paid by residential customers are fair, equitable, and reflect the costs to serve those customers.

    2. Requires PUC to consider specified principles in approving any changes to electric service rates.

    3. Requires PUC to report to the Legislature its findings and recommendations relating to tiered residential electric service rates in a specified rulemaking by January 31, 2014.

    4. Recasts and revises limitations on electric and natural gas service rates of residential customers, including the rate increase limitations applicable to electric service provided to California Alternate Rates for Energy (CARE) customers.

    The Senate amendments, substantively revise this bill by adding new provisions
    1. Require the IOUs to provide annual distribution plans and for the PUC to approve those plans, if it finds them reasonable, in each IOU General Rate Case.

    2. Revise the current Net Energy Metering (NEM) statute to specify the maximum program capacity for customers in IOU service areas, require the PUC to develop a new NEM program by July 2015 and establish a transition to the new NEM program by 2017. The new NEM program is to be based on electrical system costs and benefits to nonparticipating ratepayers and remove both the total system capacity cap and the one megawatt project size limit. Existing NEM customers will be transitions no later than December 2020 to the new NEM.

      AB 327, as amended, calls for the CPUC to create a new study to serve as the basis for the state’s big three investor-owned utilities to develop brand-new net metering programs by the end of 2015, and instructs them to put those new programs in place in 2017.

      The bill states "There shall be no limitation on the number of new eligible customer-generators entitled to receive service pursuant to the standard contract or tariff after January 1, 2017" This means the current 5% cap for NEM of aggregate consumer demand will be eliminated.

      The three IOUs defined aggregate consumer demand as “coincident” peak demand. Renewables advocates argue that “non-coincident” peak demand should be used.

      Coincident peak demand is the designated period when all sectors (residential, commercial and industrial) reach their maximum electricity consumption and the state’s consumption peaks.

      Non-coincident peak demand is the sum of the individual peaking demands of all customers in the three sectors. Residential peak is typically late afternoon, commercial peak is early mid afternoon, and industrial peak can be at night. That sum of all peaks is greater than the total peak demand at any one time of the day.

      When the installed DG capacity eligible for NEM divided by the peak demand gets to five percent, the utilities are off the hook. So they want that bottom number to be smaller. Renewables advocates want just the opposite because the larger number keeps what one solar advocate called their “backbone” incentive in place.

      In April 2013, the CPUC concluded that the legislature “did not intend ‘aggregate customer peak demand’ to mean coincident peak demand

      Solar and ratepayer advocates were concerned that individual utilities might seek to alter the rates and tariffs that net-metering customers face in ways that could reduce their value. To counter that possibility, the new amendment to AB 327 requires that any such changes take place during a “rulemaking proceeding involving every large electrical corporation.”

      That means that the state’s three IOUS's, PG&E, SCE, and SDG&E, won’t be free to make changes on their own, but will have to collectively seek changes in a major CPUC process

    3. Provide the PUC with authority to require IOUs to procure renewable energy generation above that which is required in the 33% Renewable Portfolio Standard.

    4. Authorize the PUC to approved fixed monthly charges no greater than $10 for residential customers and $5 for low-income customers beginning in 2016. Specify discounts for low-income customers are not to exceed 30% to 35% of the average non-low-income customer.

      AB 327 doesn’t change rates itself. “Rate reform is going to be decided by the CPUC. All that AB 327 does is give the CPUC some more tools in that process.

    5. Establish that by 2018 the default rate schedule for residential customers shall be based on Time of Use and establishes provisions to protect senior or other vulnerable customers, in hot climate zones, from unreasonable hardship.

    6. Add technical amendments to the provisions related to residential electricity rate reform.

  • PUC Residential Rate Design Proceeding (R.12-06-013) is underway. On June 28, 2012, PUC initiated a proceeding to examine current residential electric rate design, including the tier structure in effect for residential customers, the state of time variant and dynamic pricing, potential pathways from tiers to time variant and dynamic pricing, and preferable residential rate design.

    This PUC proceeding is open to the public and allows interested parties opportunities to participate by making comments on PUC rulings, making rate design proposals, commenting on proposals made by others, commenting on proposals made by staff, and commenting on any decision made by PUC. According to the public schedule, final rounds of comments are due mid-summer 2013. This would be followed by a draft decision, which is also open to comments. (See 7. Next Steps and  9. Links below)

4. Benefits
  • Reducing Peak Demand - Solar advocates argue "Cost in our electric infrastructure in California is driven by peak demand. There is a huge benefit to reducing peak, and that is what the residential rooftop solar supported by NEM does. There are costs, but there are also benefits, and it works out that it is not really a subsidy.”

  • Incentives for Conservation & Energy Efficiency - Large fixed charges can undermine customer incentives to reduce consumption and undertake energy efficiency improvements. For example, if you used 500 kilowatt-hours of electricity per month (about average for a California customer) and your rate was 15 cents for each of those kilowatt-hours, it might take two years to recover your investment in new energy efficient lighting.

    But if the utility charged you a $25 fixed charge per month, and reduced your rate to 10 cents per kilowatt hour to compensate, it would now take three years for that same energy efficiency investment to pay back because you cannot avoid that $25 charge and you would have to save 50 percent more kilowatt hours to recover your investment. Similar impacts would occur for consumers considering the installation of rooftop solar.

    (Note: AB327 permits fixed charges, but does not require them,

  • Reduced GHG - SB 327 makes it clear NEM will be additive to the state's 33% RPS goal for renewable energy.

5. Risks/Issues
  • Cost Calculation Methodology - Utilities' "all-in cost" is what energy experts call the "avoided cost." An avoided-cost analysis does not consider longer-term impacts. It is very hard for traditional utility people to see rooftop solar as a resource because they do not control it. As a result, they don’t consider it a resource; they think of it as opportunity energy, so they are not willing to consider cumulative impacts.

    In the absence of real data, utilities assume a simplistic binomial distribution of costs and benefits. The straw man is that solar either avoids transmission and distribution costs or it doesn’t, and the conclusion is that since it doesn’t, because PV has to be connected to the grid, therefore all the costs apply to solar and none are avoided.

    Will there will be worst-case days with both high peak demand and high cloud cover? I'd say "no" for a California summer heat wave, but I'm not responsible for maintaining the grid. Maybe a giant wildfire blots out the sun?

    In addition, economics change based on PV penetration. Enough solar on the grid will collapse peak hour demand. That has already happened in Germany. When high peak demand falls then the spread between the wholesale cost of midday power and late night power goes away. The most expensive power will be found just before solar kicks in and right after it goes away. In that potential future case, end-user solar would be sending relatively low value electricity to the grid and taking back more expensive.

  • Stranded Costs -   Utilities argue "An electricity bill’s per-kilowatt-hour charge has three primary portions, the generation portion of the charge, the amount for that kilowatt-hour to actually be generated, the transmission portion of the charge, the part you pay for the use, construction, maintenance, etc., of the transmission line between the generation station and the local substation, and the distribution charge that is very similar to the transmission portion but is for the distribution system that actually allows the electricity to be delivered. NEM customers avoid paying non-generation components of rates for the portion of their electricity."

  • Unfair Upper Tiers  - If a family can't buy or lease solar to shave the tier 3 and 4 electricity rates off of their bill, and if they don't qualify for enrollment in the CARE program, the cost of electricity, particularly in hot climates, can be a tremendous burden.

  • Legislative Rate Making - There is little disagreement between that the indices and freezes on tier 1 and 2 residential rates must be eliminated and that any modification for those rates must be gradual so as to prevent ratepayer shock. But should the Legislature provide a framework for rate design to reflect and protect its priorities? Some argue that restrictions in statute amount to "legislative ratemaking"

  • Equity - Utilities argue the beneficiaries of net metering are relatively rich home owners, while relatively poor rate payers who cannot afford to install solar or do not own their own homes have to support more fixed costs.

  • Time Lag in Net Metering Contracts - Under existing law, net metering would be suspended completely as of 2014, AB 327 removes that suspension. Utilities and the solar industry have been working under a deadline imposed by the CPUC, which would force net metering programs to cease as of the end of 2014. AB 327, as currently amended, would put that worry to rest.

    Under current law, there are no grandfathering protections at all for existing net metering customers. Everything under this is additive. These are all additional protections that nobody had before.

  • Impact on Current Net Metering Contracts - It was feared AB 327 would subject today’s existing net metering contracts to review and potential rewriting, as the CPUC comes up with a new net metering regime. That led some groups to decry the bill as an attempt to undercut their investment in solar.

    The Sep 2013 bill revisions address this concern by setting a deadline of Mar 31, 2014 for the CPUC to set a procedure for how it will deal with “grandfathering” existing net metering contracts into the new program that AB 327 requires it to create. It also states that “Any rules adopted by the commission shall consider a reasonable expected payback period based on the year the customer initially took service under the tariff or contract.”

    While that doesn’t change the fact that existing net metering contracts will be subject to change, it does address the concern that the previous version of the bill was “creating a lag time of uncertainty as the market waited for the new rules.

  • Net Metering Cap - Several years ago, the CPUC extended the cap for net metering from 2.5 percent to 5 percent of each IOU's nameplate capacity, but there’s been a longstanding dispute about how the  cap should be calculated.  Once the total number of customers signed up for net metering exceeded that cap, in terms of their kilowatt contribution to their utility’s total power mix, new customers would have been excluded.

    AB327 removes all legal uncertainty, and makes clear how the cap is calculated. As amended,, it sets clear figures for when each utility will reach that cap. That will either come as of Dec 31, 2016, or at the following capacities, whichever come first: 607 megawatts for SDG&E; 2,240 megawatts for SCE; and 2,409 megawatts for PG&E.

  • Consumer Backlash to TOU Rates - The impacts of TOU rates would be especially felt by inland climates where air conditioning use is the highest and drives peak demand in the state. if not managed well, the imposition of mandatory TOU rates on customers will result in a significant customer revolt. Even with effective notice and education of customers about how to manage TOU rates, the inland regions of California will be hit the hardest due to their reliance on air conditioning during the summer months.

    SMUD announced its TOU rate structure this year but customers will not be switched to TOU until 2018. To ensure that customers have adequate notice and education and to gain customer acceptance, delay default TOU and permit mandatory TOU with bill protection beginning in 2020.


  • Low Income Incentives - Because lower rates tend to encourage greater electricity consumption, should assistance for low-income households be offered as a fixed monthly credit, similar to food stamps, rather than as a rate discount?

6. Success Criteria In 2007 the CPUC adopted principles for rate design and expressed intent to use those as guidance in the Residential Rate Design Proceeding currently underway
  1. Rates should be based on marginal cost;
  2. Rates should be based on cost-causation principles;
  3. Rates should encourage conservation and reduce peak demand;
  4. Rates should provide stability, simplicity and customer choice; 
  5. Rates should encourage economically efficient decision-making.
7. Next Steps
  • The CPUC initiated a rulemaking on policy guidance for rate design in the summer of 2012 (R.12-06-013). They intend to consider how the state's energy policy goals for 2020 are affected by retail rate design and how rate design policies can and should be used to meet long-term climate and energy policy goals in an effort to align rates with policy objectives. More specifically, the proceeding will examine "whether the current tier structure continues to support the underlying statewide-energy goals facilitates the development of customer-friendly technologies, and whether the rates result in inequitable treatment across customers and customer classes."

8. Companies/Organizations
  1. CPUC - California Public Utilities Commission, San Franciso

  2. DRA - Division of Ratepayer Advocates San Francisco - A California state agency whose statutory mission is to obtain the lowest possible rate for service consistent with reliable and safe service levels. In fulfilling this goal, DRA also advocates for customer and environmental protections.

  3. PG&E - Pacific Gas and Electric, San Francisco

  4. SCE - Southern California Edison, Rosemead

  5. SDG&E - San Diego Gas and Electric, San Diego

  6. SMUD - Sacramento Municipal Utility District, Sacramento

  7. TURN - The Utility Reform Network, San Francisco

9. Links
  1. What’s so Great about Fixed Charges? by Severin Borenstein Energy Institute at Haas School of Business November 3, 2014

  2. Financial Impacts of Net-Metered PV on Utilities and Ratepayers: A Scoping Study of Two Prototypical U.S. Utilities - Satchwell, Andrew, Andrew D. Mills, Galen L. Barbose,  - Lawrence Berkeley National Lab (LBL) - September 2014  A scoping analysis to quantify the financial impacts of customer-sited PV on utility shareholders and ratepayers and to assess the potential efficacy of various options for mitigating those impacts.The analysis relied on a pro-forma utility financial model that LBL previously developed for the purpose of analyzing utility shareholder and ratepayer impacts of utility-sponsored energy efficiency programs.The findings from this scoping study point towards several high-level policy implications.

    1. First, even at 10% PV penetration levels, which are substantially higher than exist today, the impact of customer-sited PV on average retail rates may be relatively modest (at least from the perspective of all ratepayers, in aggregate. At a minimum, the magnitude of the rate impacts estimated within our analysis suggest that, in many cases, utilities and regulators may have sufficient time to address concerns about the rate impacts of PV in a measured and  deliberate manner.

    2. Second and by comparison, the impacts of customer-sited PV on utility shareholder profitability are potentially much more pronounced, though they are highly dependent upon the specifics of the utility operating and regulatory environment, and therefore warrant utility-specific analysis.

    3. Finally, LBL found that the shareholder (and, to a lesser extent,ratepayer) impacts of customer-sited PV may be mitigated through various “incremental” changes to utility business or regulatory models, though the potential efficacy of those measures varies considerably depending upon both their design and upon the specific utility circumstances. 
    4. Importantly, however, these mitigation strategies entail tradeoffs – either between ratepayers and shareholders or among competing policy objectives – which may ultimately necessitate resolution within the context of broader policy- and rate-making processes, rather than on a stand-alone basis.

    5. Areas for future research include 
      • examining: the relative impacts of customer-sited PV compared to other factors that may impact utility profitability and customer rates;
      •  the combined impacts of customer-sited PV, aggressive energy efficiency, and other demand-side measures;
      •  the rate impacts of customer-sited PV and various mitigation measures specifically on customers without PV and differences among customer classes; 
      • a broader range of mitigation options; 
      • potential strategies for maximizing the avoided costs of customer-sited PV;
      •  continued efforts to improve the methods and data required to develop reliable and actionable estimates of the avoided costs of customer-sited PV.

  3. Minnesota Value of Solar
  4. Free the Grid 2012 - policy guide that grades all 50 states on two key renewable energy programs: net metering and interconnection procedures.

  5. AB-327 Electricity: natural gas: rates: net energy metering: California Renewables Portfolio Standard Program.

  6. DSIRE - The Database of State Incentives for Renewable Energy

  7. DRA's Presentation on Rate Design Basics.

  8. CPUC -  Residential Rate Design Proceeding  (R.12-06-013)

    Aug. 27, 2012, 9:30 a.m. – 4 p.m.: Workshop to Discuss and Refine Preliminary Questions including transitioning to Time Varying and Dynamic Rates for Residential Rate Structure Rulemaking
  9. Dec. 5-6, 2012: Public Workshops on the CPUC's proceeding to Conduct a Comprehensive Examination of Investor Owned Electric Utilities’ Residential Rate Structures (R.12-06-013)
  10.  CPUC Workshop - December 6, 2012 - Retail Rate Reform Proceeding
    [Agenda]
    [Archive Video Part 1] [Send Eclip]
    [Archive Video Part 2] [Send Eclip]
     CPUC Workshop - December 5, 2012 - Retail Rate Reform Proceeding
    [Agenda]
    [Archive Video Part 1] [Send Eclip]
    [Archive Video Part 2] [Send Eclip]

    June 25, 2013Workshop on Time Varying and Dynamic Rates

     CPUC Workshop - June 25, 2013 - Time Varying and Dynamic Rates
    [Agenda]
    [Archive Video Part 1] [Send Eclip]
    [Archive Video Part 2] [Send Eclip]

Wednesday, October 29, 2014

Home Energy Management (HEM)

Mass deployment of smart meters by utilities is creating new business opportunities for product developers and utilities. As energy plays a larger role in the lives of consumers, a wide range of new products and services will be developed to enable the market. Home Energy Management is becoming the “killer app” for home automation




Navigate this Report
Back to Consumer Index
1. Background

2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Criteria
7. Next Steps
8. Companies
9. Links

1.Background
  • In the past, Home Automation was mostly about entertainment. Home theaters that can cue up a movie and darken the room with a flip of a switch. Wireless networks that allow music to be streamed from any room. Recently, though, automation has become synonymous with energy management. Thermostats that automatically raise and lower the temperature based on the time of day. Blinds that close when the sun goes down.
  • Homes used 21% of US total energy demand in 2004. Managing the residential sector is an important priority for addressing global warming, conserving resources and improving energy security. A lot of energy is wasted, for example heating/cooling and lighting of unoccupied houses and rooms, and overheating or overcooling to make up for temperature variations. IT enabled monitoring and control technologies have played an important role in eliminating similar kinds of inefficiencies in commercial buildings, so it is natural to think that these systems could have an important role in the home.
  • Most homes use energy control technology is at least 20 years old. Only about a quarter of US homes even have simple programmable thermostats. Networked thermostats, power meters and switches, and zone heating can provide information on energy use and allow it to be controlled for distribution only when needed.
  • In addition to direct energy savings, homes can participate in peak shifting. Redistributing electricity demand more evenly throughout the day reduces the needs for energy infrastructure.
  • There are big gaps in consumer communication which the smart grid can help close. Utilities sell electricity in many ways; but have little concept of how individual customers use it. Customers use products & services; but have little concept of electricity use or value. Products and services use electricity; but have little concept of how and when to conserve. Interoperability and Home Area Network Standards are becoming critical. Many utilities want people to be able to shop for smart thermostats, smart appliances and other smart-grid technologies, if everything is proprietary that becomes much more problematic.


2. Acronyms/Definitions
  1. Controller - Provides a gateway between a variety of standard interfaces found in residential and commercial applications: Abstracts devices and their protocols to a common object model representation so relationships between disparate devices can be made by director.
  2. EMS – Energy Management System
  3. Energy Awareness - the ability for products to automatically react and share information with consumers as it relates to changes in electricity prices and activation of demand response events. Extending the meter into the home will require a new class of products that feature energy awareness.
  4. Energy Services - Energy Services bridge the gaps by giving the customer the ability to meet demand requirements and personal goals regardless.
  5. ERT – Electronic Receiver/Transmitter Meter
  6. H2G – Home to Grid – market segment that connects consumer products and smart meters.
  7. HAN – Home Area Network - From the perspective of energy use, the term Home Area Network was coined to address connectivity between consumer products and smart meters. It covers any means by which a utility customer interconnects devices within a home. Interaction of consumer-owned devices, including distributed energy resources, with the Smart Grid Connecting products to smart meters requires development of an entirely new class of consumer products that are capable of being networked together using one or more communication protocols.
  8. Grid Direct Messaging (Prices-to-Devices)
  9. Home Controls - A broad market opportunity encompassing Security, Home Theatre, and Home Automation as well as Energy Management.
  10. HEM - Home Energy Monitoring device.
  11. IHD – In-Home Display - This can be a simple LCD device that just passes information to the user or it could be a widget on an HD television.
  12. Kill-a-Watt - An individual appliance measuring device for analyzing individual appliances and loads one at a time.
  13. NILM - Nonintrusive Load Monitoring - A process for analyzing changes in the voltage and current going into a house and deducing what appliances are used in the house as well as their individual energy consumption. Electric meters with NILM technology are used by utility companies to survey the specific uses of electric power in different homes. NILM is considered a low cost alternative to attaching individual monitors on each appliance. It does, however, present privacy concerns.
  14. PCT - Programmable Communicating Thermostat
  15. Quadruple Play - Back at the start of the century, telecommunications companies described the “triple play” (voice, video, data) opportunity –- a convergence of all media into the home, provided by a single vendor, and streamed onto a variety of consumer devices (phones, TVs, computers, and more). The Smart Grid is the first opportunity to enable the “quadruple play,” made possible by the use of standards-based, scalable smart grid architectures that connect and leverage feature-rich devices and functionality, along with high-bandwidth (and low cost) 4G networking.
  16. Smart Appliances - Energy aware products that allow consumers and utilities to shape electricity loads during peak periods.
  17. ZigBee SE – Smart Energy Profile defines the standard behavior of Home Area Network (HAN) devices.


3. Business Case
  • According to Navigant Research, global revenue for communicating and smart thermostats and associated software and services is expected to grow from $146.9 million in 2014 to $2.3 billion in 2023.
  • Studies show that giving people direct feedback on their energy use leads to a reduction in energy consumption of 5-15%. Home Energy Management will make it possible to get instantaneous pricing information on the electricity that is being used and to scale electricity consumption accordingly. The Smart Grid is a key enabler in communicating peak prices to consumers; and integrating smart appliances with the grid to help customers change their energy consumption habits.
  • Evolving into an open eco-system where the devices can come from any provider whether that’s from the utility, or Best Buy down the street or from the appliances that come with the home. Key is to enable them to communicate in real time.
  • What matters is the data (about consumption) and control (i.e., automation), not the HAN hardware; . The endgame should focus on building intelligent, automated energy management, not filling the home with a slew of new, narrow-purpose HAN devices. Clearly, the overall trend is toward feature convergence -- more goodies on a few broad-purpose digital platforms. Look at today’s smart phones. Most include GPS, motion sensors, Wi-Fi, cameras, audio players, and you can load almost any clever app you can think of. They are a platform for innovation. Is home energy management an innovation platform or an innovation to add to other platforms? Seems to me we’ve got quite a few platforms already, and they are pretty darn good already.

Source: EPRI



4. Benefits
  • Reduced Energy Use - Various studies have shown a reduction in home energy use of 4-15% through use of home energy display. For example, a study using the PowerCost Monitor deployed in 500 Ontario homes by Hydro One showed an average 6.5% drop in total electricity use when compared with a similarly sized control group.
  • Identify Energy Spikes - One of the most obvious aspects of real-time measuring is the spikes. You can see them. Sometimes they are staggering. If most people knew that their 500W PC that they leave on all the time is costing them an additional $100/month, they would be somewhat persuaded to turn it off every so often. Seeing spikes a day later will not have the same effect as seeing the data live and asking, “What’s going on?”
  • Identify Baseload -Some of the composite parts of the baseload or standing heart rate of the house are comparatively small, but anything that runs 24/7, even low wattage, adds up.
  • Identify Anomalies - Sometimes people leave something on that shouldn’t be. By knowing a home’s standing heart rate, it is very easy to identify when something’s been inadvertently left running. This point alone makes the case for real-time monitoring: figuring out the next day that you’ve left a space heater on in the basement is not so helpful.
  • Data=Action. The old management axiom: “You can’t manage what you can’t measure”
    is as true with energy as with anything else. One of the key aspects of real-time monitoring is that it lets you know immediately the impact of your daily activities. Reducing the dryer heat from high to medium has a significant impact on electricity. When they are measurable, those shifts become tangible, and you look for more opportunities.
  • Demand Response - Supports load control integration
  • Environmental Monitoring - Multiple benefits/value are needed. HEM should answer a market need, solve real problems, beyond 'carbon guilt'. There are specific problems that improved environmental monitoring could mitigate in addition to helping homeowners keep energy costs down. There are 250,000 freeze events per year costing insurers dearly and countless mold claims as well. Offering temp/humidity alerts could potentially reduce insurance costs while being part of the system helping keep residential energy costs down.
Your Kitchen of the Future


5. Risks/Issues
  • Lukewarm Consumer Interest - the less-than-stellar consumer response to various efforts to market energy saving home devices in the past.
  • Integration With Other Home Controls - A broad market encompassing Security, Home Theatre, and Home Automation as well as Energy Management. Homeowners would like these devices to work together, not one use case wonders. Low powered wireless networks are designed for low power so that batteries can last for months and years, not for broadband. The consumer does not want more complexity.
  • Device Clutter - Companies that are tied to home energy management consoles are most at risk. Most homeowners would prefer to see energy information on their smart phones, computers or TVs and don't want a new, single-purpose device cluttering their counters.
  • Low Consumer Price Points - A new survey shows that Americans are willing to pay an average of $48 for equipment that allows them to manage their home energy use. That price might be hard to meet, depending on the technology being deployed.
  • Controls/Thermostat Challenges:
    • Interface that’s easy to understand and intuitive -- for many sectors of society.
    • Learning algorithms that will optimize energy savings and comfort with time varying energy prices (e.g. pre-cooling algorithms)
    • Display to the user the expected monthly bill (“shock effect of monthly credit-card-bill”)
    • Control strategies for a house that can react to the possibility of low in-house network quality or complete network failure.
  • Real Time Limitations - Don’t know the point of diminishing return in data granularity. Recent news that energy monitoring and managing devices will not take advantage of their real-time potential is distressing. Real-time electricity monitoring provides incentives to increase energy efficiency like no other tool. We will continue to advocate for widespread availability of real-time data
  • Privacy – Finding right balance between security and simplicity.
    • Access to meter information
    • Top-down mandated or opt-in
  • Upgradeability - Extensibility to wide range of in-home devices. Potential technology obsolescence is low due to multiple bridging options. HAN interface choice isn’t Betamax vs. VHS, rather Mac vs. PC
  • Limited Residential Demand Response Potential - Consumers are largely at work during peak periods: Thus, there is far less than can be harvested from consumer demand response. Commercial DR programs tend to work because factories and large commercial buildings use a lot of electricity and can curb power consumption at peak times.
  • Business Relationships
    • Who owns the customer? Utility, ISP, Retailer?
    • Who rolls truck?
    • Business model? Pay to play, freemium or “Gainshare”?


6. Success Criteria
  • Consistent Experience - Customers would like to go to one place to manage energy usage, control devices, and plan actions. The Web will play a critical role as a cost effective medium to deliver rich information. A consistent Web experience across AMI, DR, EE, and HAN programs is required to engage customers.
  • User Centric Design - Consumer owns the HAN The consumer will be king
  • Open Standards for Meter Interface to HAN
  • Real Time/Two-Way Communication – So that all the devices that are inside the home can be controlled by the user and also be accessible by the utility or at least be able to respond to signals that might come down.
  • Real Time Information - Provides direct access to usage data. Get near real time electric use data from AMI meters. Real-time leads to a real map of action.
  • Focus on Small to Mid-size Commercial Customers -  Big industrial sites and big high-rises already have energy management systems and tie-ins to utility programs.  But many smaller commercial properties are still not fully on board. And many utilities believe that it will be far easier to convince commercial property owners to play along than to convince residential customers to change their energy behavior.

7. Next Steps
  • The normal Joe on the street isn't quite ready to make room on his handset for an application that allows him to view his bill or see his energy consumption. Now, is this coming? Absolutely. My question is really one of who will have to pay for the application? I don't see him needing one to pay the bill, as the bank or credit card company already does this. But what about energy consumption, being able to lower/raise house temperature remotely if away? This will be a cool one. Yet I believe it will be the thermostat folks that pay to have this application and offer it for free if you purchase their device.


7. Companies
  1. Control4, Salt Lake City UT - Offers a complete line of home-automation products that allow lighting, audio, video and climate to be controlled. Earlier this year the company raised $17.3 million in a Series F expansion capital round and could be gearing up for an IPO. New investors include Best Buy's venture arm, indicating a possible channel to market for the devices. Smart Grid News Company Profile

  2. EcoFactor - Redwood City, CA - Has created a system that controls home energy consumption through broadband gateways, came out of stealth mode in early November. A few weeks later it won the prize at the Cleantech Open. Now, it has raised $2.4 million--not an outrageous amount, but better than nothing--from Claremont Creek Ventures and a few others.

    EcoFactor offers a SaaS-based residential energy management solution that works with two-way communicating thermostats and a broadband Internet connection to develop a dynamic, customized heating and cooling strategy. In EcoFactor's system, a wireless thermostat sends data to a home DSL or cable box. No smart meter needed.

    The service allows thermostats to modulate temperatures for comfort while simultaneously shaving energy demand and customers’ energy bills. After EcoFactor is installed, all homeowners have to do is adjust their thermostats as usual for several days. The software remembers what they like, in relation to seasons, weather conditions and square footage, so that they never have to worry about it again. EcoFactor’s software adjusts home temperature in real time as conditions change.

    Oncor is folding EcoFactor’s service into its Take a Load Off Texas program. It will allow the utility to run demand response programs — reducing demand when needed to avoid grid overloads — and allow customers to save as much as 20 to 30 percent on their heating and cooling costs, the company says.

    It makes sense that EcoFactor is rolling out first in Texas. Utilities are not regulated in the state, meaning that homeowners are largely free to choose between several competing energy vendors. In order to retain customers, many of these utilities need to expand their portfolios to include extras like energy efficiency tools, and energy monitoring dashboards.

  3. Home Automation, Inc.(HAI) – New Orleans, LA - Partnering with Sensus to deliver advanced Home Area Network (HAN) devices for demand response, energy display, and comfort control to the utility marketplace. Thousands of devices have already been distributed to five utilities across the country.

  4. IControl, Palo Alto, CA - Will offer utilities direct consent-based access into customers’ homes and let homeowners monitor and control energy use though a website, in-home touch-screen or “smart phone.” An offering called Connected Life Energy Management, that was released in Novmeber, will be marketed to utilities, cable and telecom broadband providers and homesecurity firms.

    iControl was founded in 2004 and focused on home security, home monitoring, energy monitoring and elderly care. Each involves a home network. IControl raised $23 million in a Series C round and investment partners include Intel, home-security giant ADT, cable broadband provider Comcast, networking firm Cisco Systems and GE.

    In June 2011 iControl announced the close of over $50 million in Series D funding, bringing total investment in the company to more than $100 million. They said this round of funding will accelerate the deployment of iControl's energy management solution and other broadband home management services, while also positioning the company for international expansion. Investors in this round of funding include Cisco, Comcast Ventures, Intel Capital, Charles River Ventures, the Kleiner Perkins Caufield & Byers iFund, Rogers Communications and Tyco International, the parent company of ADT Security Services.

  5. Microsoft - Redmond, WA - Launched the beta version of its new Hohm online energy management application in June 2009. Hohm was designed to help U.S. utility customers better understand their electricity and gas usage, receive recommendations, and start saving 5 percent to 10 percent on their bills. The program was expected to eventually be offered worldwide and include water usage, electric cars, homes, home devices and appliances, and commercial buildings.

    Hohm’s business model was expected to generate revenue from advertising. The site includes a section for sponsored and general vendors compiled from Microsoft’s Bing search, along with a rating system. Hohm was built on the Windows Azure cloud operating system, a platform for developers of Web applications.

    In June 2011, Microsoft announced it is discontinuing the Microsoft Hohm service effective May 31, 2012. They say "The feedback from customers and partners has remained encouraging throughout Microsoft Hohm’s beta period. However, due to the slow overall market adoption of the service, we are instead focusing our efforts on products and solutions more capable of supporting long-standing growth within this evolving market." Microsoft's hardware partner on Hohm was Newfoundland, Canada-based Blue Line Innovations Inc., a maker of energy-monitoring hardware. Blue Line had also partnered with Google on its PowerMeter software. The Blue Line devices worked with both power-monitoring software products to automatically collect and track power usage statistics, instead of having to manually enter data. (Microsoft's Hohm requires users to manually enter data about their home appliances to generate power-saving suggestions.) In July 2011, Blue Line announced a new software partnership with PeoplePower 1.0 to replace the phased-out Microsoft and Google solutions. The new smart phone application offers real time electricity data anywhere, anytime, but many more layers of engagement including – real time pricing, budgeting, gaming, social interaction and remote appliance control Here's some reasons why Microsoft Hohm didn’t take off: 1. Limited initial use. One of the upsides of the Microsoft Hohm system was that any consumer could access it by putting in their zip code and adding in various other bits of information like size of home, etc. The tool then started giving you immediate feedback on how you could be more energy-efficient, based on just this data and using the algorithms Microsoft licensed from Lawrence Berkeley National Laboratory and the Department of Energy. However this initial step — before you connected it with your utility account or added in a Hohm gadget — didn’t really provide much use. 2. Utility barrier. Like with Google PowerMeter, utilities just didn’t seem to embrace the Microsoft Hohm tool. Microsoft’s large brand could have been seen as threatening by utilities, who want to own the relationship with their customer. Hohm works best when it incorporates customer-usage data fed directly from partner utilities, which, in Microsoft’s case, are currently limited to the Sacramento Municipal Utility District, Seattle City Light, and Xcel Energy. 3. Early Days It’s still early days for the market for home energy management. 4. Internal Politics - Microsoft blogger M.J. Miller explained in a blog that Microsoft decided to end its Hohm online power-savings software utility because "it didn't fit into the Windows Embedded business model."  As technology site Ars Technica noted, "the timing of the announcement suggests that Microsoft only developed Hohm for strategic reasons." 5. Over-ambitious long-term plan. While Hohm had limited use in the initial steps, its end goal was very ambitious. Microsoft was trying to turn Hohm into an entire platform that brought in revenue for the company, and which would turn Hohm into an operating system for everything from electric cars, to homes, to home devices and appliances, to commercial buildings.  Adding value for consumers and utilities needed to be worked out before moving on to the next steps. 6. Opt-in, not opt-out. In this early stage of the market, it seems like programs that are opt-out (sent unless the customer says they don’t want it), not opt-in (only sent if the customer wants it), are the ones working. OPower has been successful largely because it connected with utilities early on, and OPower’s detailed energy bills and energy savings recommendations, are delivered to utility customers automatically.
  6. Our Home Spaces - Novato, CA -Empowers consumers with their energy use information and tools to optimize their energy consumption. Partnering with RF module maker RF Digital and Gainspan under the umbrella of the U-SNAP Alliance to make a kit for homeowners to measure and control energy consumption.

  7. Silver Spring Networks - Acquired home energy monitoring startup Greenbox Technology in September 2009. It integrated Greenbox's web-based energy management platform into its series of deployments under under its new name, CustomerIQ.

    Greenbox created an integrated Internet service that lets a residential customer view, interpret, and act on their everyday utility service consumption and distributed generation behaviors. While other companies have presented residential electricity awareness interfaces, they rarely demonstrate the ability to span non-electric utility services, distributed generation, and remote appliance control from a single unified interface.

    Customers can get energy information from CustomerIQ via:
    • Web portal - The online portal provides a rich, interactive, and engaging experience through any standard Web browser;
    • Email - CustomerIQ can deliver a weekly energy report to customers via e-mail;
    • Mobile - The full CustomerIQ portal experience is available on smartphones and other mobile devices;
    • Telephone - Utility customer service representatives (CSRs) have access to a specialized CSR portal and can leverage this tool when handling customer calls; and
    • In-home devices - Silver Spring also supports a wide range of ZigBee Smart Energy Profile devices that display usage and pricing information relayed via the customer’s smart meter.

  8. Tendril , Boulder CO - Tendril Residential Energy Ecosystem (TREE) gives consumers
    insight into and control over the household energy footprint. The in-home wireless network allows appliances and electrical outlets to talk instantly and directly to a home energy monitor or web portal and enables understanding and management of energy consumption. With the consumer portal, Tendril Vantage, the home wireless network can be remotely monitored and controlled down to each individual device. Tendril Networks received $12 million VC funding in 2008 to develop smart grid networking products.

    In August 2011, Tendril announced the launch of the Tendril Connect™ Platform Application Developer Program, which will allow select developers to build on the Tendril Connect cloud platform to deliver innovative energy applications to more than 35 utilities and energy service providers, representing a market of 70 million addressable households across three continents. In addition, Tendril announced that it is sponsoring the Cleanweb Hackathon on Sept. 10-11 at pariSoma in San Francisco, and will provide its platform APIs as well as a data set to participants to test drive Tendril Connect. “We’ve opened our APIs and invite application developers to use them to engage with the mass-market energy industry to unleash the next killer app,” said Adrian Tuck, CEO, Tendril.

  9. Universal Devices , Encino CA - Leading Manufacturer of Affordable Internet Accessible Automation, Energy Management and Conservation Products and Solutions

8. Links
  1. Greentechmedia - The Telco Home Energy Invasion More telecom companies are offering energy management systems for their customers' homes. Some home energy startups believe telcos could rival utilities as a market channel, particularly in the early stages of the still-nascent industry
  2. Connectivity Week 2009 Home Energy Ecosystem Mass deployment of smart meters by utilities is creating new business opportunities for product developers and utilities. Extending the meter into the home will require a new class of products that feature energy awareness.
  3. Greentechmedia - Will Utilities or Customers Lead in Smart Grid