There are many different technologies that continue to evolve with the goal of creating smart grids.  The development and deployment of Home Area Networks (HAN) is one such technology that has commanded a great deal of attention. When one starts to examine the offerings in the HAN world, it becomes very apparent that this part of the smart grid has many facets that must be examined in regards to its use and potential benefits.

First off, utilities need to clarify their goals in bringing a HAN into the customer's environment. HAN devices are being designed so that they offer a significant number of variables in terms of their capabilities and costs. Some devices are being targeted as communication devices, intended to inform customers of how much energy they are using and what it costs. Others are being offered as demand-side management tools, where the customer or the utility may use the HAN as a load-shedding device. Let's take a look at the costs and benefits of just these two basic designs and consider a few of the other offerings against which they are competing.

In our first example, the HAN device is used as a communication device. It is basically telling the customer very simple information -- how much energy is being consumed and at what expense.  The question that immediately comes to mind is what the value of this information is, and what does it cost the utility to provide this information? These small display devices are being presented into the market by a multitude of vendors at a price range of $80 to $110 per unit. The HAN device needs to be placed within a specific range so that it can communicate to the electric meter, which in this case is the broadcaster of the information.

In addition to the display unit itself, the utility must also purchase the additional communication chip for the electric meter that will be linked to the display device. This can add on an additional cost of $30 to $50 per meter. Not including the additional cost of IT support for this device and the additional software requirements, this type of system could cost as much as $110 to $160 per unit per home to deploy. This is more than the smart meter itself and its communication board in most cases.

So the question quickly becomes, "Is it worth it?" Compared to other available methods of communicating this type of information to customers, probably not. The utility can provide the same information with more interactive capabilities via a web interface. This adds in other pieces of data, such as historical costs/usage and various environmental data points that impact the customer's consumption.

The information can also be made available via cell phones, touchpads, SMS, IVR systems, etc., at a fraction of the cost of the display device model. Additionally, these methods offer many more avenues of communicating with the customer in a technology-driven environment.  Communicating this information to a customer via a web interface should cost pennies per year versus the display unit cost of $110 to $160 for deployment.

In the second example, the utility designs the HAN unit to act as a demand side manage (DSM) device to shed load at peak load periods. The simplest devices that can be used for this task are thermostats. The utility can raise the temperature a few degrees, resulting in the units cycling off. The cost for these devices can range from $120 to $160 per unit, plus, once again, the additional cost of $30 to $50 for the communication chip in the meter. All told, this design, whichi is geared for the residential market, costs about $150 to $210 per unit per house. This figure does not include installation costs, nor does it account for all of the software components needed to make the process work.

Still, utilities are interested in using this structure to shed load in order to eliminate potential demand charges that they may incur during peak load times. It is very important for the utility to accurately analyze its demand charges.  The utility will need to evaluate how much load can be shed via this method and see if the cost is worth it. In order to do this, the utility needs to calculate all of the actual costs of purchasing, installing and maintaining this type of DSM program and then compare this option to other methods of load shedding.

Is there greater potential elsewhere that could achieve the same or better results for this level of capital expenditure? Perhaps opting instead to addsolarcapacity will eliminate the demand charges. For most utilities, the majority of demand is from the commercial and industrial base, so is it even worth targeting the residential component? The ability to meet the required load shed levels in the commercial and industrial base may be able to be achieved with a much simpler system.

While HAN devices may offer potential benefits, it is critical that the correct analysis be done by the utility from a cost-benefit point of view. The utility should create a process that allows for a wide variety of options to be reviewed and compared. Spending capital on communication to the various end users may obtain the same results as the deployment of these DSM devices at a fraction of the cost.   

Utilities today are entering a dynamic market, with a host of new offerings. As with other technology migrations, some technologies prove themselves out and others are left by the wayside. The same will occur with the development of the smart grid.  As energy Home Area Networks are deployed, the benefits -- or lack thereof -- will be assessed.

It may come to pass that the market will migrate HANs to a consumer-driven event wherein the utility only has to provide data via a web portal to a home energy management application that communicates to multiple HAN devices, completely bypassing the electric meter. A key factor in this evolution of HANs will be vendor interest. With technology icons such as Goggle and Microsoft entering the home energy market, it is anticipated that this trend will bring about a multitude of changes to the future of the HAN world.

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Dale Pennington is the Managing Director of Utiliworks Consulting, an international professional services organization that helps utility clients assess, design, procure and deploy advanced metering systems and smart grid technologies. With more than 20 years of experience working with water, gas and electric utilities, Dale is recognized as an authority in compiling profitability analyses and mentoring government partnerships for small and large U.S.-based cities.