Every utility says they'd like to see their customers living in energy-smart homes.
But ask them how much they think their customers will pay for the privilege – or how much utilities are willing to pay to help them along – and you're going to get a variety of answers that boil down to, "it depends."
After all, making a home more energy efficient can range from $25,000 or so for setting up a home withsolarpanels, storage batteries and the best home automation system money can buy – all the way down to a few dollars extra for the "smart" appliances that General Electric, Whirlpool and others plan to start selling in the coming years (see GE's Smart Appliances: Smarter with GE Home Energy Manager).
That's according to Randy Huston, project delivery executive for Xcel Energy's $100 million SmartGridCity project in Boulder, Colo., which has made a showcase of its smart grid deployments (see Distribution Automation: Smart Grid's Quiet Efficiency Offering).
But, of all the smart grid technologies Xcel has implemented in Boulder, home energy controls aren't among them, Huston said this week at the GridWeek conference in Washington, D.C.
Instead, the idea is to create communications links and install smart meters that can give homeowners energy usage data and, perhaps, variable energy pricing signals, and then let the homeowners figure out what they want to install to use it, he said.
"Xcel Energy doesn't see itself getting into the home," Huston said. "That's where the open market comes in."
But will homeowners comply? First of all, of course, there must be energy devices to buy that link with utility smart meters or other routes to the home. Companies like Tendril, Control4, OpenPeak, EnergyHub, Comverge, AlertMe, and dozens more are working on that task – in fact, it's quite a crowded marketplace (see Green Light post and stories here, here, here and here).
But the market for those devices could be a challenge when it comes to pricing. One recent study suggested that the vast majority of homeowners would spend no more than $50 or so for home energy management (see $48: A Threshold Price for In-Home Energy Management?).
But while simple energy-use displays can cost $5 to $25, smart thermostats – the most basic energy control item – cost about $140 these days, though that's likely to fall in the coming years, said Marcus Torchia, research manager of intelligent grid strategies for IDC company Energy Insights. Setting up the networks to get all these devices to talk to one another and communicate to the utility will add more costs.
Not all utilities are taking the hands-off approach. But those that are bankrolling the installation of home energy displays, networks and controls are doing so at small, pilot scale, and that will likely remain the case for several years (see Green Light post).
In part, that's because utilities still face uncertainty over which standards will apply to linking smart meters and other communications routes into the home with home energy devices, noted Zahra Makoui, network engineer with Pacific Gas & Electric.
"It's very complex," she said. But beyond those complications, the basic economics still apply, she added.
"It really depends on the price of energy. If energy [saved] costs less than the price of a device, I won't buy it." Or, rather, if the value of savings can't pay back the cost of installing a device over a certain period of time, homeowners will be loath to install it.
That's why PG&E has built in financial incentives for its customers to install these devices, she said – "If we were going to wait for this to take off, it would take a long time."
And, of course, utilities in different states face different incentives to help customers save energy. Those that lie in states like California that have instituted so-called "decoupling" of utility revenues to power sold have generally moved faster than those in states that haven't.
That's a point that Joseph Rigby, CEO of Mid-Atlantic utility Pepco Holdings, made in a presentation at GridWeek. Before the utility began to roll out millions of smart meters to its customers in Maryland, Delaware and Washington, D.C., "it was essential for us to have decoupling in place," given that "customers were going to begin using less of our product."
A different situation applies in Texas, where deregulation has led to a split between retail sellers of electricity and the utilities that generate, transmit and distribute the power, noted Dan Cortez, CenterPoint Energy's division vice president of regulated operations technology.
In that environment, Texas's four investor-owned utilities are creating a common data repository that retail electricity providers can then use to market their own energy-saving devices, he said.
"Retail providers aren't really discussing it openly, because they're competitive," he said. But one example is retailer TXU Energy, which is giving its customers "iThermostats" that can be programmed over the internet, as well as a home energy portal from demand response aggregator Comverge (see A Broadband Smart Grid?)
The slow development of the market may be one reason some home energy platform developers are being acquired by larger smart grid startups (see Silver Spring Swallows Greenbox and GridPoint Buys Home Energy Management Startup Lixar).
It's also a driver behind moves to add energy management features to home security and entertainment systems – or telecommunications companies making moves to add that functionality to their suite of in-home devices and services (see iControl Gets $23M For Home Security, Home Energy Management and The Telco Home Energy Invasion).
And then there are the thorny questions of which home energy systems really yield energy savings, said Steve Nadel, executive director of the industry group American Council for an Energy Efficient Economy. Those involve how well the system captivates the interest of homeowners, how easy it is to use, and others, he said.
"There's a lot of details to work out – how do you provide the information, does the customer control it, does the utility control it?" he said. "I've seen pilots where they don't save anything at all."