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Managing change for the Smart Grid

With: Christine Hertzog, consultant, author and Managing Director, Smart Grid Library • Issue: Will we merely survive…or thrive? Anticipating the success essentials for Smart Grid’s futureCategory:

  • Policy makers, utilities, regulators and vendors must focus on change management as a core social acceptance strategy.
  • The Smart Grid’s largest social impact will be seen in developing nations.
  • Smart Grid designs should incorporate social and cultural behaviors in order to fully enable the benefits of the Smart Grid going forward.

The Smart Grid of the future will change our lives. It will impact our business landscape, the energy marketplace and the ways in which we interact socially and culturally. It also will enhance control and convenience in the industrialized world while enabling positive social progress in developing nations.

When and how well these benefits gain traction will depend on how skillfully energy providers manage change. “You can count on unmanaged or poorly managed change to instill fear, uncertainty, and doubt – the FUD factor – into those who are impacted, and that leads to resistance,” says Christine Hertzog, Managing Director of the Smart Grid Library. “That makes it critical that policy makers, utilities, regulators and vendors focus on change management as a core strategy to rollout Smart Grid-related technologies and programs.”

Enhancing Control and Convenience

For the developed world the Smart Grid will enhance the reliability of electricity, along with opportunities to minimize operational cost and avoid rate increases and the ability to incorporate new forms of electricity generation and storage to all parts of the supply chain.

Wireless will be very much the enabling technology for all of the interfaces at the point of consumer interaction and communication. Mobile devices will increasingly keep homeowners in control of their home systems governing energy use, security and more, while location-based services relying on GPS can use the same network to provide additional consumer amenities that will significantly change lifestyles.

“Smart Grid can also mean water and natural gas as well,” Hertzog notes “Right now our most expensive asset, our homes, are much dumber than our cars, which have a fraction of their value. I’d like to see something like a home dashboard, an app that is on your iPad, for example, to allow consumers to easily monitor and control utility usage, from electricity use to a water or gas leak. This type of monitoring would no doubt be attractive to insurance companies, which now give discounts based on sprinkler systems, smoke detectors and alarm systems in homes.”

Wireless support of the Smart Grid will also better protect society against large-scale losses of property and services. “The San Bruno, California gas pipeline explosion in 2010 killed eight people and created a raging fire that destroyed or damaged many homes, yet once it was reported, it took an hour and a half for a technician to travel from the company headquarters from the other side of the bay in rush hour traffic to manually turn a valve to shut off the gas,” Hertzog says. “In the future, remote fault sensors and control powered by wireless communications will minimize that kind of damage.”

New Tools for the Developing World

The Smart Grid’s largest social impact will be seen in developing nations. Hertzog notes that approximately 2.4 billion people of the world live in energy poverty – what she terms a permanent blackout. “The technologies in Smart Grid can make a huge difference in delivering electricity to these people,” she says. “Whereas we will see incremental improvements in our lives, for them this will be the difference between night and day.”

One powerful application is micro grids – highly local, renewably produced electricity that has selected destinations “Ideally what the generated electricity is used for would be a community decision,” Hertzog says. “One use could be, for example, to power a well, alleviating the necessity to yank girls out of school in order to hike miles to get water.”

Data generated by micro grids in the developing world could be used by NGOs to assure that systems installed to help local populations are functioning well, with replacement parts distributed more readily. “You may bring prosperity to a small village that is 25 miles from anything else,” Hertzog says. “This prosperity could be engendered by the fact that villagers now can, for example, operate sewing machines day or night, producing clothing, which brings more commerce.” She adds that thanks to the scalability of smart architectures eventually these installations could easily grow into expanded grids that provide even more services.

Creating a New Energy Marketplace

Renewables will make the social equation more complex. Hertzog points out that the social responsibility mechanisms of policy and regulation must continue to support all of the new models for generation, storage and distribution being made possible by Smart Grid architecture. For example:

  • The Energy “Farmer’s Market”: This model could be a significant factor in those communities where abundant, renewable sources of energy are readily available and can be tapped in a cost-effective manner. “People who have solar panels, for example, will generate local business to support them, and entire local ecosystems could develop,” Hertzog says. “Regulators need to be careful in designing policies that will encourage rather than discourage the conditions for establishing this ‘locavore’ type of movement for electricity generation.”
  • Electric Vehicles (EVs): “The roles that regulators allow for utilities in building the charging infrastructure and financing mechanisms for end users of EVs could have a profound impact on both demand response efforts and the speed of transition to an electrified transportation system,” says Hertzog. “For example, I could lease an EV from my power supplier, agreeing to a very attractive rate in return for keeping it plugged in during peak hours so that the utility can discharge the battery.” Utilities would essentially take ownership of the vehicle’s battery, repurposing it as community energy storage, as well as other uses.

“Intelligently designed policy, including useful feed-in tariffs (FiTs) can address all of those different constituencies’ concerns, allowing consumers who will actually become power providers to have as much control as they want over their own generation in those parts of the world where it makes sense,” Hertzog notes.

“For consumers to rapidly adopt any devices or management solutions for collection devices, they’re going to want it to be plug and play.”

Enabling Social Adoption with Good Design

Smart Grid designs should incorporate social and cultural behaviors and viewpoints in order to fully enable the benefits of the Smart Grid going forward. “Although the underlying technology may be the same, how information is presented could have some very localized distinctions,” Hertzog notes. “In one part of the world, electricity may be cheap, but gas or water may be expensive, so those types of indicators would be more prominent on the device. Also, in a typical home you don’t have just one consumer – you have a family unit, typically with a couple of adult consumers and some juvenile consumers. You need to make sure that your interfaces are appropriate for all of those consumers.”

Flexibility of architecture and services also is critical to social adoption. A smart home’s energy consumption systems need to be automatic and seamless, non-proprietary and modular. “For consumers to rapidly adopt any devices or management solutions for collection devices, they’re going to want it to be plug and play,” Hertzog notes.

She adds that many of the same principles are applicable to generation, transmission, and distribution, recognizing that we have very profound security concerns whenever we’re talking about infrastructure. “Too many closed systems that are difficult to use or upgrade may cause operators to look for the easiest workaround, which could compromise security,” she says.

Crafting the Right Message

According to Hertzog, social acceptance and satisfaction is dependent upon three categories of messaging to consumers. “We all talk about environmental benefits. That is very important, but what is often overlooked is how a Smart Grid capable of supporting electrified transportation can boost a nation’s energy security. That message needs to be more strongly communicated. This can help eliminate wars and massive environmental cleanups based on our continuing reliance on oil,” she says.

“What is often overlooked is how a Smart Grid capable of supporting electrified transportation can boost a nation’s energy security.”

“A second area is for consumers to be aware of the rewards and the risks inherent in new types of energy consumption data that will be made available to them, utilities and third parties. That behavior data must be protected, and consumers need to feel secure in order to encourage adoption,” Hertzog notes. “Consumers also need to be made aware and secure in the new kinds of relationships between various companies that are being forged in the Smart Grid ecosystem – for example, where a company other than the main energy provider may own the consumer relationship.”

Focusing on Human Nature to Ensure Success

“Change, whether it’s in the form of new technologies, new processes, or new services, should not be assumed to be a foregone conclusion,” says Hertzog. “Utilities should plan to assimilate new ways of thinking, operating, planning, and interacting with their customers.”

“Everyone involved in promoting the Smart Grid will need to increasingly concentrate on human nature.”

Hertzog says that “gamification,” which incorporates achievements, points, status, and behavioral momentum into existing communication channels, can build knowledge and support for Smart Grid initiatives such as smart meter deployments, introduction of time of use (TOU) pricing, or enrollment in demand response (DR) programs. “Using websites and social media platforms such as Facebook, utilities can reward consumers and motivate them to actively seek information and recruit others,” she says. She adds that power providers could use the same approach to work out agreements with local businesses that are willing to redeem game points towards the purchase of approved merchandise or services such as energy efficiency upgrades, HVAC maintenance and other actions that deliver long-term benefits to utilities in reduced energy use.

Resistance to change will also be evident within utilities as employees are expected to develop different orientations to consumers, and develop mindsets that are modeled on competing for customer walletshare and energy awareness mindshare. “The convergence of a customer service orientation with a focus on reducing consumption would be a fabulous change in utilities,” she states.

“Ultimately, everyone involved in promoting the Smart Grid will need to increasingly concentrate on human nature,” says Hertzog. “We must identify and explain the benefits of the changes that need to be made to avoid resistance from all impacted populations – utilities, regulators, vendors, and consumers.”

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