Subscribe to RSS feedIn 2008, FERC Chairman Wellinghoff said that demand response is the killer app of the smart grid. Since then, we’ve seen the market iterate from a utility-centric demand response mind set toward what I call “consumer-directed demand response.” With technology that allows us to customize virtually every aspect of our environment, including our smart phone wallpaper and ring tones, consumers are no longer going to be satisfied allowing the utility to simply curtail their air conditioning on hot days.
The same digital technologies that power smart phone apps, DVRs, and smart home applications also lay the groundwork for intelligent demand response. Both smart home services and consumer-directed demand response require a gateway installed at the premise to bridge between the service provider and the equipment to be controlled.
This gateway provides connectivity, performs data transfer and storage, and serves as a platform for all types of home control applications – home security, energy monitoring, healthcare monitoring, media sharing, and of course, your refrigerator notifying you when you are out of milk.
At the same time, customer-directed demand response solutions are already emerging in the consumer and enterprise realms. One utility has a residential demand response program that alters set points and pre-cools homes during periods of peak demand. Another of our utility customers has a solution that allows enterprise customers to setup scenarios that change set points, open window shades, and curtail non-essential equipment during demand response events.
Much of this innovation, including the development of smart-home solutions, is happening separately from utilities. Utilities are not incented to provide these types of value-add services, and in some cases are prohibited from acting on the customer side of the meter. Meanwhile, communications companies, which 30 years ago were regulated much as utilities are today, have evolved to become part of the world of high tech. This evolution was unleashed by a series of regulatory changes, and it has resulted in the rich mixture of wireless, video, and data services you see today.
The regulatory changes allowed service providers like Verizon to make investments, deploy technology, and to advance by out-innovating our competitors. Perhaps utilities can experience the same with some changes in the regulatory structure and incentives.
Kyle McNamara, Managing Principal in Verizon’s energy and utility practice, will discuss these remarks at the National Town Meeting on Demand Response, on July 13, 2011, in Washington, DC.
