Defining telcos role in remote energy management

Most communications service providers (CSPs) are currently focused on offering backhaul communication solutions to utilities looking to delve into the smart grid, but that doesn’t mean they’re not equipped to offer more. According to Bill Ablondi, Parks Associates’ director of home systems, there’s room for telcos – amongst the IT companies and home-area network vendors – to carve a niche in remote energy management (REM), with or without the help of a utility.

At its recent Smart Energy Summit event, Ablondi said the shared sentiment was that energy demand is growing faster than supply. This is driving the move toward smartening up the electrical grid, but REM services don’t depend on the presence of advanced metering infrastructure (AMI), the first step most utilities are taking today. They can be sold, or offered free of charge, as part of a CSP’s bundle. The utilities are only exploring the market because they need to shed their peak loads, he said.

“[Telcos] could provide monitoring and the ability to control things over the Web in the home whether you are in the home or not,” Ablondi said. “It could make sense because these types of systems could be set up before utilities decide on their approach to the home-area network. There are only a few trials out there right now, but the technology is capable of monitoring consumption on the circuits in the home or helping a consumer change the temperature setting on a water heater or the HVAC system to save energy.”

For CSPs, their motivation stems from the potential for additional ARPU from their existing networks or, at the least, the ability to increase stickiness amongst their customer bases. Consumers have indicated they are willing to pay in the short term for longer-term savings. Parks found that 80% to 85% of households are willing to pay $80 to $100 for cost-saving equipment if they are guaranteed to save 10% to 30% off their monthly electricity bill.

On the other hand, only 15% to 20% of consumers are likely to sign up for time-of-use or demand response programs, and 35% do not want utilities to control systems in their home no matter what the potential savings, Parks found. That doesn’t imply that they would want a CSP either, but they would be more amicable to a remote energy management platform that ties into their existing services.

“The question is, will energy management be a viable standalone service?” Ablondi asked in Park’s webcast today. “We, at this point, feel it’s better to collect that with other services consumers already pay for. Then there’s the possibility of adding some value for the consumers.”

CSP’s biggest barriers could come in the form of obtaining utility-controlled usage data and their ability to act on event alerts that come from the utility, Ablondi said. It brings up the non-trivial question of who owns the consumer data and CSPs’ resultant access to it. In Texas, at least, the answer is the consumer. All smart meter deployments that take place in Texas require that the customer owns the data, and they can have access to it whenever they want, said Parks Associates Research analyst Farhan Abid. For CSPs to play an active role utilities have to publish their consumer data – and consumers would have to sign off on it.

GOOGLE, MICROSOFT MAKE THEIR MOVES

IT giants Google and Microsoft are also showing that REM services don’t necessarily require a utility. This week, Google got clearance from the Federal Energy Regulatory Commission (FERC) to buy and sell electricity on federally regulated wholesale energy markets. This puts Google Energy on the same level as a utility company – if it wants to be. The IT giant has said it plans to exercise this power (which other large companies like Wal-Mart share) to cut its own sizable energy bills, as well as to buy more energy generated from renewable sources. It maintains its altruism in this space, highlighted by its goal of carbon neutrality.

“Google PowerMeter came up awhile ago with quite a bit of press and awareness,” Ablondi said. “It developed awareness in the consumer marketplace, as well as in various federal agencies, for the fact that technology is available for consumers to better understand and track their energy usage and possibly take action on that.”

Microsoft also made a move this week, announcing it expects the first energy devices— smart meters, energy management dashboards and thermostats — to link to Hohm, following its release of a software-development kit for its online Web service. Both Microsoft and Google partner with utilities, as well as offer their beta services direct to consumers, free of charge.

In other energy news, Bloom Energy came out of eight years of stealth mode yesterday to a bevy of media excitement. The company, which already counts Google, Coca Cola and eBay amongst its beta customer list, is offering a distributed energy fuel cell technology that can power entire campuses. According to the company’s founders, the technology can take almost any fuel and turn it into electricity, cheaply and efficiently. The more boxes a company adds, the more electricity they receive. Bloom is focusing on corporations now, but could someday – when costs come down – become a competitor in the home as well.

Ablondi admitted that with all the major players in the market today, it remains to be seen how the space will shake out. But with energy demands continuing to outpace the supply, moves will have to be taken. The point was raised at the Smart Energy Summit that the energy market resembles telecom back in the ‘60s. It used to be that AT&T owned the network and the phones on it until the Carterfone decision allowed other devices to connect to the network under the provision that they didn’t harm the system, Ablondi said. “If that same approach was taken to the electricity meter, how would that change the game?”