October 2013
MAKING SENSE OF THE SMART HOME
Applications of Smart Grid and Smart Home Technologies for
the Home Performance Industry
by Kara Saul-Rinaldi, Robin LeBaron and Julie Caracino
DRAFT FOR INDUSTRY REVIEW
Acknowledgements
The authors thank the many individuals in both the smart grid and home performance industries
that contributed their insights and critiques as the hypotheses of this paper were shared, debated,
and expanded. We gratefully acknowledge the Department of Energy, the Energy Foundation
and NYSERDA for their financial support and freedom to pursue new ideas as well as the
guidance and engagement of the NHPC Board of Directors. We thank not only those cited in the
paper, but also the individuals who we met in the halls at NARUC, NASEO, or ACI conferences
that provided invaluable conversations that assisted in our research. Thanks to both Elizabeth
Bunnen and Maddie Bergner for their research support. We greatly appreciate the work of the
many research authors and innovative pilot project leaders that brought forth the innovations we
are seeing today. Any errors or premature conclusions made here are ours alone.
Please accept our advance appreciation for the comments and suggestions that we hope to
receive from those reading this paper so that the research can continue. Please do not hesitate to
send comments on the paper to us directly:
Kara Saul Rinaldi, kara.saul-rinaldi@nhpci.org
Robin LeBaron, robin.lebaron@nhpci.org
Julie Caracino, julie.caracino@nhpci.org
Contents
1. Introduction....................................................................................................................................... 1 2. Defining the Smart Grid and the Smart Home .............................................................................. 2 What is the Smart Grid? ..................................................................................................................... 2 What is the Smart Home? ................................................................................................................... 4 3. Smart Grid and Smart Home Applications that Enhance Home
Performance: Consumer Understanding and Motivation ............................................................ 6 Impacts of Feedback Technologies on Participant Behavior ............................................................. 7 Using Demand Response to Optimize Home Performance ................................................................ 9 Motivating Consumers to Invest in Home Performance .................................................................. 12 4. Smart Grid and Smart Home Applications that Enhance Home
Performance: More Accurate Quantification of Consumption.................................................. 13 More Precise Quantification of Energy Consumption...................................................................... 13 More Effective Prescreening ............................................................................................................ 15 Improved Energy-Use Modeling Techniques ................................................................................... 16 More Cost-Effective and Accurate Program Evaluation .................................................................. 16 Improved Quality Assurance ............................................................................................................ 18 More Accurate Labeling of Energy Consumption............................................................................ 18 Getting to Bankable Energy Efficiency ............................................................................................ 18 5. Challenges to Advancing Home Performance and Smart Grid
Integration ....................................................................................................................................... 20 Data Access ...................................................................................................................................... 20 Privacy and Security ......................................................................................................................... 22 6. Where Do We Go From Here? ...................................................................................................... 24 Lead Generation Through Cross Marketing ..................................................................................... 24 Using Stand-Alone Devices to Drive Whole House Upgrades ........................................................ 25 Policies Using Smart Home Data to Advance Home Performance .................................................. 26 The Future of Energy Efficiency and Home Performance ............................................................... 26 7. Bibliography .................................................................................................................................... 28 Introduction
1. Introduction
Millions of existing homes in the U.S. could be made more energy efficient. New “smart” technologies
that provide detailed real-time information on energy use for homeowners and utilities, including smart
meters, home energy management (HEM) systems and smart devices, are creating new opportunities to
improve U.S. homes through home performance (whole-house) energy efficiency upgrades.1 Although
efforts to incorporate smart technologies into home performance have been ventured in only a handful
of jurisdictions to date, the wave of new technology innovation is bringing the future into the present.
This paper aims to give an overview of this evolution and to discuss the benefits of future integration.
The emergence of new technology has the potential to be a game changer in the home performance
field. Programs, contractors, and utilities benefit from educated and energy-savvy consumers who
understand how their behavior impacts energy use. Similarly, with smart technology, programs and
contractors can better estimate and model energy consumption, identify cost-saving improvements, and
work with program evaluation consultants to measure and verify energy savings and net impacts more
cost-effectively than analysis of utility bills or aggregated meter data.
Smart meters, combined with home energy management systems and smart devices, are giving homes
an intelligence that helps homeowners identify and eliminate energy waste, and manage overall energy
consumption. These “smart homes” are characterized by use of information technology and two-way
communication systems that enable homeowners and utilities to remotely manage energy use, among
other benefits.
Unlike commercial and industrial building owners, who tend to prioritize payback and performance,
homeowners often make comfort their priority and may not understand how their behavior impacts
their energy use. Furthermore, the energy savings in regions where utility rates are low provide a poor
financial incentive for increasing home energy efficiency. Combinations with smart grid technology
may be able to increase the payback for capital purchases.
The central theme of this paper is that “smart grid” and “smart home” technologies, as defined later in
this paper, can significantly reduce the energy consumption in residential homes, and that the full
potential for making a home energy efficient can be realized only by making the home “smart” through
implementation of these technologies. Specifically, the paper argues that:

1
Smart grid and smart home technologies can reduce residential energy consumption by
providing homeowners with information about their energy consumption and providing
controls to manage the devices and appliances in their home;
In this paper, we refer to home performance as a comprehensive or “whole house” approach to energy efficiency that uses building
science principles to comprehensively assess the existing conditions of a home’s energy usage, as well as how all the systems in the
house interact. This approach relies on properly trained and certified technicians to complete the home energy assessment and
installation of measures. One common model of a home performance program is the Home Performance with ENERGY STAR
program managed by the U.S. Department of Energy.
1
2
Defining the Smart Grid and the Smart Home



Home performance programs and contractors can use smart grid and smart home technologies
to enhance their work in a variety of ways, including more accurate diagnosis of problems, and
feedback on equipment problems or failures;
Home energy use data has the potential to enable better measurement and verification
techniques, allowing more accurate program evaluation and creating new potential for
monetizing energy savings; and,
Telecommunication and security firms seeking to provide energy services may provide new
and significant marketing opportunities for home performance programs and contractors.
While this paper will include a review of much of the current thinking on the topic, as new technology,
incentives, and partnerships emerge, it will have to be updated. The enormous untapped potential of
energy efficiency will not be fully tapped until the four points above are sufficiently addressed and
realized by federal, state, and local stakeholders.
2. Defining the Smart Grid and the Smart Home
What is the Smart Grid?
In basic terms, the smart grid has been called “electricity with a brain: much in the way that a smart
phone means a phone with a computer in it, the smart grid is a ‘computerized’ electrical grid.”2 This
“computerization” can take many forms, but in general, the features of the smart grid include:



Devices with sensors designed to measure and monitor changes in the flow of electricity
through the grid;
Two-way communications capacity that allows a flow of information between the devices and
central control locations; and,
Control functions that allow grid operators to use the smart grid’s two-way communications
facility to make alterations and adjustments to the grid’s operations remotely.
The Pacific Northwest National Laboratory (PNNL) estimates that over the next 20 years, smart grid
technology will become pervasive in the U.S. because of the cost-efficiencies it provides for the
electric power system, which, among other benefits, could be leveraged to reduce energy consumption
and carbon emissions.3 Other benefits of the smart grid include:






2
3
More efficient transmission of electricity,
Quicker restoration of electricity after power disturbances,
Reduced operations and management costs for utilities and customers,
Reduced peak demand for a more reliable system,
Increased integration of large-scale renewable energy systems,
Better integration of customer-owned power generation systems, and,
Smart Grid Information Clearinghouse, 2013, http://www.sgiclearinghouse.org
Pratt et al., 2010
Defining the Smart Grid and the Smart Home

Improved security.4
The smart grid technologies that have the most direct and significant effect on the operations of a home
are Advanced Metering Infrastructure (AMI) and Home Area Networks (HAN). AMI generally refers
to the overall system that makes smart meters work and enables the system to provide detailed, timebased information and remote data collection between the utility, the smart meter, and the consumer.5
A HAN is a type of local area network that uses existing communication technologies such as WiFi or
Bluetooth to facilitate communication and interoperability among the digital devices that are connected
to the network, such as smart appliances, thermostats, and other home automation systems, and the
smart meter. The HAN is not necessary for consumers to receive smart meter data. However, it makes
it easier for consumers to implement home automation systems (e.g., smart thermostats), and therefore,
to respond to price signals if residential dynamic pricing is available.6
There are two main components to AMI: (1) a smart meter at the customer location that tracks
electricity use, remotely controls appliances on the HAN, and therefore, remotely controls electricity
consumption; and, (2) a communications network between the utility and the smart meter.7 These
components provide the infrastructure to establish communication between the utility and the house.
There are multiple benefits to AMI technology for the utility and its customers. Unlike
electromechanical meters that are read manually and provide no information on when a customer used
electricity within that time period, smart meters can provide the utility and its customers with real-time
information about energy use, making it easier for the customers to identify and reduce energy waste
and for the utility to potentially better manage supply when demand for electricity is high. These
technologies allow for customer demand response programs and time-based rates, which offer different
electricity pricing options based on the time of day.
Smart grid advancements over the last several years have been largely spearheaded by the federal
American Recovery and Reinvestment Act (ARRA) of 2009, which provided the U.S. Department of
Energy (DOE) with about $3.4 billion to fund smart grid investment grant (SGIG) projects. Federal
funding was matched by industry funding for a total public-private investment of $8 billion to
modernize the electric power grid, including customer systems, electric distribution systems, electric
transmission systems, and equipment manufacturing.8
As of September 2013, over $3.6 billion has been invested in AMI, including over $2.2 billion on
smart meters.9 According to reports by SGIG recipients, more than 15.5 million smart meters have
been installed and are operational.10 This figure could be much higher because some meters may have
4
SmartGrid.gov, 2013, http://www.smartgrid.gov/the_smart_grid#smart_grid
Electric Power Research Institute, 2007
6
Syal et al., 2013
7
Syal et al., 2013
8
SmartGrid.gov, 2013, http://www.smartgrid.gov/recovery_act/overview
9
SmartGrid.gov, 2013, http://www.smartgrid.gov/recovery_act/deployment_status/ami_and_customer_systems##AmiExpenditures
10
Based on 78 entities reporting to the DOE.
5
3
4
Defining the Smart Grid and Smart Home
been installed but are not yet operational or are not yet able to transmit information to the utility. For
example, the Institute for Electric Efficiency (IEE) estimates that, as of July 2013, 46 million smart
meters had been installed in about 40 percent of all U.S. households, up from 33 percent in May
2012.11 IEE projects that more than half of all U.S. households will have smart meters (65 million
smart meters) by 2015.12
What is the Smart Home?
Like the smart grid, the smart home is a general term that denotes residential buildings equipped with
information technology and communications systems that provide their occupants with a much greater
level of understanding and control than is possible with traditional “dumb” homes. As with the smart
grid, a smart home includes:



Devices with a range of sensory capacities;
Two-way information flow between devices and the occupant, and possibly also with the utility
or other third-party firms such as security system providers; and,
Control systems that allow occupants to change the operations and functions of devices within
the home.
The devices included in a smart home can vary tremendously in their nature and functions.
Thermostats with sensors and communications capability that provide homeowners with information
about how their HVAC equipment is functioning and the ability to manage the settings directly or
through a computer or smart phone, and can even “learn” the homeowner’s heating and cooling cycle
times to deliver more accurate temperatures, are one of the most well-known technologies. Other
devices with sensory, communication and/or control functions include appliances, lighting, and power
strips.
Examples of these many devices are refrigerators and freezers that conform with the optional gridconnected criteria in the U.S. Environmental Protection Agency (EPA)’s new 5.0 ENERGY STAR
Residential Refrigerators and Freezers Product Specification. These appliances will allow customers
the option of connecting the product with their local utility to reduce or defer consumption during peak
load events. Products will also alert customers that a door has been left open, provide real-time
information on energy consumption, and allow consumers to manage settings remotely. The products
with connected functionality will use open standards, which will help ensure that products are
compatible with both the smart grid and with a range of energy management systems and smart phone
applications.
Another example of smart devices are advanced power strips, which are used to eliminate “phantom”
load, or the power that electronic equipment, computers, space heaters, and other miscellaneous plug
11
Institute for Electric Efficiency, 2013. Estimates based on submitted and approved automated metering infrastructure (AMI) business
plans, responses to survey questions and other public information.
12
Institute for Electric Efficiency, 2012
Defining the Smart Grid and the Smart Home
loads use even when turned off. 13 Smart power strips may be programmed to shut off the power
supply to a customer’s home office or audio visual equipment after a period of disuse, or may have
motion-sensing or occupancy-sensing devices that turn off the controlled outlets when no motion has
been detected for a period of time.
The motion and occupancy-sensing capacity of some smart strips is also found in a number of other
devices, including some lighting and thermostat equipment.
The term Home Energy Management systems, or HEM, is often used to describe devices designed to
provide the homeowner with information taken from the smart meter about the home’s overall energy
consumption and/or about one or more systems in the home (e.g. HVAC, lighting, plug load, or
appliances). Some HEMs are designed primarily to provide the homeowner with information. These
consist of web portals and interfaces, appliances, and in-home displays that may provide real-time or
near real-time electricity use, energy consumption for the whole house or by individual load, and
billing information to a home’s occupants. These devices may also provide occupants with energy
saving tips, emissions reductions, electricity savings (in kilowatt hours), and comparisons with like
cohorts. Some devices with sophisticated “dashboard” functions give occupants greater control over a
house’s energy consumption by gathering a range of systems into a single display to provide
homeowners with a very sophisticated understanding of their home’s energy consumption and of the
consumption of individual devices or loads in a home. This provision of detailed, real-time or near
real-time information on energy use is intended to make the customer more aware of how his or her
behavior impacts energy use, and to ultimately encourage energy saving behavior and load-shifting.
Many HEMs provide the homeowner not only with information, but also with a range of control
opportunities that help a home’s occupants better manage energy use. Homeowners can use these
HEMs to control or adjust the functioning of multiple devices in the home through the internet or
smartphone apps. These control functions allow homeowners to reduce consumption, both overall and
in response to peak load events or other pricing signals.
Utilities and energy providers also use direct load controls to reduce electricity use during times of
high demand to maintain system reliability; for example, by placing a remotely controllable switch on
a residential central air conditioner to cycle the unit on and off during demand response events. The
device can also regulate the amount of power that a load or appliance can consume.14 HVAC
contractors may also install smart monitoring systems that provide information about when an HVAC
system is malfunctioning, to avoid emergency service calls and give homeowners lead-time to plan for
replacement.15
13
Earle et al., 2012. Phantom load may account for nearly 10 percent of household electricity use.
SmartGrid.gov, 2013, http://www.smartgrid.gov/glossary/term/84#sthash.4bwdMcsm.dpuf
15
One obstacle to home performance retrofits is that over 80 percent of HVAC installations are as a result of failure and thus the
homeowner may not have the time to undertake a whole-house energy assessment and plan for both insulation and HVAC installation.
The more lead-time available, the more able a homeowner can plan for home performance improvements as well as take advantage of
rebates and benefits that require a home audit baseline.
14
5
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Smart Grid and Smart Home Applications that Enhance Home Performance:
Consumer Understanding and Motivation
As of September 2013, almost half a million consumer devices, including in-home displays, direct load
control devices, programmable communicating thermostats and smart appliances, have been installed
and are operational.16 The current HEM systems market is valued at $1.5 billion annually, but with
only 1.5 to 2.5 percent penetration in most states.17 Until recently, the HEM systems market has been
stuck in neutral, as consumers have been wary of purchasing products with relatively high upfront
costs compared to potential energy savings (currently estimated at three to five percent).18 However,
many analysts expect this situation to change soon. In a recent report on the HEM systems market,
Pike Research estimated that the number of households with installed HEM systems, both stand-alone
and networked, will grow to more than 40 million worldwide by 2020.19 Similarly, the latest report by
GTM Research Home Energy Management Systems: Vendors, Technologies, and Opportunities, 20132017 forecasts that the HEM systems market will be worth over $4 billion by 2017.20
This growth will be largely propelled by higher statewide energy efficiency targets, recent strategic
partnerships in the utility solutions space and the home energy market, and the increased desire for
customers to reduce energy costs. Pike Research also estimated that the savings from HEM systems
may rise to 10 percent or more as the industry moves to more sophisticated types of reporting.21
3. Smart Grid and Smart Home Applications that Enhance Home
Performance: Consumer Understanding and Motivation
As described in the previous section, smart grid enabled technologies give a home’s occupants more
detailed information about energy use in their home, sometimes down to the individual appliance or
circuit level. Smart devices also allow for greater control over how energy is managed, using a variety
of functions and reporting methods.
For example, Tucson Electric Power’s (TEP) Power Partners pilot, which is expected to conclude in
November 2013, is already showing success in encouraging participants to take some form of action,
including making low-cost investments such as replacing light bulbs, based on near real-time time
energy use data that is transmitted to the customer every 15 minutes or less through an energy
management system.22
In addition to having the option of programming a thermostat to maximize energy savings or receiving
a monthly utility bill with the total electricity used for that month, customers may now have the option
of working with more intuitive products that have the potential to regulate energy use based on the
16
SmartGrid.gov, 2013, http://www.smartgrid.gov/recovery_act/deployment_status/ami_and_customer_systems##AmiExpenditures
Munsell, 2013
18
Strother, et al., 2012
19
Strother, et al., 2012
20
Munsell, 2013
21
BusinessWire, 2012
22
Vergetis Lundin, 2013, http://www.fierceenergy.com/story/tep-hails-behavior-change-untapped-energy-efficiency-resource/2013-1007.
17
Smart Grid and the Smart Home Applications the Enhance Home Performance:
Consumer Understanding and Motivation
consumer’s lifestyle and habits, and of receiving detailed real-time feedback on electricity
consumption.
In this section, we consider the extent to which smart grid technologies impact consumer behavior and
motivate consumers to conserve, change, or reduce energy use. Recent studies and pilot programs in
the U.S., Canada, and Europe have used different methods and combinations of technologies to try to
measure the impact of smart technologies and applications on energy consumption, with sometimes
different and conflicting results, depending on the type and length of study.
Impacts of Feedback Technologies on Participant Behavior
Studies of the “Prius effect,” a phenomenon named after Toyota’s hybrid, the Prius, which displays in
real-time when the car is using its battery, charging its battery, or using gasoline, show that continuous
data on how many miles per gallon the driver is getting from its tank has encouraged drivers to drive in
ways that decrease fuel consumption.23
A recent Penn Energy survey found that Americans want a more simple way to manage energy; they
want to manage it from a single location, and they increasingly want that location to be online.24
Nearly 60 percent of the over 1,000 respondents surveyed claimed that they would prefer to have a
centralized location to manage all their utility-driven energy management programs.25 This preference
is even greater among young adults (69 percent for those ages 18-29), who also indicated a strong
desire to move information online.26
Smart technologies and applications for the home that provide direct, real-time feedback to consumers
on residential electricity consumption and prices through in-home displays, web interfaces, or a
combination of both have been shown to be effective in large-scale, real-time feedback pilots and
experiments that were summarized in a 2012 report by the American Council for an Energy-Efficient
Economy (ACEEE), Results from Recent Real-Time Feedback Studies.
This report was a follow-up to its 2010 report that found that the household electricity savings from all
types of feedback ranged from four to 12 percent, based on pilot studies with small sample sizes.27
The 2012 report aimed to confirm these savings by looking at nine more recent (2009-2011) largescale or long-term, real-time feedback pilots conducted in the U.S. and Europe (U.K. and Ireland).28
The nine studies showed a range of savings from zero to 19.5 percent, with average savings of 3.8
percent, excluding a Northern Ireland study, which had the highest savings from the replacement of
existing prepayment meters in Northern Irish homes with new prepayment meters that featured real-
23
Seele, 2009
PennEnergy Editorial Staff, 2013
25
PennEnergy Editorial Staff, 2013
26
PennEnergy Editorial Staff, 2013
27
Ehrhardt-Martinez et al., 2010
28
Foster, et al., 2012
24
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Smart Grid and Smart Home Applications that Enhance Home Performance:
Consumer Understanding and Motivation
time display.29 Several of the studies had a small percentage of households that had large savings of up
to 25 percent, a group that ACEEE termed the “cybernetically sensitive,” to indicate a higher
susceptibility to feedback either as a result of predisposition or of learning a new behavior or habit.30
The pilots reviewed in the report tested various combinations of feedback technologies, including inhome displays, web interfaces, and prepayment meters. The Residential Smart Energy Monitoring
Pilot program, run by the Cape Light Compact (CLC), a small distribution utility on Cape Cod and
Martha’s Vineyard, provided 100 households that participated in a year-long study of the behavioral
aspects of energy use, with free home energy monitoring technologies, training on those technologies,
and access to an online dashboard for the duration of the pilot. 31 Tendril provided the hardware and
online dashboard, which included a clip-on monitor attached to the home’s electrical panel, a wireless
base station to receive data from the monitor and send it to Tendril, and a web interface that provided
real-time access to electricity usage and demand, energy savings in kWh and carbon dioxide,
comparisons with like cohorts, and energy-saving actions.
The installation on the clip-on display and web interface led to average savings of 9.3 percent;
although savings were not distributed evenly across participants. Five percent of participants reduced
energy consumption by 13 to 25 percent, while 23 percent of participants actually increased their
energy use from 2008 to 2009. The highest savings occurred from August to October, ranging from
11.5 to 15.7 percent, or 3.6 to 4.9 kilowatt hours per day.
The study found that participants who frequently engaged with the web interface over the course of the
study and who remained online longer than five minutes saved the most energy, more than 11 percent
on average. The study also found that overall the majority of participants were somewhat or very
satisfied with most aspects of the pilot, including the home installation process, experience using the
online dashboard, and assistance from the utility.
When asked to rate the effectiveness of features of the online dashboard on a scale of 0 to 10,
participants rated the visibility of real-time energy use the highest at 8.17, followed by understanding
energy use and cost savings. A number of participants installed new lighting fixtures, reduced bulb
wattage, increased refrigerator temperature, and starting using power strips as a result of the pilot.
Great Britain’s Energy Demand Research Project (EDRP) was a large-scale effort undertaken between
2007 and 2010 to test interventions to reduce residential energy use, with a smaller focus on peak loadshifting.32 The project involved pilots at four major energy suppliers in Great Britain, and included
more than 60,000 households, 18,000 of which had smart meters installed.
29
This study differs from the others, but was included in the ACEEE report because it demonstrates the large impact that a combination
of prepayment of electricity with real-time consumption feedback can have, particularly for low-income households, which tended to
realize the largest energy savings in the Northern Ireland study.
30
Foster, et al., 2012
31
Foster, et al., 2012. Unless otherwise noted, all information on this study has been taken from this report.
32
Foster, et al., 2012. Unless otherwise noted, all information on this study has been taken from this report.
Smart Grid and the Smart Home Applications the Enhance Home Performance:
Consumer Understanding and Motivation
Households with smart meters were given real-time in-home displays (some with the ability to control
space and water heating), energy efficiency advice, historic and peer-group consumption comparisons,
financial incentives, and the use of other digital media for providing feedback information. Households
that did not receive smart meters were provided with clip-on monitors, along with other interventions
mentioned above.
Overall, households with interventions that included smart meters recorded larger energy savings than
households without smart meters. The difference in savings between the two groups was
approximately three percent, with some variation depending on fuel, customer group, and period.
The trials also found that differences in the design of products such as in-home displays led to
differences in use. For example, in-home displays that were connected to smart meters tended to have
more features and were installed, retained, used, and rated more positively. Households also preferred
the traffic signal as the visual cue of consumption, rather than a display with an audible alarm to
indicate high consumption. Not only was this latter cue rated poorly by participants, but it also did not
motivate change.
The range of findings across programs using similar technologies suggests that realizing energy
savings from interventions using real-time feedback is not “one size fits all,” but that there are a range
of behavioral and technological factors that may result in energy savings, including:





“Sensitivity” towards real-time energy consumption feedback,
The design of and content provided by feedback devices,
The installation process and reliability of feedback devices,
The impact of household dynamics on engagement of feedback devices, and
The degree to which learning and habit formation take place.33
Using Demand Response to Optimize Home Performance
Not every kilowatt is equally priced. Electricity prices rise and fall over the course of a day and season.
It is typically more expensive for utilities to provide power when demand is highest, for example,
during day-time hours on summer and winter days,34 than when demand is low, such as in the middle
of the night. These costs of providing power at peak season are passed on to customers in the form of
higher rates.35 According to a 2004 report by the Government Accountability Office, one percent of the
year’s 8,760 hours may account for 10 to 20 percent of the total electricity costs for the year.36
33
Foster, et al., 2012
While this paper focuses largely on devices that increase the electric energy performance of a home, heating and cooling peaks exist.
Heating peaks in many parts of the country are associated with strains on natural gas/oil/propane supplies leading to rising costs of
those fuels and not electrical spikes that may lead to black outs and brown outs.
35
U.S. Energy Information Administration, 2013
36
U.S. Government Accountability Office, 2004
34
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Smart Grid and Smart Home Applications that Enhance Home Performance:
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The residential end-use sector has the largest seasonal variance, with significant peaks in demand
every summer and winter due to increased heating and cooling.37 The peaks in the residential sector
can be as big as 67 billion kilowatt-hours, compared to only 18 billion kilowatt-hours for a summer
peak in the industrial sector.38 The large seasonal spikes in the residential sector are a major reason
why residential customers are the most expensive for utilities to serve (on a dollars-per-megawatt hour
basis).39
Automated demand response programs are implemented by utilities to encourage customers to reduce
energy consumption or to shift energy use from on-peak to off-peak times, or times when demand for
electricity is lower and therefore less expensive. Demand response helps to maintain system reliability,
and may reduce the overall costs of energy if utilities can reduce or avoid using inefficient and
expensive “peaking plants” to meet short-term peak demand.
Utilities typically offer program participants a financial incentive to allow the utility to temporarily
adjust the energy use of appliances or HVAC systems from normal consumption during one or more
“peak events,” the times when residential energy demand is anticipated to be high. The utility places a
direct load-control device on the customer’s central air conditioning (CAC) unit, for example, and
when a peak event is called, the unit is cycled on and off for a few hours or the temperature is raised by
a few degrees until the event is completed. The customer can typically override the utility’s
adjustments by manually adjusting the CAC, but they forfeit the financial incentive that the utility
offers.
Automated demand response programs have been largely successful at reducing peak demand for
residential and small commercial customers. San Diego Gas and Electric’s (SDG&E) Summer Saver
program40 provided about 14 megawatts of demand response over six events, and is forecasted to
provide up to 30 megawatts of combined commercial and residential demand response, depending on
weather conditions.41
Similarly, Oklahoma Gas and Electric’s SmartHours program, a peak-sensitive, time-of-use (TOU)
plan, provides residential customers with smart thermostats that have two-way communication
capabilities. The utility sends price signals to the customer on a web-connected device, as well as
provides customers with advance notice of the peak price the day before so they can manage energy
use more efficiently. Last year, over 90 percent of the customers in the program saved money,
37
U.S. Energy Information Administration, 2013
U.S. Energy Information Administration, 2013
39
U.S. Energy Information Administration, 2013
40
San Diego Gas and Electric’s Summer Saver program is a demand response program based on central air conditioner (CAC) load
control. On select summer days, from May 1st to October 1st, when demand for electricity is high, the utility activates the load control
device to cycle on and off for a few hours. The customer is unaware of when the event will occur. In exchange for completing each
event, the customer receives a credit on his or her utility bill.
41
Freeman, Sullivan & Co – need source
38
Smart Grid and the Smart Home Applications the Enhance Home Performance:
Consumer Understanding and Motivation
achieving an average peak reduction of 2.02 kilowatt per home.42 These savings resulted exclusively
from customers opting in the program based on pricing signals.
Estimates from the World Energy Council, IBM, and others indicate that smart meters and other smart
grid technologies could help ameliorate seasonal spikes in electricity costs by shaving up to 15 to 20
percent off a utility or region’s peak power demand.43
Demand response programs would be most effective if combined with home performance retrofits.
Customers with a well-insulated home will be less likely to feel the change in temperature compared to
a customer with a leaky home because a sealed home keeps the temperature constant for a longer time.
This is similar, in theory, to putting ice in a cooler rather than a paper bag.
Smart meters make it possible to introduce time-of-use (TOU) pricing to homes so that the rate
structure reflects the costs associated with electricity throughout the day. To help customers and
utilities manage peak demand, electricity providers in Ontario, Canada, have introduced smart meters
with TOU electricity rates.44 When homes transition to TOU pricing, they receive a smart meter, which
wirelessly transmits their electricity use to their utility for more accurate billing. Consumers also
receive more detailed information about the price of electricity at any given hour, which empowers
them to make decisions about when to run appliances, such as pool pumps, dishwashers, and washing
machines.
In the U.S., Navigant recently published an evaluation of NSTAR Gas and Electric Corporation’s
Smart Grid pilot program,45 which provided four customer test groups with a unique combination of
information on energy consumption; residential dynamic pricing (both TOU and critical peak pricing
(CPP)46 rates and rebates); and, two-way direct load control through existing automated meter readings
and customer broadband connections. The program used Tendril smart grid technology, including an
in-home display, smart thermostat, web portal, and internet, facilitating two-way communication
between the meter and NSTAR and back to in-home display. The purpose of the pilot was to test
hypotheses regarding the impact of technology on load reduction and the interaction of various
technologies and rate structures.
During this 24-month pilot program, NSTAR enrolled approximately 3,600 customers and installed the
enabling smart grid equipment at roughly 2,700 homes. Overall, Navigant found that three out of the
four participant groups--all but the group that received enhanced information on energy consumption
only--reduced their energy use in both summer and winter, with customers on the TOU rate reducing
42
Vergetis Lundin, 2013, http://www.fierceenergy.com/story/smarthours-saves-money-90-percent-oge-customers-top-story-1-fe/201306-11?utm_medium=nl&utm_source=internal
43
St. John, 2013, http://www.greentechmedia.com/articles/read/making-the-case-for-smart-grid-to-shave-peak-power
44
In 2009, utilities started to install smart meters on residential and commercial properties as part of the province’s Green Energy Act,
which was created to expand renewable energy generation, and promote energy conservation and the creation of clean energy jobs.
45
SmartGrid.gov, 2013, http://www.smartgrid.gov/sites/default/files/NSTAR%20Smart%20Grid%20TPR1_Final%203-19-13.pdf
46
When utilities observe or anticipate high wholesale market prices or power system emergency conditions, they may call critical events
during a specified period. Events are usually limited to 10 to 15 per year. During critical peak events, electricity prices can be between
three to 10 times as much as non-critical peak times. CPP may be combined with TOU.
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Smart Grid and Smart Home Applications that Enhance Home Performance:
Consumer Understanding and Motivation
energy consumption by more than those on the standard rate.47 The study also found that customers on
the TOU rate were generally more satisfied with the pilot (in total over 80 percent) than customers on
the standard rate.
Motivating Consumers to Invest in Home Performance
Major advancements in HEM systems technology, together with national efforts like the Green Button
Initiative,48 a federal voluntary program that encourages utilities to provide retail electricity customers
with easily accessible and up-to-date data on their electricity usage, have fostered the rapid
development of new tools and applications to connect utilities with their customers. It is this
connection that adds to the home performance potential.
Platform developers are also beginning to take advantage of the benefits that standardized energy use
data provide. The Simple Energy Customer Engagement Platform49 was created by Simple Energy to
integrate utility Green Button data with customer feedback programs, such as San Diego’s Biggest
Energy Saver program, which motivated customers to save an average of more than 20 percent on their
energy consumption, with the top performer in the program achieving nearly 50 percent in savings.50
Although the upfront costs of many of these feedback interventions remain relatively high compared
with other energy efficiency improvements such as air sealing and insulation,51 the development of
new products is likely to drive down prices over the next several years. Leveraging these new
technologies and the savings they provide with home performance retrofits may also increase the cost
effectiveness of home performance programs and reduce the pay-back time for customers, which will
make programs more attractive and economically feasible for a larger portion of the population. If a
home is well-insulated and sealed, customers participating in demand response programs will be less
likely to feel the effects. Therefore, energy efficient homes may have a higher probability of program
retention, satisfaction and energy savings.
Utility data access is important for advancing home energy analysis, and initiatives to standardize
energy use data such as Green Button are critical. Harnessing new, detailed energy data and integrating
energy efficiency and demand response programs with sophisticated consumer engagement platforms
significantly increases a consumer’s ability to understand and manage his or her home’s energy use
more efficiently.
With HEM systems, smart appliances, and the ability to move energy management onto a digital
platform, consumers are given unprecedented understanding and control of their home’s energy use.
47
Although participants reduced energy consumption, results were not statistically significantly different from zero at the 90 percent
confidence level This is due primarily to two factors: 1) data for this evaluation covered only nine of the 24 months of the pilot and 2)
sample sizes for some demographic subgroups were relatively small, especially when further broken down by pilot test group.
48
Customers with utilities participating in this program may go directly to the utility website to download electricity use data, or may use
Green Button Connect to authorize a third party service provider to receive access to their Green Button data.
49
Simple Energy, 2012
50
Simple Energy, 2012
51
Foster, et al., 2012
Smart Grid and Smart Home Applications that Enhance Home Performance:
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This gives them the power to easily identify energy waste and adjust their home’s energy controls
accordingly. It also gives them the power to cut energy costs through reduced consumption as well as
time-of-use adjustments.
4. Smart Grid and Smart Home Applications that Enhance Home
Performance: More Accurate Quantification of Consumption
Many of the stakeholders in the home performance industry, including contractors, program
administrators and evaluation, measurement, and verification (EM&V)52 consultants benefit from
access to utility meter data, both before and after a home performance project has been completed.
Contractors use energy consumption data to diagnose problems and model changes in energy
consumption. Program administrators use the same information to identify appropriate measures or
systems for upgrades and to verify installation work. Program evaluators use meter data to compare
pre- and post-upgrade consumption, verify energy savings predications, and assess net impacts.53
The smart grid’s ability to manage and communicate large quantities of data through electronic or
wireless networks means that home performance contractors, customers, utilities and program
evaluators have the potential to access energy consumption data more easily and at a much lower
cost.54 This potentially leads to more accurate and cost-effective estimates of program impacts and
improved program evaluation, which can in turn help program administrators identify homes with the
greatest need for energy efficiency upgrades.
In this section, we consider ways in which smart grid technologies are facilitating more accurate
quantification of energy consumption and how that benefits the home performance industry.
More Precise Quantification of Energy Consumption
One of the benefits of smart meters is that they allow for very precise measurement of energy
consumption, both in the aggregate and, when combined with an HEM device, by end use. For
example, smart thermostats that communicate data on when HVAC systems are turned on and off can
complement smart meter data by showing the relationship between a home’s overall energy
52
Evaluation, measurement and verification or EM&V is an overarching term that encompasses four major types of program evaluation:
process, market effects, impact, and cost-effectiveness evaluation. Evaluations of energy efficiency and demand response programs
have three primary objectives, which are achieved through the use of these four major types of evaluation: (1) documenting the
impacts of the program to determine whether the program has met its goals; (2) identify ways to improve current and future programs
by determining why program-induced impacts occurred; and, (3) support energy demand forecasting and resource planning by
understanding the historical and future resource contributions of energy efficiency as compared to other energy resources (SEE Action
Network, 2012).
53
The net impact of a program is the total measured energy savings resulting from the installation of one or more energy efficiency
measures minus “free riders,” or the energy savings resulting from customers that have participated in the program but say that they
would have installed measures without program incentives.
54
It is important to emphasize that this promise has not yet been realized, and that there are significant barriers –discussed later in this
paper – to its realization. However, if these challenges can be resolved, the benefits of making this data available to home performance
practitioners are tremendous. Most of the following discussion of the benefits of smart grid and smart home technologies are
predicated on the assumption that these problems can and will be resolved.
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Smart Grid and Smart Home Applications that Enhance Home Performance:
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consumption and the use of heating or cooling systems. This disaggregation between baseload and
HVAC is key to understanding the impact of a home performance upgrade.
Models of a home’s energy consumption that draw on both smart meter and thermostat data to
disaggregate energy consumption by end use show that, contrary to common assumptions, baseload
consumption can vary seasonally. These models, based on both smart meter and HEM systems data,
provide a much more accurate picture of the proportion of a home’s energy consumption required for
heating and cooling.55 Models may also show the extent to which changes in internal heat gains as a
result of non-heating and cooling-related measures impact heating and cooling end uses.
Utility bills have traditionally been used to estimate energy consumption but provide only a very rough
indication of how a home consumes energy. It may also be difficult for contractors to obtain 12 months
of utility bills. Customers may be reluctant or unable to allow third parties to access their online utility
accounts. Program administrators and EM&V contractors can in theory obtain consumption data from
the customer’s utility, but in practice this data can be very difficult to obtain and is often not provided
in a digital, easy-to-download format.56
A monthly utility bill can show that a home consumes more energy in some months (typically winter
and summer) than others. However, it cannot provide information about load shapes for individual
days, which are useful for understanding the home’s contribution to peak load, or for determining
which devices are driving energy consumption.
In the absence of smart meters, statistical programs that use nonlinear regression such as the PRISM57
are frequently used to disaggregate the home’s heating and cooling loads and to calculate baseload on
the basis of conventional billing data. However, these methods can be imprecise and are better at
characterizing large numbers of homes where statistically significant estimates can be made, rather
than individual residences.
Another benefit to smart meter data is that the meter shows energy consumption at relatively short
intervals (every fifteen minutes, for example), which can provide a much more precise picture of how a
home consumes energy before and after a whole-house energy upgrade. Smart meter data also has the
ability to show periods of high energy consumption and short-term spikes caused by use of an
appliance such as a vacuum cleaner or dishwasher.
Bidgely, a two-year-old company that uses unique analytics to obtain home energy use data to the
appliance level without using any plug-level monitors, finds that customer engagement, energy
savings, and value to consumers all increase as the granularity of data increases.
Although Bidgely has the capacity to disaggregate heating and cooling loads using 15-minute and 60minute smart meter data, obtaining energy consumption data every seven seconds through a home
55
Pratt et al., 2010
The need for data entry of paper bills can lead to unnecessary errors in analyzing energy use.
57
The PRISM method attempts to find the best statistical fit for three lines describing the heating, cooling, and base load (all other loads)
for a building. The base load is estimated from the minimum monthly bills, assuming that it is relatively constant.
56
Smart Grid and Smart Home Applications that Enhance Home Performance:
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energy management system helps the company determine if major appliances are running efficiently
by analyzing energy patterns.58 This is important to the home performance industry because it creates
the potential for homeowners and home performance contractors to identify appliances or systems that
are running inefficiently.
More Effective Prescreening
Smart meter data may be useful in identifying particular segments of the population or types of
buildings that can benefit from home performance the most, which can potentially help program
administrators to cost-effectively distribute resources to homes with the greatest need and potential for
energy savings.
Studies have shown that when smart meter data is linked to demographic and building characteristic
data at the time the smart meter is installed, it can provide utilities and other program administrators
with a better idea of their customer’s structural demand for electricity over time and the energy
intensity of the buildings they occupy.59
Linking household energy use data with information about the home’s age, characteristics and
condition may also help to identify unusual consumption patterns that might be indicative of
malfunctioning HVAC equipment or an exceptionally leaky envelope. For example, Opower has been
able to improve its algorithms using 15 minute to hourly data intervals to target customers and provide
site-specific recommendations on how to cost-effectively reduce energy use.60
In the first long-term research trial to measure customer energy use at the whole-home and circuit
level, Pecan Street Research Institute’s appropriately named 2013 study, Data-Driven Insights from the
Nation’s Deepest Ever Research on Customer Energy Use, recorded electricity use, apparent power,
and voltage levels for the whole home plus eight to 23 circuits at data intervals ranging from one
minute to one second. The study gathered this data from nearly 200 homes over the course of several
years.61
One hundred homes in the study were less than five years old and had a green building certification,
and 100 homes were between 10 to 90 years old and represented a broad range of home conditions,
sizes, and appliance configurations. The purpose of this study is to better understand the patterns of
residential energy use in newer versus older homes and homes with green building certifications
identify seasonal load variations, and the most cost-effective home energy efficiency improvements,
among other goals.
The top ten findings from a preliminary report include that green-built homes exhibit a 27 percent
lower energy intensity score (kilowatt hours/square foot) than older homes without rebates when
58
Plante, 2013
Barata et al.
60
Barata et al.
61
McCracken, et al., 2013
59
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Smart Grid and Smart Home Applications that Enhance Home Performance:
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normalized for size and have a lower sustained load (average kilowatts) in summer months when
thermal loading is highest.
The study is not yet complete, but has generally shown how smart meter data can be used by programs
and contractors to identify homes that are consuming unusually large quantities of energy and appear
to be good candidates for energy efficiency improvements.
Improved Energy-Use Modeling Techniques
Many home performance programs require contractors to model the projected reduction in energy
consumption resulting from the installation of energy efficiency measures. The extent to which these
models provide accurate predictions of post-upgrade energy consumption has been the subject of
extensive debate within the energy efficiency field.
One solution to improve the accuracy of these models has been the development of calibration
methods, such as the procedures codified in the BPI standard, BPI-2400-S-1200 Standard Practice for
Standardized Qualification of Whole-House Energy Savings Predictions by Calibration to Energy Use
History.
BPI-2400 and similar calibration methods are implemented prior to an upgrade in a home. The home’s
energy consumption before and after the upgrade are modeled and predicted. The model of the preupgrade energy consumption is then compared to actual consumption data, traditionally as indicated by
utility bills. If the model’s prediction of pre-upgrade consumption is significantly off, the model is
calibrated using several methods until it accurately models pre-upgrade consumption. These calibration
methods are then applied to the post-upgrade consumption model to improve its accuracy, a procedure
colloquially known as a “true-up.”
Although smart meter data is not necessary for these calibration methods, it could improve home
performance predictions in two ways. First, to the extent that smart meter data becomes easier to
access than traditional billing data, contractors will have an easier time conducting the calibration.
Second, and more importantly, granular smart meter data that indicates a home’s load shape during a
day or month may allow the development of more sophisticated calibration methods that enable the
modeled energy consumption associated with specific end uses to be calibrated to the actual
consumption of the same end uses, ultimately resulting in more accurate predictions.
More Cost-Effective and Accurate Program Evaluation
Program administrators are required to conduct EM&V to estimate a program’s first-year energy
savings and the persistence of those savings over time to justify the use of ratepayer funds. One of the
most common methods of measuring program impact, or the energy savings that can be attributed to a
program, is to compare the difference in consumption between the pre- and post-upgrade periods, after
controlling for weather conditions and other factors that influence customer energy use such as
behavior to the greatest degree possible.
Smart Grid and Smart Home Applications that Enhance Home Performance:
More Accurate Quantification of Consumption
In addition to billing analysis, the International Performance Measurement and Verification Protocol
(IPMVP) also recommends short-term metering to verify other types of energy savings estimates.
Short-term metering is labor-intensive because it requires the installation of metering equipment and
data collection. Thus, this approach is usually conducted on a relatively small sample of the
population. The benefits to this method are that evaluators eliminate the need to make assumptions
about how customer-use schedules and behavior impact energy use, which aids in more accurate
estimates of energy savings from installed measures.62
Leveraging the smart grid’s metering and communication abilities to expand sample size, improve data
granularity, and increase the duration of EM&V is expected to provide more accurate and transparent
evaluations at a lower cost. The significant increase in the level of granularity of energy use data is
also expected to make it easier to measure persistence of energy savings because of the potential for
continuous feedback before, during, and after the project is completed.63
Program evaluators also benefit from understanding how the energy use requirements of buildings,
substations, or zip codes change over time. These tools and data make it easier to develop control
groups, which aid in the evaluation of behavior-based programs, or programs that rely, at least in part,
on consumers changing their behavior, for example by programming their thermostat or reacting to
real-time feedback devices to reduce energy consumption.64
In 2012, Freeman, Sullivan & Co. (FSC) conducted an evaluation of SDG&E’s Summer Saver
program using smart meter interval data for the first time.65 The prevalence of smart meters in the
program’s population eliminated the need to install expensive CAC load loggers, reducing overall
evaluation costs. In the future, FSC anticipates using smart meter data to facilitate quicker impact
evaluations, with estimates becoming available as soon as the smart meter data can be accessed, and
forecasted estimates available soon after the end of summer.
Use of smart grid data in EM&V is still so rare that there is very little data on the costs of this
approach. However, the Pacific Northwest National Laboratory (2010) estimates that if high-quality
EM&V were implemented, it could displace a significant fraction of the costs of particular evaluation
methods, including short-term metering (although there would still be costs associated with data
collection and cleaning), which could be standardized and automated as part of the utility billing
process. Once this process is in place, the cost to deploy it should be relatively independent of the
number of customers, or the duration over which it is used, resulting in larger sample sizes, improved
data quality, and improved ability to measure persistence, particularly for new energy efficiency
technologies.
62
Pratt et al., 2010
Barata et al., 2012
64
Barata et.al., 2012
65
Malaspina et al., 2012
63
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Smart Grid and Smart Home Applications that Enhance Home Performance:
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Improved Quality Assurance
Home performance programs and their third-party contractors usually perform quality assurance (QA)
and quality control (QC) on a selected number of projects after they have been completed (or are near
completion) to evaluate the effectiveness of their quality management systems and to provide feedback
that may result in quality improvements.66 Quality assurance also aids program evaluation by ensuring
that program funds were spent in a manner consistent with contractor reporting.
Smart meter data could enhance QA/QC processes in two ways. First, it could allow a program to
verify a contractor’s modeling assumptions by using or replicating a bill calibration method as
described above. Second, if a smart meter monitors energy consumption after a project is completed,
the data can provide early indications as to whether the installed measures are functioning as
anticipated without the need to install expensive load loggers. This approach can also help programs
and contractors verify energy savings for each retrofit.
More Accurate Labeling of Energy Consumption
Residential green building certifications and labels, such as ENERGY STAR, LEED for Homes, and
BPI-2101-S-2013 Home Performance Certificate, provide nationally recognized standards of building
performance that can be used by homeowners and the home performance, real estate, and appraisal
industries to verify that homes have achieved a certain level of energy efficiency. Several certification
and rating systems for residential homes are currently in the market but none are explicitly tied to
metered consumption data or are necessarily required to report energy savings or consumption derived
from energy efficiency improvements.
Smart meter data could provide more detailed information on energy performance, taking into
consideration a set of assumptions for occupant behavior, which may then in turn improve how home
performance is valued in the real estate industry and could serve as a useful addition or complement to
existing scores and labels.
Smart meter data also has the potential to allow the organizations that sponsor these scores and
certifications to check the accuracy of their assumptions against actual consumption, ensuring that
better-scoring homes do in fact consume less energy than worse-scoring homes.
Over time, as the price differential between energy efficient homes and equivalent homes that are not
as energy efficient increases, consumer interest in home performance upgrades should also increase, as
homeowners realize that investments in energy efficiency measures can be recovered at the time of
sale.
Getting to Bankable Energy Efficiency
Energy bill savings are one of the primary motivations for building owners to invest in increasing the
energy efficiency of their property. Making connections between the efficiency measure undertaken
66
Building Performance Institute, 2013
Smart Grid and Smart Home Applications that Enhance Home Performance:
More Accurate Quantification of Consumption
and the metered savings generates a host of new policy options for financing. The Achilles’ heel for
energy efficiency is that it lacks the metered, measured data that would give it a clear place in the
discussions on carbon credits and clean energy standards.
Energy efficiency measures have long been a part of federal, state, and utility incentive packages by
attaching estimated or deemed energy savings to the efficiency measures. Yet the fact that the energy
saved is estimated has stuck in the craw of policymakers who are looking to give utilities credit for
offsets of measured pollution. Financiers apply higher pricing to greater risk investments, and
estimates have greater risk than measured data.
Renewable energy has long been metered, measured, and considered an acceptable offset to carbon or
for meeting a clean energy standard. Financing a solar system is clear cut in that it is easy to verify
whether the system produced the energy that was predicted. It is already expected that, by the year
2020, homes that produce electricity will be the norm and advances in net metering will lead to more
and more homes paying little to nothing to utilities as sell more energy from their solar panels than
they buy from utilities. The ability for consumers to connect specific efficiency measures to actual
energy savings results is a breakthrough in energy efficiency investment.
As smart meters become more prolific and HEM technology more commonplace, the highest
performing homes will be smart homes. The payback for high-efficiency technology has been the
greatest barrier to energy efficiency investment. While incentives for solar energy have made solar
panel installments virtually free in some areas of the country, home performance contracting
companies are still struggling to build a profitable market. We are now at the dawn of a scalable
market for home performance retrofits, which could be made more profitable if the savings could be
sold to the market.
Energy efficiency provides capacity to the grid in the form of “negawatts.” The demand response
industry has grown through producing negawatts on-demand at peak (when they are most valuable to
the utility). However, base load reduction, achieved not through conservation measures but by
increasing the efficiency of buildings, also produces negawatts and, if metered and measured as
demand response, could earn the same investment as installing renewables or building a power plant
and the carbon that it offsets could have clear value in some regions.
If a home retrofit earned credit through producing negawatts, home performance contractors, trained in
advanced software and schooled in building science, would then be able to bundle a package of energy
efficiency measures, like solar contractors do a series of solar panels, and project the savings for that
energy efficiency upgrade accurately enough to provide certainty to investors and policymakers. In a
future that includes broad access to useable smart grid data, bundles of saving would be marketable
“negawatts” that could be used as the security for the financing of the retrofit itself. Thus access to
data could lead to more increases in whole-home retrofits and deep potential energy savings.
There are barriers to this future that must still be addressed. Renewable technology and efficiency
technology differ, and there are limits to replicating renewable policy for energy efficiency. For
19
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Challenges to Advancing Home Performance and Smart Grid Integration
example, renewable technology lives outside a building and not inside the building like most
efficiency improvement; solar panels are often leased and energy efficiency technology is not;
renewables stand alone as power supplies while energy efficiency involves a change to a building or
manufacturing process. Importantly it is impossible to prove the counter-factual--we must assume
that the energy we save through efficiency would have been used in the first place in order to count
the savings. While these differences can be overcome to some degree with smart grid technology,
they cannot be eliminated. Thus, energy efficiency and home performance must chart their own
policy path.
5. Challenges to Advancing Home Performance and Smart Grid
Integration
The previous sections demonstrated that smart grid and smart home technologies have the potential to
significantly enhance home performance upgrades and to provide homeowners with new ways to
understand and control their energy consumption that will complement whole-house energy
improvements. For this potential to be realized, however, a number of challenges must be addressed.
Data Access
Energy consumers typically have access to only the relatively sparse information provided on their
utility bills. Despite the large-scale deployment of smart meters across the country, most consumers
have yet to be provided with access to the detailed energy data generated by these meters. As a result,
many of the potential benefits of smart grid deployment have yet to be realized.
While some states and public utility commissions (PUCs) have worked to advance consumer energy
information and demand response programs, utilities typically collect and manage energy use data. A
written customer request is required to release data, and that request often has to be made on paper
(often on a paper form provided by the utility). This makes it difficult for a third party to engage
directly with the customer without going through the utility – leaving the choice of what program will
be utilized and offered to the utility and the PUC.
Access to accurate, detailed data is also a necessary precondition for expanding markets for energy
efficiency. Both capacity and carbon markets rely heavily on measured savings and detailed meter
data is crucial for accurately measuring these savings. As discussed in Section 4 above, other data
from smart devices such as thermostats can complement smart meter data to provide even more
accurate measurements of savings.
The national Green Button Initiative provides a way to start addressing the obstacle of inefficient and
difficult data access. The White House launched the Green Button Initiative in January 2012 and 38
utilities and energy suppliers have committed to participate to date.67 They will provide 30 million
67
Office of Science and Technology Policy & Council on Environmental Quality, 2012
Challenges to Advancing Home Performance and Smart Grid Integration
households in 17 states68 and the District of Columbia with access to their energy use information.69
However, while initial uptake has been laudable, advancing access to Green Button data has been
difficult. One reason for this is that out of the 38 utilities that have committed to participate, only 17
have implemented it so far.70 Other obstacles include certain state privacy and liability laws that
prevent consumers from sharing their data.71 Security concerns also present a hurdle, as well as the
lack of a federal framework for safe data access, which is discussed later in this section.
As the Administration has struggled with this issue, Congress has made attempts to gain progress on
data access. In the 111th Congress, the idea to require access to utility data took legislative shape. In
March 2010, Rep. Ed Markey (D-MA.) introduced H.R. 4860, the Electric Consumer Right to Know
Act, or 'e-Know Act.' Sen. Mark Udall introduced a similar bill (S.3487) and then reintroduced the
legislation (S.1029) in the 112th Congress with then-Sen. Scott Brown (R-MA).
The purpose of e-Know is to require utilities to make energy consumption data available to their
customers or the customer’s third-party designee (which could be a contractor, energy management
company, smart grid technology provider, or other).
Rep. Markey's bill would have required utilities to make energy use data available to consumers at
the rate at which the utility receives it. For a smart meter, it would be at the smart meter interval,
whether 15 or 30 minutes. For customers with standard meters, utilities would be required to provide
data to whenever they made meter readings (as they presently do on a normal billing cycle). The
legislation introduced by the Udall and Brown bill would require utilities to provide consumers with
smart meters with one-hour data intervals; utilities would have twenty-four hours to provide it, rather
than in near-real-time as is the case with Rep. Markey's version.
In both bills, consumers would be allowed to provide third parties access to their consumption data so
that third-party energy management services could process and reinterpret data from smart meters
and program smart appliances. These services could simplify the use of smart meters for customers,
create the potential for greater energy savings, and allow for an aggregation of savings for load
management. Either state attorney generals or consumers would be able to take legal action to
enforce this requirement if they believed a utility was not providing appropriate data access.
While it costs the federal government nothing, utilities that comply with these bills may ask for rate
increases to cover their efforts. This has been an ongoing sticking point as policymakers fear that
requiring data access will lead to rate increases and they will receive the blame.
In the absence of public policy, the private sector has entered the discussion. Internet giant Google
announced in January 2013 that it is launching an effort to help realize all the potential benefits of the
68
Arkansas, California, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, North Carolina, Ohio, Oklahoma,
Pennsylvania, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia.
69
Green Button, 2013
70
Green Button, 2013
71
Tweed, 2012
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Challenges to Advancing Home Performance and Smart Grid Integration
data revolution. Google awarded a $2.65 million grant to the Energy Foundation for the purpose of
advancing policy reforms to incentivize the use of smart grid technology, encourage the use of home
energy management devices and online platforms, and expand the use of time-based pricing, among
other goals.72 Google says its effort is intended to build upon the Administration’s Green Button
Initiative, with the overarching goals of empowering consumers to make smarter energy choices,
improving real-time management of the electricity grid and facilitating more renewable energy, all
while lowering overall costs.73
Some utilities have entered the fray as well. SDG&E, for example, launched a program that gives
customers an incentive to buy and install HAN devices and link them to the ZigBee radios inside
their smart meters.74 Doing so creates a smart meter-to-home connection, which allows homeowners
to monitor their energy use directly, as opposed to relying on their utility. With these devices, and the
direct communication they create, homeowners can receive energy data updates as often as several
times a minute, which is much faster than updates coming from the utility itself.
Access to the data is the right of the person who pays for the energy. While utilities and the private
sector have joined forces in some regions to advance access, and the White House has demonstrated
leadership through its voluntary initiative, easy, efficient and digital access should be provided as a
right to all energy consumers so that market forces can advance energy management and home
performance contractors and homeowners can better understand a building’s energy use. Until
Congress acts, state legislatures and PUCs must work with utilities and the private sector to ensure
that data access is not a barrier to either technological innovation or increased energy efficiency.
Privacy and Security
The impact of human decision-making on the way technology works cannot be underestimated, and
push-back against smart meters is one aspect of this relationship.75 Many homeowners perceive the
flow of information from a smart meter to be one-way: from the home to the utility, even though it is
possible for it to have other uses, such as enabling the homeowner to make better decisions about
energy use based on access to more detailed energy consumption data and pricing.
In a 2010 Poneman Institute study, Perceptions about Privacy on the Smart Grid, researchers found
that more than half the consumers surveyed were concerned about government misuse and inadequate
protection of personal information. Consumers believe these data could indicate their daily habits,
and anyone monitoring a household’s energy use could track whether or not occupants were home.
However, the study went on to mention that these concerns were largely unfounded and based on a
lack of understanding about the functions and capabilities of smart meters.76 Significantly, the report
72
Colman, 2012
Colman, 2012
74
St. John, 2013, http://www.greentechmedia.com/articles/read/california-expands-the-smart-meter-to-home-area-network-market
75
Foster, et al., 2012
76
Poneman Institute , 2010, http://www.ponemon.org/news-2/39
73
Challenges to Advancing Home Performance and Smart Grid Integration
also noted that consumers would be substantially less concerned if their personal data was subject to
protections such as those in place for personal health information.
In fact, the percentage of consumers concerned about the release of information fell from 58 to 32 if
the information in question was not identified by the customer’s name.77 Ensuring that consumers’
private information is adequately protected will likely facilitate consumer acceptance of smart grid
technology. A full 75 percent of respondents found planning for improvements to the network grid to
be an acceptable use of their private energy records.
Security and customer privacy are priorities in all smart grid projects because digital information has
the potential to be compromised. Consumers have concerns are not only about deliberate data theft
and misuse, but also about inadvertent data leaks resulting from user errors, equipment failures, and
natural disasters. Both states and the federal government have been focused on how to reduce the risk
of energy disruptions or unauthorized data access from cyber intrusions, avoid the loss of critical
functions during an intentional cyber assault, and address customer concern about privacy and data
misuse.
California, Maine and Vermont have offered customers the option to opt-out of smart meter programs
for an additional fee. The California Public Utilities Commission (CPUC), which has the most
comprehensive plan for addressing consumer concerns about privacy and data misuse, modified its
customer data release governance process in 2011 by requiring customer consent before utility data is
shared with a third party, unless that party is using aggregated data sets in which the individual is not
personally identifiable.
However, the concern that criminals may use smart grid data to determine whether or when
occupants are at home may be something of a red herring. Eighty-five per cent of residential
burglaries are committed by non-professionals looking for items that can quickly be converted to
cash.78 Such criminals are unlikely to have access to sophisticated software that allows them to
determine if someone is home by checking if they have used their hair dryer – they are more likely to
get such information by looking for a car in the driveway or piled-up newspapers. This does not
negate all customer privacy concerns, but suggests that it is important to not lose sight of great
potential energy savings by trying to protect data that has little value to anyone but those trying to
help manage energy savings.
"Companies developing energy efficiency software agree that security and privacy is a core
requirement for working in the industry,” said Aaron Goldfeder, the CEO and co-founder of
EnergySavvy, a company that provides software solutions to utilities and energy efficiency programs.
77
78
Poneman Institute , 2010, http://www.ok-safe.com/files/documents/1/Perceptions_About_Privacy_on_the_Smart_Grid.pdf
Safeguard the World, 2013
23
24
Where Do We Go From Here?
He notes that in both the home performance and IT industries it is a basic requirement that firms take
customer privacy and security seriously. “Anyone who does not have the ability to protect customer
data should not be in this business,” Goldfeder said at the 2013 ACI Home Performance Leadership
Summit during a panel on emerging technology.79
6. Where Do We Go From Here?
Lead Generation Through Cross Marketing
Successful home performance contractors have learned where to find their best leads and how to target
homeowners who are thinking about home improvements. In many cases, HVAC contractors are home
performance lead generators as they have a maintenance relationship with the customer and are bestsuited to know what the heating and cooling needs in the home are and where the problems may be
(i.e., rooms upstairs are never warm in the winter). But there are times apart from HVAC failure when
homeowners consider home improvements. Thanks to smart grid technologies, new industries could
generate home performance leads.
According to a 2013 survey by the National Association of Realtors, fifty-three percent of buyers
undertook a home improvement project within three months of their home purchase. A promising way
to tap that market is to look to the first service providers that a new homebuyer calls for lead
generation opportunities.80
New homeowners almost inevitably request service from the local telecommunications provider to
establish phone, TV, wireless internet, and other services. Many also call security firms to set up home
protection systems.81 These telecommunications and security firms have an opportunity to expand their
services to include energy efficiency.
Telecommunications firms are already getting into the digital automation business. National companies
like Verizon FiOS have a home automation service that includes self-monitoring, energy management,
and home control tools. Their energy control kit includes a gateway device, a smart thermostat, an
appliance switch, an energy reader and a remote control.82 Similarly, AT&T has launched a new
product that offers customers the ability to remotely adjust their thermostat, lights, appliances, and
security systems.83
Another digital, automated industry that is invited into many homes in the first month of ownership is
the security company. Similarly, security systems typically have been installing motion and occupancy
79
Goldfeder, 2013
Lautz, 2013
81
According to a 2008 study by Rutgers University, “the market for alarm systems, sold by the private security industry, is about $30
billion annually, growing at a compound annual rate of 7-8 percent. Lee, 2008
82
Verizon, 2013
83
AT&T, 2013
80
Where Do We Go From Here?
sensors for years. As discussed in Section 2, sensors that detect whether people are home are also an
important component of home energy management systems.
Other features of security systems also have the potential to support whole-house upgrades. According
to Peter Rice of Alarm.com, the key to customer-friendly automation is having one homeowner action
cause many others: locking a door turns on the alarm system, shuts the lights, and reduces the
thermostat temperature. Similarly, a phone app can alert the home that the homeowner is on their way
so as to bring the home to a comfortable temperature. While an energy-only HEM focuses on comfort
and cost savings, “a security system is an emotional purchase that provides peace of mind, it’s about
the homeowner feeling safe. So adding energy management services delivers a lot more value for the
homeowner,” Rice says.84
Despite the potential, both telecommunications and security firms are only beginning to think about
how to expand into energy services. One possible strategy would be for them to partner with home
performance programs or contractors and recommend a home performance assessment and upgrade at
the same time that equipment is being installed. Further, the communications and/or security
installations could analyze energy efficiency improvements that might be valuable for the homeowner
–new smart devices might indicate that a home’s HVAC system is consuming an usual amount of
energy, for example, and a home performance contractor could then be contacted to provide a bid and
conduct the work.
Using Stand-Alone Devices to Drive Whole House Upgrades
A similar strategy would be to deliberately develop ways for HEMs and devices with relatively narrow
scopes to suggest broader home performance upgrades under certain circumstances.
Nest Labs, a start-up founded by former Apple engineers Tony Fadell and Matt Rogers, provides one
interesting example among many. Nest has been working to capitalize on automating home
technologies to provide convenient digital platforms. The company recently expanded the home energy
management function of their thermostat with a fire detector called Nest Protect. The new Protect
device will connect to existing Nest thermostats so that if the device detects carbon monoxide, it will
contact the thermostat, which will automatically switch off the furnace.85 In theory, a home
performance component could contact a homeowner or HVAC contractor when the equipment
malfunctions to let them know a service call is needed.
At the release of Protect, Rogers explained how Nest Labs is targeting their home technology
innovations: “We are focusing on unloved, ugly, dumb, plastic boxes that have had no innovation for
years," Rogers said. "It's less about automation and more about the re-invention of unloved gadgets.
Our goal is to build all these gadgets and only connect them if it makes sense.”86
84
Rice, 2013
Barr, 2013
86
Barr, 2013
85
25
26
Where Do We Go From Here?
The key to smart home integration is that all “smart” devices – meters, appliances, HEMs, security and
cable systems – are linked in a way that allows each component to communicate and maximize their
usefulness to the homeowner, and in many cases, the utility provider(s). As residents living in wireless
environments add aspects of their home energy (e.g. automated thermostat control and lighting) to
other automated systems in their homes (e.g. pre-programmed lawn sprinkler systems), what emerges
is an all-inclusive, two-way communication system between a house and its residents.
Because this communication has the potential to add in a third party, such as home performance
contractor or energy program, there is an enormous potential to ensure that contractors are notified as
service is needed, that inefficient homes are targeted for rebates and retrofits, and that home retrofits
are monitored to ensure they meet their predicted savings – all done wirelessly without the homeowner
doing much more than pressing a button or locking a door.
Policies Using Smart Home Data to Advance Home Performance
As the U.S. continues to focus on fiscal responsibility and cutting waste, energy performance meets the
demand for market-based, technology-neutral policies. In the 112th Congress, an innovative new tax
credit, the Cut Energy Bills At Home Act (S. 1914) was introduced by Senators Olympia Snowe (RME), Jeff Bingaman (D-NM), and Diane Feinstein (D-CA). The bill calls for using utility data to
establish the baseline of a home’s energy consumption, according to procedures specified by Building
Performance Institute (BPI) standard BPI-2400-S-2011 described above. A similar bill in the House
provides a rebate in lieu of the tax credit, but focused on an increased in home energy performance.
That bill was introduced first in the 112th Congress and again in the 113th Congress by Reps David
McKinley (R-WV) and Peter Welch (D-VT) Like S.1914, the Home Owner Managing Energy Savings
Act of 2013 (H.R. 2128) uses utility data, new standards for establishing the home baseline, and
contractor requirements to specifically reward energy savings – the more energy your home saves as a
result of a retrofit (20%-50%) the more of a tax credit or rebate you receive for undertaking the retrofit
($2,000-$3,000/$5,000).
By making the connection directly to the energy savings and the incentive, public dollars are rewarding
the public good (energy efficiency and the environmental, national security, and job benefits associated
with it) – this makes for good public policy. Establishing that data baseline, however, is not an easy
task in many utility markets. This is why the Green Button and E-Know legislation that help to provide
for timely utility data access, as described in Section 5, are important.
State governments and PUCs are also primed to take action. Performance-based incentives;
modifications to the rules associated with energy, carbon, and capacity markets; access to utility data;
and, policies that require increasing the use of energy efficiency in the resource mix will lead to new
innovations in home performance – including home energy digital devices.
The Future of Energy Efficiency and Home Performance
It has been said that if Alexander Graham Bell were to look at today’s telephone system, he would not
recognize it, but Thomas Edison would be completely familiar with our electricity system. It was less
Where Do We Go From Here?
than 20 years ago that the telephone revolution began and the smart-electricity revolution is
comparatively at its infancy. Utilities and PUCs across the country have had different reactions to the
smart grid’s emergence and either embraced or fought the technologies, just as long-standing family
contracting businesses have either embraced home performance as the future of their industry or fought
it as a threat to their livelihoods.
What is clear is that energy efficiency no longer should sit on the wall between the meter and the home
but transcends the silos so that “high performing,” “efficient,” and “smart” are equivalent terms for
policymakers. Smart grid, demand response, and energy efficiency policy must be integrated to
contribute to each other’s advancement and the creation of one efficient, smart energy system.
A future home with high energy performance will not simply be energy efficient in its walls,
fenestration, ducts, and systems, but it will be able to communicate its energy use and change its
energy use in response to signals. Homes have the potential to produce negawatts, whether through
baseload or peak load reductions, and smart grid and smart home technologies can help convert homes
into tiny power plants, connected by meter and wire as well as by wireless communication to the smart
grid. The new digital functions of the grid will help homeowners and utilities squeeze out the
efficiencies of the home, even as new technologies and energy demands threaten to drive up total
energy consumption.
As smart grid technologies reach across the wall from the meter into the home, and home energy
management devices wirelessly communicate with contractors, homeowners, and energy programs,
home performance in the future will be part of the digital platform and home performance contracting
will be a part of home energy management and a vital part of a secure utility grid. There are many
obstacles to this future integration, some as noted in this paper and some yet undiscovered. What is
clear is that as traditional energy efficiency and smart grid technology converge, opportunities for
increasing the profitability and sustainability of the home performance industry emerge.
27
28
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White Paper - Making Sense of the Smart Home: Applications of Smart Grid and Smart Home Technologies for
the Home Performance Industry (October 2013)
The National Home Performance Council, Inc. (NHPC) encourages the implementation of whole-house retrofits for
increased home energy performance and facilitates coordination among federal governmental agencies, utilities, state
energy offices, contractors and others to achieve improved whole-house energy performance. NHPC is a registered
501(3)(c) organization. Further information about our firm can be found at www.nhpci.org.
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