Feb 22, 2022
David Klatt and Sylvie Binder
“Multibillion investments by utilities in Advanced Metering Infrastructure are about to unlock the future energy marketplace — shifting the power to small energy users to control their own energy and carbon destiny.”
In her recent article in The Wall Street Journal, the distinguished energy and utilities reporter Katherine Blunt painted a grim picture of the state of the U.S. power grid. Blunt argued that the electrical system is undependable and that increasing demand for energy due to the transition to clean energy and electrification is contributing to more frequent blackouts. According to Blunt, a fair amount of electric grid challenges are arising as more of our energy usage shifts to electricity, i.e., electric vehicles and heat pumps. To complicate matters further, renewable energy sources are increasingly intermittent.
But that’s only half of the story. We’d like to offer a much more optimistic outlook focused on the energy users or the demand side.
The most scalable and immediate solution to balancing the grid is found in the untapped potential of empowering users to shift their energy usage to non-peak times. This transition does not have to be a struggle but a shift. This necessary power shift can be effectuated through many tools: battery storage, smart thermostats, smart EV charging infrastructure, or even individual action by people making smarter usage decisions armed with basic market data.
What can we learn from New York?
There is a massive power shift taking off right now in New York, empowering energy users to finally be real energy market participants. Companies like Revel and AvalonBay are on board, as are thousands of New Yorkers who are earning real money for shifting power usage, making easy, simple, better energy decisions.
In New York, Consolidated Edison has just finished a 5-year, ~$2 billion technology overhaul, installing 5.5 million Advanced Metering Infrastructure, or AMI, meters. AMI will unlock massive growth opportunities in the future energy marketplace. Put simply, AMI has been the missing ingredient. But not anymore.
“Put simply, AMI has been the missing ingredient. But not anymore.”
For the first time ever, 4 million electric and 1.5 million gas users will have the power to easily access their 15-minute interval data. That amounts to 5 trillion new utility revenue-grade data points per year for users and experts to analyze. Whether it’s using real-time data for demand response, sizing onsite solar deployment, or other distributed energy resources, AMI is a new multi-billion-dollar accounting system that empowers end users to change behaviors and allows small and large energy users alike to actually participate in the energy market. This investment by the utility will spawn multi-billion industries dependent upon the data.
AMI is not talked about very often, as it’s unassuming and cleanly tucked away in the basement or service areas of buildings. But the $2 billion AMI technology hidden in the cellar should be at the center of this conversation. Multi-billion investments by utilities in Advanced Metering Infrastructure are about to unlock the future energy marketplace — shifting the power to small energy users to control their own energy destiny.
“New advanced meters hidden in the cellar should be at the center of this conversation.”
Empowering Users to Make Their Own Energy Choices
The energy system is transitioning from a centralized, zero time-of-use (TOU) data regime to a regime where energy users are empowered through access to their electricity data. This has not been possible since the advent of the electric utility. But necessary data upgrades, such as retrofitting buildings with AMI meters, have not kept pace with grid-level improvements. Our grid largely functions without price-responsive users — a highly inefficient, only semi-functioning marketplace. In our homes, the AC is on blast during times of peak energy usage, and our electric cars are charging at all hours of the day, whether the price is 10c/kWh or $10/kWh. People need to understand what their actions can do to their bill and their carbon footprint.
Data — real-time, clear, and accessible data — is the backbone of the future energy landscape. It’s the best-kept secret that not many understand. There are technologies and incentives on the market right now that, if broadly adopted, will enable energy users to drastically shift their consumption to their advantage. We are learning that the greatest solution to grid unreliability is the simple empowerment of small energy users over their data.
If utilities navigate upgrades to data infrastructure correctly, there will be massive growth opportunities for industries and stakeholders who will use and benefit from AMI data. Immediately, one thinks of the HVAC industry, solar installation companies, energy efficiency, and carbon tracking companies — which will be ever-evolving with FERC 2222, Auto-Direct Load Management, Value of Distributed Energy Resources, and beyond. However, individual energy users can now benefit directly from their data usage and be an invaluable asset to the power grid. We are in the first inning of this paradigm shift, but we need ubiquitous AMI infrastructure.
Don’t Forget About Delivery
Surging power bills are not just about trends in commodity markets.
Power bills are spiking not only due to supply limitations but also time-dependent delivery charges. Delivery charges are never really talked about, yet they account for around 50% of a typical energy bill each month. Energy delivery has a time-of-use component, so the way to combat the fluctuating price of delivery charges is mitigated — you guessed it — through widespread adoption of AMI meters, understanding of how to read energy usage data, and shifting your energy usage to non-peak times. What’s more, charges are up around 25% this year because utilities are allowed to recover the costs that they incurred during the pandemic through revenue-adjusted mechanisms. Utilities are still technically recovering from 2020’s unprecedented revenue shortfalls and are catching up through today’s higher delivery rates.
Energy is not a one-way street anymore. At Logical Buildings, we are optimistic about the power shift where the utility pays its customers for a change. The largest contributor to promoting a dynamic, resilient grid is through empowering and incentivizing large and small energy users to shift their power usage. It is critical to begin exposing users to the new technologies that use data both for their good and the greater good.
America needs this power shift.