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4 March 2016

National Grid and FPL point to IoT for big opex savings

Two utilities have released the results of their smart grid trial projects, with both reporting significant savings in their opex and a strong incentive to their bottom lines should they rollout the technology to the rest of their customers.

National Grid, a utility operating mainly in the North Eastern US, implemented its two-year Smart Energy Solutions program a little over a year ago, and has announced that in the first year it achieved a 98% customer retention rate, a 72% customer satisfaction rating, and total customer bill savings of around $1.25m – equating to around $113 per customer in a year.

Down in Florida, FPL (Florida Power and Light) has announced that its 4.8m-unit smart meter deployment has saved it $46m in 2015, with a 200,000-trip reduction in its truck roll too. For the utility, the return on investment looks certain to be made with a decade, already notching up $70m in savings in two years on a $600m investment.

National Grid, a British multinational electricity and gas utility, found that its participants collectively save around 2,300 megawatt hours (mWh) in energy, which is roughly enough to power the local library in Worcester, MA for a solid year. More importantly for National Grid was the 4% reduction in peak energy usage.

Currently, homes use energy in peaks, with maximum usage happening in the mornings as people prepare for the day ahead, and in the evenings when they return home from work. Those spikes in demand require that the utility holds enough energy generation capacity in reserve, so that there aren’t blackouts when its customers all demand energy in unison.

So the 4% reduction in peak usage means that National Grid could save 4% on its peak generation acquisition costs, which could be the difference nationally between building a new coal plant or being able to rely on the more environmentally friendly (and increasingly cheaper) renewable sources of energy like solar and wind that are captured in battery storage – either inside the home or at grid-scale.

The battery storage opportunity for utilities is huge, as it enables them to raise their baseline level of energy generation and store it inside batteries at the point of consumption, so that when a home enters its peak energy usage phase, it is drawing from a battery that has been filled up throughout the day by renewable sources – and so the home doesn’t draw from the grid during peak usage.

Those renewable sources might be giant wind farms or domestic rooftop solar, but the batteries are the future-looking means of creating much more efficient utilities. In the meantime, data and visualization (gamification, of sorts) has been shown to have an immediate impact that utilities can aim for today.

The program used two dynamic pricing schemes to incentivize users to change their behavior. On the 20-planned Conservation Days, National Grid would alert customers to times when the dynamic per-kWh cost was going to be elevated, so that they could perform energy-intensive tasks on cheaper days – such as firing up vacuum cleaners, washing machines, or garden equipment on the low-cost days.

National Grid said that its 20-alerts were during the hot and humid summer, while the Smart Rewards pricing scheme was a more familiar rebate program that promised rebates for customers that promised rebates in exchange for reduced consumption. There were also improvements in the uptime.

According to Ed White, vice president of New Energy Solutions at National Grid, “as part of the SES program, we have been piloting advanced automation on the electricity distribution system. This includes special equipment and switches that communicate and operate to automatically isolate power outages, minimizing the impact to customers. During two major events the technology helped us reduce the time customers were interrupted by more than 75 per cent.”

Elsewhere in the US, Florida Power and Light (FPL) reported a $46m saving in its operating costs through 2015, stemming from a 4.8m-unit smart meter deployment. While the project is expected to cost $800m and be completed in 2017, it appears that the savings will soon provide a solid return on investment.

With a $200m grant from the US Department of Energy, FPL only has to recoup some $600m to break even. In the past two years, it says it has managed $70m of that figure, and still has a mix of some 2,000 industrial and commercial meters to install. If there is scope for the annual to grow, as it did from 2014 to 2015, the utility looks on track to comfortably break even within the decade.

In terms of the reduction in truck roll, FPL reports that it has made 200,000 fewer field visits in 2015 than it did in 2012. It also notes that it uses analytics from its meters and connected infrastructure to help field engineers improve the efficiency of its grid assets – and prevent outages from occurring proactively.

FPL’s president, Eric Silagy, said that FPL had made remarkable strides in its ability to monitor and manage the electric system compared to the abilities of only a few years ago. “The smart meters on homes and businesses, together with thousands of intelligent devices installed on our poles and wires, provide unprecedented visibility across the grid, allowing FPL to detect and prevent many issues before they become problems for our customers.”

Like the National Grid project, providing data to the customers was also seen to help reduce usage. While gamification may be something of a buzzword, being able to see how your usage compares to people in your neighborhood is a powerful incentive to reduce your usage. Similarly, if a customer thinks that they are already trying to use less electricity but are still more intensive than their neighbors, it could encourage them to investigate home improvements or fixes that might reduce their consumption.

“The enhanced FPL Energy Dashboard allows unprecedented customer control over energy usage – customers with smart meters can see their energy use by the hour, day and month,” said Marlene Santos, vice president of customer service for FPL. “Customers are recognizing the value of this. In fact, in 2015, FPL customers set a new record for visits.”