by Adam James
Talk about the promise of a Smart Grid has exploded. While progress has been solid, it is also incremental, with projects spreading across clusters of markets and communities at different levels of sophistication.
While President Obama’s Grid 21 and Better Buildings Initiative prove this issue is being taken seriously, the wildfire spread of the discussion has outpaced a general understanding of what the Smart Grid is and what some of the key debates are. This series will highlight some of the big sticking points and the arguments that underlie them.
A Quick Definition of the Smart Grid
The phrase “Smart Grid’” can be misleading, since that implies we are working to a particular endpoint. What is actually happening is that we are progressively developing a smarter and smarter grid as new technology development and policy mechanisms spark changes within the system. For example, widespread smart meter roll out has been happening nationwide for some time. Incorporating renewable energy into the existing electricity generation structure has been steadily gaining momentum. The development of newer and better batteries has revolutionized storage capacity. That’s not all; the proliferation of Energy Star rated appliances shows efficiency is becoming a higher and higher priority among consumers.
Tying all those elements together in a coordinated way is what makes the Smart Grid truly “smart.”
Issue 1: Secure vs. Accessible Data
The “smart” component to the grid is the communication between its various parts. These communications will yield vast amounts of data about electricity users. Where utilities used to collect 1 data point about each consumer per year, they will soon be collecting over 6,500 per consumer, per year. All this information, paired with unclear ownership rules, creates a quandary for those in the Smart Grid field.
On one hand, this data can be mined to create inferences about your preferences, behaviors, and desires, which many Americans are uncomfortable having shipped out to the highest bidder. What appliances you use and when, what you watch on TV and search for on the Internet, when you are home and how often; all of these variables can be extracted from careful examination of electronic signatures.
On the other hand, this data unlocks massive potential for consumer empowerment. Real time information about energy use will make each user the master of their domain. Adjustable settings for your home can ensure that the AC and heating doesn’t run when you aren’t home, that your refrigerator gets power 24/7 but your TV does only when you use it, that you will allow your thermostat to ‘float’ an extra degree or two, for which you will receive monetary compensation for alleviating peak demand.
The tension begins with ownership. The meter which measures energy usage is technically the property of the utility, but the information that they are tracking is about you and your habits. Does the utility own the data because they own the meter? If so, can they sell it to third parties? Will they disclose it to consumers free of charge? If the individual owns it, is the utility permitted to look through it? How does the individual get the data off the meter?
There is a reasonable minimum threshold on the ownership question, determined since the utility needs a certain amount of information to do their job effectively. The whole purpose of metering is to track energy use to determine demand and rates. While strides in communications and technology will increasingly automate this system; that data still is central to the utility business model. So the ownership spectrum will run from “shared between individuals and utilities” to “solely utility owned,” since “solely individually” owned isn’t a credible option.
There is a common opinion that the closer you move to shared (but mostly individual) owned data, the harder it is to incentivize innovation based on creative uses of data (such as smart thermostats and water heaters). This is not entirely true. Perhaps if the data were public record, there would be a feeding frenzy of innovative start-ups that would rush to mine that information. But the popular backlash for exposing private information in that manner would also be severe. Similarly, only opening up the data to the highest bidder would restrict solutions and innovation to a select few companies.
A Possible Compromise?
There is a middle ground that would preserve consumer protection while enabling utilities to do their jobs effectively and ensure that the innovation that makes America great can take root. Data could belong to the consumer, but be viewed by the utility “blind” and in aggregate. This would make the specific energy usage of each home (the inferences you can make from the energy ‘signature’) the property of the homeowner, but the data over the scope of a utilities territory readable. This way, third parties could work with utilities for access to aggregate data to improve their top-level technologies, and with individuals to craft the specific functions of their technologies.
It is important to remember that this is not a new challenge; in fact, it is the same hurdle that was faced by users of Facebook and online banking. The reality has been that by using the service, you waive a degree of privacy, but you have an expectation that different kinds of information still have various levels of security. While your name, address, and favorite band might be up for grabs, your bank account routing number is not. It seems reasonable that this same sliding scale could apply to data: you understand that by having electricity running through your home that you waive a degree of privacy about your macro-level consumption trends. However, your specific habits should be at your discretion to divulge.
In order for a legal framework for data ownership to be successful, it must reflect the needs of stakeholders in the Smart Grid space. If a policy is too harmful to utility rate structures and business models, it will hamstring the rollout of better technologies. If it plays fast and loose with individual privacy rights, distrust towards the new and emerging systems will evolve. If it is too inhibitive towards third party innovators, America risks being left behind in the global marketplace. Striking the right balance requires recognizing the needs and rights of each of these entities, which the “blind aggregation model” successfully incorporates.
Next, in this series: “Standards and Interoperability: Doing it fast v. Doing it right”
Adam James is a special assistant for energy policy at the Center for American Progress