Wednesday, May 26, 2010

Post # 19 - Seventy Percent of Americans Have Never Heard of Smart Grid

According to a study released this week by the strategic marketing agency EcoAlign, approximately 70 percent of Americans are not familiar with the term "smart grid." However, the study, "Separating Smart Grid From Smart Meters? Consumers Perceptions and Expectations of Smart Grid," indicates that consumers can become favorably disposed to the smart grid as they learn more details. But the study also highlights some obstacles to consumer acceptance, as well as to a possible mismatch of industry versus consumer expectations.

For the study, EcoAlign defined "smart grid" as a "larger network of interconnected devices in homes, businesses and communities that will allow service providers to offer new applications, including new billing and payment options." Based on this definition, 55 percent of the survey respondents believed that they would benefit from a smart grid, while 50 percent found the ability to review their own energy consumption to be "extremely or very appealing." One quarter of respondents think they would use the smart grid capability either daily or weekly; on average, respondents think they would use it about 12 times per month. EcoAlign says these are "strong findings of consumer good will and expectation with regard to rolling out the smart grid."

At the same time, the study underscores major potential stumbling block to consumer acceptance. Perhaps most significantly, and potentially most troubling, the respondents saw smart grid as "primarily a means to lower and/or manage rising energy bills." But what it that is not, in fact, a realistic expectation? As the study notes:
Energy bills are increasing and are expected to increase even more in the foreseeable future. Seventy-four percent of Americans surveyed are extremely or very concerned about the rising cost of utility bills. But will utility bills increase more than any potential cost savings or management options enabled by smart grid? In other words, after the smart meter has been installed and the consumer has access to the smart grid, what happens if the consumers’ bill is bigger, and perhaps, substantially bigger due to any number of factors external to smart grid: rising fuel input costs, increasing utility rates to replace and/or bolster aging infrastructure, new costs [relating] to renewable or nuclear power generation, or even if the consumer herself consumes more energy because of new devices or a changing lifestyle.
EcoAlign also sees a need to decouple smart grid smart meters. The study states that while smart grid represents "the entire ecosystem of hardware and software that allow for greater networking, interconnections, integration and bundling of products and services," smart meters are primarily geared to measuring and controlling the electric use. "For now, consumer perceptions are anchored by the smart meter’s commodity focus, and more specifically, the billing function, rather than a platform for a much broader array of management possibilities including the commodity, security, entertainment, and so on."

Finally, insofar as smart grid represents a two-way communication platform, EcoAlign states that "consumers have a reasonable expectation that communications coming to them from this platform will also be 'smart.'" But EcoAlign is concerned that the current ability of utilities and energy suppliers to deliver and communicate the way consumers increasingly prefer is limited by "back office infrastructure, and as importantly, by an industry culture that has not had to be consumer-focused for decades."

The EcoAlign study is one more piece of evidence that, for all its promise, smart grid development may not be totally aligned with consumer expectations.

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