Cooperation Between the Utility and its Customers in a Complex Energy Landscape
By John Bonnin
In a previous article of this series, I introduced the constructs of the fluid energy landscape of the future, whereby the energy ecosystem can be viewed as a collection of large and small participants, all connected to the grid and operating to help balance supply and demand, and each containing its own value drivers, interconnectivity, business models and even regulatory regimes.
The future energy landscape is a multi-leveled, interconnected topography of many diverse entities. Therefore, successful operations require cooperative business relationships between the utility electric providers, aggregators, and customers. This cooperative model is a transition from the decades-old supplier/purchaser model, where the utility was simply a supplier of a commodity to customers who had no say in pricing or service level.
Three central components of a cooperative, synergistic relationship include:
- Customer knowledge
Nearly every home and business are powered by electricity, so nearly every person is an electricity customer of some entity. According to the IEA, renewable electricity generation in 2021 will expand by more than 8%, representing the fastest year-on-year growth since the 1970s. China alone is predicted to account for almost half of the global increase in renewable electricity in 2021, followed by the United States, the European Union, and India (Forbes)
Therefore, when it comes to transitioning to a new energy landscape, utilities, aggregators, and other electricity providers will find it in their best interest to educate the general public about the inherent benefits and opportunities of participating in programs happening at the grid’s edge such as demand response, home backup generation, and energy storage.
Because of the widespread applicability of solutions throughout the region, there are a variety of special interest groups, particularly in the clean energy industry, that can launch public awareness campaigns to encourage residential customers to invest in rooftop solar, energy storage, backup generation, thermostat demand response programs, and similar programs.
Commercial and industrial (C+I) customers, such as hotels, school districts, grocery chains, factories, refineries, and so on are inherently more complex and may require an extra investment of personalized attention beyond initial awareness. Customer account representatives of the utility or other electric providers have to be experts on the complexities of the new landscape. Account managers can be the liaison between the C+I customer and wholesale energy or another technical expert.
Customers who participate in the dynamic energy ecosystem of the future will need to feel that they are receiving equitable treatment. There are two main drivers of trust-building: transparency and responsiveness.
Transparency of data is a necessity. Customers participating in demand response programs will want access to their individual usage and generation, within hours or even minutes of an event, in order to measure success and make adjustments.
The more potential revenue/cost savings at stake, the more important this data access will be. This capability exists: the utility or aggregator should consider a data portal, like AutoGrid Engage™, for customers to download performance and market data, trends, and other analytics.
Responsiveness of the utility to the customer will be as important as data transparency. For example, a C+I customer participates in an event by changing the cooling settings on her HVAC systems, and the next day she receives an electronic confirmation of performance. If she has an issue with the confirmation, she must be able to promptly connect with the right utility person to resolve her issue in a timely manner. Late, ill-informed, or wrong answers by the customer rep at the utility will taint her view of the relationship. The operations of her systems as well as the settlement with the utility for the actual event could be exactly correct, yet poor customer service that causes undue frustration may jeopardize future participation.
There is no one-size-fits-all: customer and levels of participation will vary, so programs should be nimble and flexible according to consumer behaviors.
For instance, some highly engaged residential customers (like our friend Touseef in the “Day in the Life” article) will track wholesale prices, actively manage their home’s energy usage, and constantly update the availability of DR and DER systems with the aggregator or the utility.
Other residential customers will look for a program that fits with their lifestyle, choose a participation level, and rarely if ever check on results. Still, others will be indifferent and may need to be contacted by a client representative to engage in one program or another.
Whether a customer is highly engaged, set-and-forget, or indifferent, he or she must be given the option to opt-in or opt-out of specific activities in a way that fits with his or her preferences. Some may want daily text messages, others weekly, and others less frequent.
Optionality is equally important for C+I customers. Participation in the various programs such as demand response, ancillary services, etc., usually means process changes, delays or shifting in production, changes in personnel schedules, etc. Some seasonal industries may want to opt out of specific deployment windows due to more lucrative production opportunities. To help make these alternatives possible, the energy provider and the customer should work together to explore the expected market value of energy across various timeframes. The utility can help the customer calculate the opportunity cost of participating. Although contractual requirements that clearly outline incentives and penalties are needed to clarify the rights and obligations of both parties, flexibility can be built into the relationship to create value. On the downside, this flexibility adds complexity to the utility’s task of operations. This is where systems such as AutoGrid Flex™ can manage these resources, integrating this flexibility into its optimization engine and operational controls.
John Bonnin has nearly 30 years of industry experience, including 18 years at CPS Energy, where he was their Vice President of Energy Supply and Market Operations. His focus was managing market risks to native load customers and optimal dispatch of CPS Energy’s power generation fleet, which included over 1.5 GW renewable energy and 200 MW demand response capability. Mr. Bonnin has a Master of Science in Management/Computer Resource Management from Webster University and a B.S. in Chemistry from LSU.