Smart Energy Archives - Page 6 of 11

When Smart Meters get Hacked

There‘s a lot of talk about grid security and data privacy in the energy industry, but very little about the consequences of what happens if smart meters go wrong.By going wrong, I don‘t just mean people attempting to hack their meters to reduce their bills.That will probably happen.I‘m more interested in the nightmare scenario when several million electricity meters suddenly disconnect.

Whenever I’ve asked a utility about what they’d do if a million meters disconnected, the only response I’ve had is a puzzled look and the reply that “that can’t happen”. It probably won’t, but it could. If it does, the economic effect on the country would be disastrous. It’s probably the most effective terrorist attack available. And the worrying thing is that with the current design of UK smart meters, it could happen.

I wonder whether the right risk analyses have been done about the consequences of such an attack, versus the benefits to utilities of specifying meters which make it possible?

A Tale of two Thermostats

Once upon a time there was a start-up in California that thought that the world needed a smarter thermostat. Headed up by some ex-Apple executives, they raised over $80 million for their company and three years later sold it for $3.2 billion. That company is Nest Labs.

Four years before Nest was formed, two experienced technology start-up executives in Cambridge thought that the world would benefit from energy use reduction. Their solution was to design a smart in-home display which showed householders how much energy they were using. They’ve sold almost 1.5 million of these. From that experience they also decided that the world needed a smarter thermostat. Because they had limited funds to complete its development (largely because DECC had constantly delayed the UK smart metering market for their IHDs), they decided to use the crowdfunding site Kickstarter to raise enough to make the first prototypes. They didn’t raise $3.2 billion. They didn’t raise $80 million. They only just scraped together $32,000 before the Kickstarter campaign finished. To put it into perspective, that’s equivalent to the UK retail cost of just 80 of Nest’s smart thermostats. This company is GEO.

I don’t know whether GEO’s smart thermostat – called Cosy, is any better or worse than Nest’s. They both look attractive, competent products from companies that know what they’re doing. GEO’s appears better suited for a Northern European climate, where most energy expenditure goes on heating in winter. Nest’s is probably better for homes with air conditioning as well. But the one hundred thousand times difference between $32k and $3.2 billion that investors are prepared to put into two different smart thermostat companies suggests that certain sectors of the smart thermostat market may be at serious risk of overheating.

Smart Metering is FCUKED

Having delayed the Fiendishly Complicated United Kingdom Enduring Deployment** of smart meters earlier this year because of technical delays, you might expect that the British Government would have spent some time reviewing the technology they had mandated. If they had done so, it would have become clear that the program was out of control. Under the surface, too many cooks have ratcheted up the technical complexity to the point where it is no longer fit for purpose. However, it appears that no-one wants to point out that the Smart Metering Emperor is stark naked. That’s largely because those overseeing the programme don’t have the depth of technical knowledge to understand the implications of what is going on.

As always with big Government driven IT programs, whilst there’s money to be made by the metering industry and consultants, momentum rules. It seems perfectly justifiable to carry on and saddle consumers with a £12 billion white elephant which will further inflate domestic energy bills. As a result of this lack of due diligence, smart metering is firmly on course to be the next big UK Government IT disaster.

It’s not that there’s a fundamental problem with smart metering, but there are massive mistakes in the way that the UK has decided to do it. When the programme started, it was seen as world-leading. It should have set a global standard for smart metering, giving UK plc a commanding lead in exporting expertise to the rest of the world and creating long term employment opportunities. Instead it has resulted in an out-dated, over-complicated system which will be incompatible with any other solution in the world, cost more than any other, fail to deliver the promised customer benefits, add risk to our energy security, threaten jobs, further alienate customers and make the UK energy industry a laughing stock.

If we look at the issues, the GB smart metering program appears to have a unique capacity not just to duplicate major errors from previous Government disasters, but to combine many of them into one overarching Government- destroying fiasco.

The Siren Call of the Negawatt. Justifying Ratepayer Funded Energy Efficiency Schemes

The energy industry has got a new religion – that of the Negawatt. Over the past decade it’s gone from a small following to becoming the new Messiah of capacity planning. It’s one of the few things where utilities and regulators come to worship at the same shrine. In fact they like it so much, they’re happy for an increasing number of consumers to pay for it. The only problem is that like other faith based beliefs, no-one really knows whether it exists or if it delivers what it promises.

If the negawatt is new to you, it’s a very neat scheme. The theory goes that if you can persuade consumers to use less energy, then you need to build fewer new power stations. Each kWh of energy saved is a negawatt (suggesting its name was coined by a marketing person, rather than someone who understood the difference between power and energy). Hence each negawatt achieved means less generating capacity is required to support demand. As power stations are expensive to build and operate, lots of negawatts are an attractive prospect as they represent an effective reduction in the need for new power stations, or the opportunity to put off building them. In other words negawatts mean utilities save money, which should be reflected in lower energy bills for consumers.

As it appears that this is so obviously a win-win concept, regulators have increasingly been willing to support what are called Ratepayer Funded Energy Efficiency Schemes. These allow energy suppliers to increase the cost a user pays for a unit of energy on the condition that the suppliers use this extra revenue to promote energy efficiency schemes which reduce consumption. If that sounds a bit Ponzi-like, it is. But in the short term, if it works, everyone should win. Consumers pay more per unit of electricity, but use less, so save overall. Utilities need to invest less, so future energy price rises should be contained, but the rate increase keeps their profits up. And as less energy is used, CO₂ emissions are reduced, keeping the regulator and Mother Earth happy.

But does it work? In areas where these schemes operate, consumption has gone down, so negawatt proponents claim it’s effective. But energy usage has also gone down elsewhere. Which begs the question of whether we are measuring a real effect or not? Has the siren song of the negawatt befuddled both utilities and regulators, removing their ability to make rational judgements? In the US, billions of dollars are being spent on these schemes, whilst in the UK, DECC has built its justification for smart metering on the same unproven promise of jam tomorrow. So how do we separate belief from reality?

The Green Approach to Energy Theft

I’ve spent the last few days at the Utility Analytics Week conference in Atlanta, where energy companies come together to discuss what they can do with the data they’re beginning to collect from smart meters. Despite the range of interesting and useful things that are possible, the majority of speakers converged on one application – reducing the level of energy theft. Specifically that seemed to mean stopping people stealing electricity to grow marijuana. A speaker from the Canadian supplier BC Hydro even went as far as saying that detecting marijuana growers was the main reason they’d decided to install smart meters.

The reason marijuana growers bypass their meters is that it traditionally takes quite a lot of power to run the growing lights for a loft-full of cannabis plants. Apparently 1,000W agricultural lights are needed for a set of fifteen to twenty plants. And now that the Canadian utilities are cracking down on energy thieves, the illicit trade is moving to the US. Which really got the US utility representatives hot under the collar. There’s nothing that riles a Southern utility manager as much as the knowledge that those pesky Canadians are turning his kids into reefer smoking zombies.

Hence the amount of effort being poured into revenue protection data analytics in an attempt to differentiate a closet pot grower from a faulty transformer. However, I think that by concentrating on theft, the utilities are missing an opportunity.

Mobile Operators, Utilities and Customer Segmentation

For many years the best way to insult a mobile operator was to suggest to them that they were just a pipe for voice and data. They’d foam at the mouth and point out that they were a brand, not a utility. They’d justify this by pointing out that they had marketing people and that they offered differentiated products. It took a far more expert brand in the guise of Apple to make the commercial point with the iPhone, which was offered to mobile operators on the “stick it up your pipe and smoke it” principle, giving the consumers to Apple and ultimately forcing the operators into a price war in supplying a largely undifferentiated consumer data pipe.

At the same time, utilities were beginning to think that they might be more than a pipe. Particularly in areas where the market is deregulated, allowing consumers to switch energy supplier, they’ve been toying with ways to attract customers through segmentation and selling other services.

On the same day this week, in the UK, we’ve seen two interesting examples of this playing out. O2, which had been chasing the health market with their Help at Hand and Health at Home products, unexpectedly pulled out. At the same time, British Gas launched an initiative to become the energy supplier of choice to young renters. It’s useful to consider what these say about the potential to gild your pipe and rise above the status of utility. As we enter the era of the Internet of Things, the market will need service providers who can aggregate services and who have trusted relationships with consumers. These moves suggest that although utilities and network operators ought to be well placed to extend their relationships, they may lack the skills to do so.