As utility proposals grow for advanced metering infrastructure (AMI) deployments, power system regulators are demanding evidence that the real-time distribution system data AMI produces justify the billion-dollar costs, causing deployment to slow.
But some utilities have begun demonstrating granular AMI data can be used to lower customer bills and lower power system costs, utilities, private sector partners and analysts told Utility Dive.
"AMI is a whole new world for utilities, and they have to update systems and train people about the new possibilities," American Council for an Energy Efficient Economy (ACEEE) Policy Program Fellow Dan York told Utility Dive. "It is a powerful feedback to customers and utilities that can guide important changes in how and when energy is used."
Impediments to getting pay-offs from huge AMI investments have been significant, AMI advocates told Utility Dive. Utilities and providers need to evolve data processing software capabilities in a regulatory system that favors hardware investments over software expensing.
But leading utilities are showing they can meet regulators' demands to justify AMI costs as they gain access to the right capabilities, stakeholders said.
The AMI boom
AMI is the combination of smart meters, "communications networks, and data management systems that collect, transmit, and record electricity consumption data in daily or shorter intervals," a January 9 ACEEE study reported.
There were over 88 million smart meters installed at the end of 2018, serving "nearly 70% percent of U.S. households," according to a January 2019 Edison Foundation report. Cumulative distribution system investments of $39 billion in 2019 brought estimated deployment to 98 million by the end of the 2019 and could reach 107 million by the end of 2020.
AMI's "digital link" between utilities and customers allows "new and expanded services, such as smart home energy management, load control, budget billing, usage alerts, outage notifications, and time-varying pricing," the Edison Foundation report added.
New disaggregation technology can "identify 90% of the possible savings opportunities from AMI data."
Abhay Gupta
CEO, Bidgely
AMI data has already delivered "operational benefits, including reduced costs for metering and billing, faster responses to outages, and improved safety," a 2016 Department of Energy study concluded. But the data should be used to guide customers to lower bills and system-supporting dynamic rates, according to ACEEE's York. It should also be used to identify and correct distribution system inefficiencies.
Feedback on energy usage from customer engagement tools in private sector-provided platforms, like online usage-monitoring or usage reduction rewards, can reduce customer bills up to 8%, ACEEE found. Moving customers to new rates can reduce usage up to 7%, and improved system efficiencies can reduce overall usage up to 4%.
In Smart Energy Consumer Collaborative (SECC) surveys, 57% of customers said learning of potential for savings from more efficient appliances would be "very interesting."
"Utilities are leveraging AMI data and customer interest in it with third parties' software platforms and data analysis to create consumer-facing programs," SECC Deputy Director Nathan Shannon told Utility Dive.
Usage data analytics market share leader Bidgely has automated its "disaggregation-based customer engagement platform" and "expanded it to different utility silos," Bidgely CEO Abhay Gupta told Utility Dive. Disaggregation of AMI data allows identifying individual appliances in a customer's home and knowing which are running inefficiently or too long, he added.
Automated home energy audits no longer require time-consuming and costly visits to customers' homes, Gupta said. New disaggregation technology can "identify 90% of the possible savings opportunities from AMI data," online and can recommend "customer-specific actions" to reduce bills.
A just-emerging use of Bidgely's automated technology is identifying electric vehicle charging, he added. The utility can then proactively notify the customer of a time-varying rate that can reduce the cost of charging and shift charging times to the utility's benefit.
In the longer run, a more important application could be the data analytics technology's capability to identify which customers are likely to adopt new distributed technologies, Gupta said. That would allow utilities to proactively prepare their distribution systems.
AMI is evolving like "the digital transformation of television" and "benefits will become more robust as technology that can leverage digital information evolves."
Jeff Brooks
Grid Improvement Communications Manager, Duke Energy
Uplight offers a similar full range of services on its automated data analytics platform, the company's Data Platform Product Manager Monty Prekeris told Utility Dive. Uplight has "multiple automated models connecting data and machine learning" through which "utilities are leveraging a portion of the AMI data for alerts and disaggregation."
Clearly, AMI data is being used, but the newest products and applications are just beginning to deliver AMI's "vast potential," Gupta, Prekeris and ACEEE's York each said,
Four utilities using AMI
Duke Energy has used AMI data for billing, outage response and system planning, but "we are imagining new uses every day," Duke Energy Grid Improvement Communications Manager Jeff Brooks emailed Utility Dive. "Smart meters are the gateway to current and future innovation."
But that will require "other technologies and systems," including a more advanced "distribution management system" and "customer information systems," which "can take time," Brooks added. AMI is evolving like "the digital transformation of television" and "benefits will become more robust as technology that can leverage digital information evolves."
Many utilities have put the data to work in the same basic ways Duke has used it, SECC's Shannon reported.
Through August 2019, AEP Ohio had installed over 800,000 smart meters and "seen considerable interest and engagement in its smart energy tools," he pointed out.
Ohio regulators wanted a cost-benefit analysis before approving further AMI expenditures, AEP Ohio Director of Grid Modernization Scott Osterholt emailed Utility Dive. Working with Powerley, a Bidgley and Uplight competitor, AEP is developing a smart phone app and an online dashboard to demonstrate the "cost benefits that have been actualized."
Pepco Holdings has fully deployed AMI to its 1,340,000 customers, according to the Edison Electric Institute, offering a direct load control program with high customer awareness and satisfaction rates, SECC reported. The program allows customers to earn bill credits from reducing usage during the utility's demand peaks.
"Significant value" has been validated from Pepco's AMI data and monetized in wholesale markets, Steve Sunderhauf, Principal for its Utility of the Future effort, told Utility Dive in August. The "next step" is working with new distributed technologies that will likely require new distribution system controls, he added.
With its 1,310,000 smart meter deployment, NV Energy was one of the first IOUs to fully roll out AMI, its Demand Side Management Program Manager Adam Grant told Utility Dive.
"Our regulators think progressively and have encouraged us to explore new technologies and new AMI data-driven opportunities."
Adam Grant
Demand Side Management Program Manager, NV Energy
It is one of the few major IOUs working with most of AMI data's potential, according to ACEEE. The widest use is for online home energy audits through Bidgley's enterprise data analytics and non-behavioral DSM programs, Grant said. Bidgley is also allowing the utility "to identify and engage with high-end customers that want to lower their bills" through the utility's peak demand management programs.
Using AMI data required upgrading NV Energy's demand response management system communications and retraining the workforce, he added. Both were "cumbersome but not hindering" processes that continue to "evolve with the technologies."
Nevada regulators' guidance supported the AMI rollout, Grant said. "Our regulators think progressively and have encouraged us to explore new technologies and new AMI data-driven opportunities."
It is particularly important for regulators to see utilities following their guidance on AMI data opportunities, ACEEE's York said. Otherwise, utilities risk regulators disallowing cost recovery or approval of future investments.
Regulators across the country have been disinclined to approve AMI deployment proposals that don't include "new rate structures and programs" that promise benefits for it, North Carolina Clean Energy Technology Center (NCCETC) Senior Manager for Policy Research Autumn Proudlove told Utility Dive.
There were 28 requests to deploy AMI considered by regulators in 2019, including 12 newly proposed during the year, NCCETC's annual grid modernization policy update reported. The only approval, for a Hawaiian Electric Companies' proposal, "required the utility to file additional plans on the use of the data," Proudlove said.
How to use it all
There are regulatory, technology and marketplace impediments to utilities using AMI data's full potential, stakeholders told Utility Dive.
The marketplace
Greater use of AMI data is happening where the impediment of "fragmentation" of services to customers is being resolved by technology providers' consolidated platforms, Prekeris said. Platforms engage customers in a journey from home energy reports to grid services and, at each step, "route the customer to extract more value from AMI data on behalf of the utility."
Recent partnerships between meter providers and software providers show the market is consolidating in this direction.
The technology
Greater value is also made possible when technology advances, leading to more marketplace adoption and creating "a larger pool of AMI data available," allowing for greater precision, Prekeris added.
"Expenditures for [AMI] deployment have been approved, but expenditures for information technology and data analytics needed to use the data have not been approved."
Chris King
Chief Policy Officer, Siemens E-Mobility
Recent advances in machine learning that can more effectively identify where utility operations can improve or more precisely disaggregate customer usage show technology is growing more capable.
Regulation
Regulatory approvals for investments in platform solutions create flexibility that helps resolve technology and marketplace impediments, Siemens E-Mobility Chief Policy Officer Chris King told Utility Dive.
"Expenditures for [AMI] deployment have been approved, but expenditures for information technology and data analytics needed to use the data have not been approved," King, who did the first cost-benefit analysis of AMI in the 1990s, said. And the typical three-year regulatory cycle necessary to obtain the second approvals has slowed development and deployment.
Regulators can provide more flexibility by approving upfront expenditures for platforms that include those capabilities like Siemens' MindSphere and those from Bidgley and Uplight, he said. That would allow utilities to "try different things, fail quickly with small pilot programs, and implement better programs."
Regulation can also ease resistance by utilities and customers to sharing AMI data with third parties, ACEEE's York said. "Utilities supply low cost electricity safely and reliably. Third parties have new ways for utilities to provide benefits to customers and the grid, but they depend on access to data. Regulators can permit data access within strict guidelines that assure privacy and security are protected."
Utilities may still not maximize the potential benefits from AMI investments "because traditional cost of service regulation does not give them any incentive to do it," Wired Group President/Founder Paul Alvarez told Utility Dive. Utilities focus their efforts in regulatory proceedings on approvals for capital investments that earn guaranteed returns, not for things that "reduce revenues or offer nothing for shareholders."
But cost of service regulation can be made more responsive, Alvarez said. Compensating non-utility stakeholders for participation in regulatory proceedings and making distribution system planning more open and transparent would give advocates for AMI-enabling technologies the opportunity to build a more balanced record on which regulators can make different decisions, Alvarez added.
In the longer term, "regulation that eliminates the capital bias is the solution," he said. Under revenue cap regulation, which is used for electric utilities in Europe, "regulators don't regulate profits, they regulate the per-kWh price the utility is able to — within reason and with designated performance metrics — charge."
Revenue caps are comparable to "telecom deregulation," Alvarez said, adding they're "a whole other sphere that most people aren't thinking about for electric utilities."
Most importantly, Uplight's Prekeris said, regulators need to understand that full use of AMI data is "more than reducing utility operational expenditures, it is discouraging customers from using dirty energy during peak demand and keeping them engaged and educated about how and when they can use energy that benefits themselves and the system."
