Home Area Networks: A Preferred Choice for Energy Efficiency


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The day is here when home area networks (HANs) contribute to energy efficiency for utilities and home users; the way forward will be driven by automated demand response (ADR), automated demand side management (DSM), dynamic pricing, and electric vehicle (EV) charging among other key factors.

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Home Area Networks: A Preferred Choice for Energy Efficiency

  1. 1. • Cognizant 20-20 InsightsHome Area Networks: A PreferredChoice for Energy EfficiencyRising energy prices, increasingly sophisticated conservation optionsand gains in customer confidence are driving the adoption of homeenergy management technologies and electric vehicle charging. Executive Summary has proposed strict greenhouse emissions rules for all new power stations, effectively barring the According to reports, global investment in smart building of any new coal-fired plants.3 Nuclear home management will surpass $4 billion in 2016, power generation has proliferation and environ- fueled by government stimulus, faster wireless mental risks. The aftermath of the 2011 tsunami networks and cloud platforms.1 Utility customers made this abundantly clear. With the given rise in now no longer just consume energy but are political pressure, utilities worldwide would look willing to participate in energy conservation and to their own customers to help tackle the ever- contribute through energy generation. For a increasing demand for energy. utility, every kWh saved is a kWh earned. The current scenario has enabled energy service Energy Demand and Utilities’ providers and retailers to offer cloud-based Response smart services and solutions for home energy According to the Electric Power Research management. Institute, electricity consumption in residen- tial, commercial and industrial establishments This paper seeks to address the challenges in the U.S. is set to increase at a rate of 1.07% that the energy industry faces in leveraging annually, with consumption increasing by 26% investments in advanced meter infrastructure. till 2030. Whereas the Annual Energy Outlook It proposes engaging residential customers in 2012 (AEO2012) Reference Case forecasts a achieving end-user energy efficiency. realistic potential reduction of 22%, to 0.83% in this growth rate, by the creation of a favorable The Geopolitical Imperative environment through government sponsorship The “Green Button Initiative,”2 an industry as well as market-driven trends toward energy response to a White House call to provide utility efficiency.4 customers with energy usage data to help them minimize wastage and shrink bills, has prompted While utilities search for newer and cleaner ways large investments in home area network (HAN) of energy generation, however, their programs development. Adding to the urgency is the fact and policies for energy demand reduction lag that the U.S. Environmental Protection Agency behind. This can be partly attributed to utilities’ cognizant 20-20 insights | september 2012
  2. 2. fears about their bottom line, which in turn is This leads to some obvious questions:due to their lack of understanding of appropri-ate technologies to achieve demand reduction. • How profitable is pursuing residential energy efficiency through ADR?Successful demand reduction can be realized withautomated demand side management (DSM), • How much are customers willing to invest inwhich uses analytical frameworks to analyze HAN HAN-enabled smart appliances?device data, end-user load profile characteriza-tion and environmental impact, and thereafter • How should baselines be estimated for resi- dential customers without jeopardizing theirintegrate this data into utility resource planning. comfort or safety?The U.S. Federal Energy Regulatory Commission’s • How should rewards be determined forreport on national demand response potential consumers without compromising gridsuggests that the residential class of customers, operators’ profitability?which is awash in energy choices and replete withhigh tech options, provides the most “untapped • How should energy reduction coefficients for demand reduction management be calculated?potential for demand response.” With 70% antici-pated participation, demand response programs Impediments to end-user demand control canrepresent roughly 45% of the potential impact be resolved through a systematic and stream-on end-user energy efficiency.5 The caveat here is lined approach towards ADR programs. It wouldthe lack of a viable business plan for generating comprise steps such as the following:revenue and profit from smart appliances. • Segregate consumers into heterogeneous groups based on factors such as weatherBusiness Case Modeling for conditions, appliance classes, etc. andHAN Energy Management designate a baseline load shape for each group.Automated Demand ResponseAutomated demand response (ADR) programs • Analyze demand patterns combining historic and real-time demand data.for HAN-enabled appliances present a utilitywith viable opportunities for flattening peak • Design and deploy an accurate predictionload demand to a manageable scale through model for dispatchable and non-dispatchablepeak shaving. Peak shaving could be achieved ADR programs.by programming end-user devices to reflect daily • Quantify statistically the impact of ADRdemand patterns. through an appropriate measurement and veri-Results of ADR Implementation from a Listed Utility Electric Load Profile of Auto DR Participants, August 30, 2007 45 Whole Building Power (MW) 40 Auto DR 35 Saves Capacity 30 25 Auto DR Saves Energy — 3/10/07 Baseline 20 — 8/30/07 Baseline 12 AM 12 PM 11PMSource: http://www.pge.com/mybusiness/energysavingsrebates/demandresponse/adrp/Figure 1 cognizant 20-20 insights 2
  3. 3. fication methodology. Use regression methods • Accruing cost overhead of newer devices and for baseline adjustment. absence of accepted standards for interoper- ability. • Evaluate and automate the process of integrat- ing customers’ distributed energy generation How can these problems be addressed? and renewable capability. • Leverage advanced communication such as • Create awareness and educate customers Wi-Fi, 4G-LTE, etc. to stream real-time usage about the benefits and ease of modern demand data from smart meters. reduction methods. • Educate consumers by deploying IHDs and • Reward customers’ demand reduction steps. energy dashboards, and eradicate miscon- ceptions about price neutrality and the Dynamic Pricing and Curated Consumption extent of usage curtailment by using statisti- Consumers find it easier to comprehend price cally accurate yet easy-to-decipher reports, information rather than kilowatts/hour. Thus messages and alerts. price management systems must translate peak • Exhibit sensitivity towards particular customer electric system conditions, providing objective segments such as low-income groups, the information on scarcity of electricity to customers, elderly, the infirm, children and small businesses so as to engage them in energy management. to help allay concerns about dynamic pricing being unfair. Create forward contracts and Is Dynamic Pricing the One-stop Shop for DSM? baseline rebates and encourage risk-free trials. Dynamic pricing deployment involves challenges such as the following: • Provide bill protection by ensuring that bills are not higher than otherwise applicable tariffs but • Availability of usage data that is sufficient- rather are reduced. ly granular and frequent for flexible rate deployment. Distributed Generation and Impact from Electric Vehicle Charging • Consumer sentiment about the complex With the advent of deregulation, distributed dynamic pricing being predatory and unfair energy generation can no longer be overlooked and designed to benefit only high-end homes. in distribution systems. Bloomberg’s energy Dynamic Pricing Philosophy Would you mind a dynamic tariff? No risk, no reward Potential Reward Less Risk, More Risk, (Discount from Lower Reward Higher Reward Flat Rate) RTP Increasing Reward PTR VPP CPP Super Peak TOU TOU Seasonal Rate Inclining Block Rate Flat Rate Risk Increasing Risk (Variance in Price) Source: http://www.menloenergy.com/?p=349 Figure 2TOU = Time of UseCPP = Critcal Peak Pricing cognizant 20-20 insights 3VPP = Variable Peak PricingPTR = Peak Time RebateRTP = Real Time Pricing
  4. 4. finance report on the U.S. mentions a massive off-peak hours could cause shifts in demand57% increase in its renewable energy outlay, to peaks and may lead to vulnerability in the$51 billion.6 Falling technology costs and strength- power distribution system.ening policy support in favor of renewable energycreate a favorable environment for benefitting • High variability and complex signaling make renewable energy integration difficult.from the advantages of distribution generation. • Power quality and harmonic distortion canA major advantage of the advent of smart throw a systematic grid off balance.grids and smart appliances is their ability tosense, collect and analyze disaggregated data. Dealing with the Impact of EV ChargingTherefore dynamic peak load shaving can be Utilities can subsidize electric charging equipment,achieved by intelligently shifting residential users thereby reserving the rights to provision them asto their localized power backup facilities during HAN devices — thus making remote monitoringpeak demand. and management possible.Growth of Electric Vehicles Utilities should provision separate meters for EVThe stability of energy grids worldwide has charging so that the advanced metering infra-been affected by plug-in electric vehicles. U.S. structure (AMI) data from these meters can begovernment agencies predict that more than collected and analyzed for accurate identifica-one million electric vehicles will be in service by tion and customer profile segregation. This will2015. The U.S. Department of Energy recently help in prediction of EV penetration and chargingannounced an $8.5 million grant to support public behavior.planning of EV infrastructure through joint public Finally, focused solutions such as EV chargingand private ventures.7 impact visualization, ADR and direct load controlA settlement between the California Public can be leveraged through HAN and wide areaUtilities Commission (CPUC) and NRG Energy Inc. network applications.will result in the establishment of roughly 200charging stations and over 10,000 charging units Conclusionin 1,000 locations across California.8 Growing energy prices and consumers’ desire for energy monitoring and control will attractTo mitigate the risk from uncontrolled EV investments into HAN technology and in-homecharging, utilities should focus on applications displays. Commoditization of LAN/WAN tech-that help integrate the charging infrastructure nologies coupled with maturity and standardiza-into their resource planning. tion of protocols will foster growth and ease of deployment in HAN-based energy managementProblematic Scenarios for EV and Renewable systems. Utilities and energy service providersEnergy Integration should target this growth opportunistically and• EV early adopters with even a level 2 charger should align their offerings to capitalize on the could exceed the emergency loading charac- emerging HAN marketplace. Simply put, execution teristics in most transformers today in a matter of ADR, DSM and dynamic pricing combined with of minutes. the versatility and flexibility of HAN technology• Disparate EV charging could be uncontrollable will not only increase trust among customers but and undetectable. Simultaneous charging at also engage them in energy-saving endeavors. cognizant 20-20 insights 4
  5. 5. Footnotes1 ON World: Home Energy Management summary analysis. http://www.onworld.com/smartenergyhomes2 Green Button Initiative. http://www.greenbuttondata.org/greenabout.html3 “EPA to impose first greenhouse gas limits on power plants.” http://www.washingtonpost.com/national/ health-science/epa-to-impose-first-greenhouse-gas-limits-on-power-plants/2012/03/26/gIQAiJTscS_ story.html4 Annual Energy Outlook 2012. http://www.eia.gov/forecasts/aeo/5 FERC Assessment of Demand Response Programs. http://www.ferc.gov/legal/staff-reports/11-07-11-demand-response.pdf6 Global Trends in Renewable Energy Investment 2012. http://bnef.com/WhitePapers/view/1107 Awards to Advance Vehicle Development. http://energy.gov/articles/awards-advanced-vehicle-development8 CPUC settlement. http://docs.cpuc.ca.gov/PUBLISHED/NEWS_RELEASE/165145.htmAbout the AuthorSanket Patnaik is an Associate Consultant at Cognizant. He has over six years of experience in systemsarchitecture and business analysis with a focus on energy management, smart grid and AMI analytics.Sanket has a bachelor’s degree in technology from the College of Engineering and Technology, Bhu-baneswar, India. He can be reached at Sanket.Patnaik@cognizant.com.About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered inTeaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industryand business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50delivery centers worldwide and approximately 145,200 employees as of June 30, 2012, Cognizant is a member of theNASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performingand fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7121 0102 Fax: +91 (0) 44 4209 6060 Email: inquiry@cognizant.com Email: infouk@cognizant.com Email: inquiryindia@cognizant.com©­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.