Business & Technology Report SEPTEMBER 2018

The Utility-Connected Home: A Primer

Prepared by: Joseph Blackwell, Director, Commercial Energy Solutions, Leidos This Report is owned by the National Rural Electric Cooperative Association (NRECA), with authorship contributions from Leidos.

For more information about this Report, please contact: Brian Sloboda, [email protected].

Disclaimers

The information in this report is intended to be a helpful and educational resource that is general in nature. The information is not an exhaustive and complete examination of issues relating to utility-connected homes. NRECA and the authors are not attempting to render specific legal or other professional advice in this report. We, therefore, encourage cooperatives to consult with qualified experts when undergoing any analysis of utility-connected homes within your system. This report is provided “as is” and NRECA and the authors make no warranties or representations, either express or implied, about the information contained in the manual, including warranties of accuracy, completeness, or usefulness. In addition, the authors and NRECA make no warranty or representation that the use of these contents does not infringe on privately held rights.

Readers are reminded to perform due diligence in applying these findings to their specific needs, as it is not possible for NRECA to have sufficient understanding of any specific situation to ensure applicability of the findings in all cases. Neither the authors nor NRECA assume liability for how readers may use, interpret, or apply this information or with respect to the use of, or damages resulting from the use of, this information. NRECA is committed to complying fully with all applicable federal and state antitrust laws. NRECA and the authors are not endorsing any particular vendor or technology featured in this report and not suggesting that deployment of any particular technology is appropriate for every cooperative. Electric cooperatives are: (1) independent entities; (2) governed by independent boards of directors; and (3) affected by different member, financial, legal, political, policy, operational, and other considerations. For these reasons, each electric cooperative should make its own business decisions on whether and how to use this information and on what options are appropriate for that cooperative’s own circumstances.

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The National Rural Electric Cooperative Association is the national trade association representing more than 900 local electric cooperatives. From growing suburbs to remote farming communities, electric co-ops serve as engines of economic development for 42 million Americans across 56 percent of the nation’s landscape. As local businesses built by the consumers they serve, electric cooperatives have meaningful ties to rural America and invest $12 billion annually in their communities.

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The Utility-Connected Home: A Primer

Introduction Recent and continuing evolutions in control and communications technologies— including the building blocks underpinning the “Internet of Things” (IoT) and systems—have given rise to an ever-expanding array of innovative applications and opportunities. Of particular interest for consumers and utilities is the notion of the “Connected Home.” A connected home, often known as a “Smart Home,” is a premise enabled by communications and automation to allow devices to work with one another as well as external entities.

Capabilities and applications that make ‘Utility-Connected Home’ up a smart home can be grouped into a Definition The combination variety of categories, including entertain- of applications that ment, security, automation, and health. A connected home not only encompasses a are centered on Different premises may incorporate these technology platform; it is a purpose-driven utility-related use capabilities in a variety of combinations affair. While the technology employed in cases, together for a variety of purposes, all designed the establishment of a connected home is with utility to improve the life experiences of the powerful and interesting, it is the value access (or, even, homeowner. delivered to stakeholders that is the essence partnership), of why the investment is worth the cost. combine to deliver For co-op members, a smart home is char- The combination of applications that are value to the end- acterized by communications, devices, centered on utility-related use cases, use member and and applications that enable control over together with utility access (or, even, part- the co-op itself. energy consumption within the home. nership), combine to deliver value to the The value of smart homes employing end-use member and the co-op itself. energy management capabilities extends beyond the homeowners to their cooper- A close parallel to the connected home atives and wider grid operators, develop- may be found in the relationships a co-op ers, and commercial interests. has with its commercial and industrial (C&I) customers. In these cases, C&I A closer examination of these technol- members engage in close collaboration ogies, their value proposition, and the with the co-op to leverage communica- transformative promise they offer are the tions, monitoring, and control systems focus of this paper. This paper will not to manage energy demand and oversee examine the value of providing such ser- efficiency. A connected home functions in vices as a function of being a co-op mem- much the same way, only on a mass- ber; that value will vary from co-op to market scale with a common technology co-op and as various entities sell such platform. services to consumers in local markets.

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Not all co-op members will be ideally For all utilities, the value is in develop- suited—with respect to interest or abil- ing consumer energy awareness and the ity—to take advantage of a connected potential for improved partnerships in home platform. A classical market adop- lowering energy costs while enhancing tion curve may be inferred for the likeli- customer satisfaction. At the very least, hood of achieving significant customer the expectation is that enhanced awareness participation. While a modest percentage will empower members with additional of members will be ready to embrace con- information when making energy deci- nected home programs and devices in sions. This could simply be a byproduct It is important much the same way that comparable new of an energy consumer recognizing where for a co-op to technology offerings are adopted, there is her hard-earned dollars are being spent. understand its a roughly equal percentage that will likely member segments be resistant to accepting such offerings In more advanced cases, a utility can assume and their needs from their co-ops. an active role in the connected-home and desires. relationship, whether via rate programs, In order to engage a meaningful share of integration with smart grid systems, or, members, factors such as income level, perhaps, direct control over devices at home ownership, technology acceptance, the member’s premises. Managed loads access, affinity for “green” at the homes of residential members may solutions, and retail services preferences include water heaters and HVAC systems, all play a part in the decision making of a or more flexible options such as pool given customer group. The concept of pumps and electric-vehicle charging sys- clustering, or a herd mentality, may also tems that lend themselves to management influence adoption rates within a geograph- with less member inconvenience. ical area or other defined community. In the fullest sense, the integration of the technological, systemic, behavioral, envi- For example, a progressive, tech-savvy ronmental, and economic opportunities urban or suburban customer population under the heading of a utility-connected may be more inclined to adopt connected home represent a substantial and com- home programs in meaningful percent- pelling case for both the member and the ages when compared to a more rural, co-op to partner. The utility-connected geographically isolated, less technology- home helps to align interests among stake- oriented customer group. It is important The idea is more holders via information and automation. than just installing for a co-op to understand its member some isolated, segments and their needs and desires. The idea is more than just installing some interesting gadgets isolated, interesting gadgets to save time to save time or a The chief definition of a utility-connected or a little money. For the individual mem- little money. home is the interconnection of communica- ber, a utility-connected home provides a tions, monitoring, and controlling devices means to manage costs meaningfully with regulating a home’s gas and electric energy added lifestyle convenience. For the co-op, systems. These devices allow for auto- the connected home offers the promise mated control of energy use though the of extending the value of the smart grid monitoring and management of specific directly to members and supporting appliances and features in the home, such behavioral change with policy, economic, as water heaters, HVAC, water pumps, operational, and environmental benefit. lighting, and electric-vehicle charging sys- tems. Provided with enhanced awareness This has the potential to reshape the of their energy usage overall, members transactional nature of the energy- can make better energy use decisions. delivery-and-consumption relationship

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between consumers and utilities. Mov- will allow for exchanges that make energy ing away from the monthly standard use a transaction between utilities and of measurement, billing, and payment, customers, based on temporal, physical, significant research and testing is under- and economic factors. way to explore how an interactive model between the utility and the customer in a As a general reference framework for utili- building management context (which is ty-connected homes, an understanding of the nature of the utility-connected home) typical use cases is helpful; see Table 1.

TABLE 1: Utility-Connected Home Typical Use Cases and Their Benefits. Use Case Example Value to Home Dweller Value to Utility Climate Control Reduced Energy Costs, Energy Use, Demand Response (DR), and Cost Visibility Energy Efficiency (EE) Load Control Reduced Energy Costs DR, EE, Grid Security PEV Charging Control Reduced Energy Costs, Energy Use, DR, EE, Grid Security and Cost Visibility Timely Usage Information Energy Use and Cost Visibility EE Timely Cost Information Energy Use and Cost Visibility EE Cost-Based Behavioral Reduced Energy Costs, Energy Use, DR, EE Modification and Cost Visibility

Connected Home Technology Platform An examination of the associated fea- with network, also tures, capabilities, and trade-offs cur- sharing the same abbreviation. Recently, rently underpinning the technology the concept of a customer premises net- platform associated with the utility-con- work (CPN) has become a common term nected home must consider the concept to define the critical element of commu- of a Home Energy Management System nications supporting message exchange (HEMS) in combination with the related among smart meters, energy management communications technologies that pro- systems, load controllers, smart appli- vide connectivity both between the prem- ances, and electric vehicles in a home or ises and the utility and within the home building.2 A variety of wired and wire- itself. Figure 1 provides a conceptual view less networking technologies is available of a HEMS system incorporated with the and new protocols are being considered. required communications layer in a fully Give some attention to these technical integrated smart home, as envisioned by a features—alongside CPN requirements leading research effort on the subject.1 (in light of market adoption rates)—when selecting utility-connected home compo- COMMUNICATIONS nents to recommend. The communications layer within a home is typically referred to as a home area Utility-connected home CPN network (HAN), but mixing of terms environments are characterized by has often led to confusion of this concept devices that require neither low latency

1 Karlin, Beth, et al. “Characterization and Potential of Home Energy Management (HEM) Technology.” Pacific Gas and Electric Company. January 20, 2015. 2 Kuzlu, Murat, M. Pipattanasomporn, and Saifur Rahman. “Review of Communication Technologies for Smart Homes/Building Applications.” 2015 IEEE Innovative Smart Grid Technologies—Asia (ISGT ASIA). November 2015.

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HVAC Smart Smart Smart lighting thermostat lighting Load monitor In-home display Home Area Network Regular appliance Smart appliance Regular Smart Smart appliance hub plug

Smart Internet meter gateway

Utility Smart Smart Web home analytics services ESPI ESPI platform platform platform Demand Server Response Energy Portal Server

FIGURE 1: Conceptual View of a HEMS System and Communications in a Fully Integrated Smart Home.

nor high bandwidth. Most current HEMS The technical specifics about the design applications involve data payloads of only and function of these networking proto- 100–500 bytes at sampling frequencies cols are beyond the scope of this paper; that are configurable, but typically however, chief considerations for selection not less than 1 minute in granularity. of networking standards and the HEMS Furthermore, latency requirements devices should be driven by performance requirements, market adoption, device are in terms of seconds, on average, support for interoperability considerations, though reliability is required to be 98% and flexibility. To this last point, the choice or greater. These needs can be met by a between wired and network wide variety of communications protocols media is typically driven by locational flex- and technologies. Table 2 summarizes ibility in the case of a CPN, as data rates wired and wireless communications in the wireless technologies are more than technologies for CPN applications.3 adequate for HEMS applications.

3 Ibid.

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TABLE 2: Wired and Wireless Communications Technologies for Customer Premises Networks. Technology Standard/Protocol Max. Theoretical Typical Coverage Market Data Rate Range Adoption Wired Communication Technologies IEEE 802.3 10 Mbps–100 Gbps Up to 100 m Extremely High ITU-T G.hn ITU-T G.hn 1 Gbps N/A Low C PL 120 bps Up to 300 m Medium 13 kbps Up to 3,000 m Medium IEEE P1901, HomePlug AV 200 Mbps Up to 300 m Medium IEEE P1901, HomePlug GP 10 Mbps Up to 300 m Medium CE Bus 10 kbps Up to 3,000 m Low LonWorks 1.25 Mbps Up to 3,000 m Low Serial RS-232 1 Mbps Up to 15 m High RS-422 10 Mbps Up to 1,200 m Low RS-485 10 Mbps Up to 1,200 m High HomePNA HomePNA 240 Mbps Up to 300 m Low MoCA MoCA 800 Mbps Up to 60 m Low Wireless Communication Technologies Wi-Fi IEEE 802.11 2 Mbps Up to 100 m Extremely High IEEE 802.11a 54 Mbps Up to 50 m Extremely High IEEE 802.11b 11 Mbps Up to 100 m Extremely High IEEE 802.11g 54 Mbps Up to 100 m Extremely High IEEE 802.11n 600 Mbps Up to 250 m Extremely High ZigBee 802.15.4, ZigBee 250 kbps Up to 100 m High IEEE 802.15.4, ZigBee Pro 250 kbps Up to 1,600 m High Z-Wave Z-Wave 40 kbps Up to 30 m Medium IEEE 802.15.1 721 kpbs Up to 100 m High 6LoWPAN IEEE 802.15.4 250 kbps Up to 100 m High IEEE 802.15.3a IEEE 802.15.3 1.3 Gbps Up to 10 m Medium EnOcean EnOcean 125 kbps Up to 30 m Medium Wave2M Wave2M 100 kbps Up to 1,000 m Low RFID RFID 4 Mbps Up to 200 m Medium ONE-NET ONE-NET 38.4 kbps Up to 100 m Low

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Selecting a wired technology would be • Intelligent Devices physically limiting on the placement of • Smart Appliances devices in a home. While the range of network technology options appears sig- • Smart Thermostats nificant, the easiest approach—and one • Smart Lighting that will help ensure connectivity and • Smart Plugs interoperability—is to leverage Wi-Fi for IP-based communications between HEMS • Smart Hubs components, with connectivity to the • Smart EV Chargers Internet and the utility through a home gateway and service provider interface. • Software Platforms • Smart Home Systems Co-ops have a number of network tech- nologies to consider for interaction • Data Analytics with the CPN and HEMS. Generally, the • Web Services requirement is for Internet connectivity to The ability to select and configure elements The possibility gain access to on-premises systems. Smart exists to implement meter networks were originally promised as desired means that there is no single functions that allow to deliver CPN or HAN connectivity, gen- definition of a HEMS. Each utility and the user or utility to erally through a built-in ZigBee interface customer can define a solution that best manage load actively. under the meter glass. fits their needs.

However, these solutions have proven The primary function of user interfaces in cumbersome to administer and not well- a HEMS is to engage the home dwellers by suited to the intended use and design of providing information to help them make Smart Meter networks, which are typi- better-informed decisions about energy cally designed to meet the demands of usage. Intelligent user interfaces will be delivering meter data rather than the able to provide more than details about more ubiquitous networked applications. consumption and load; the possibility As long as Internet service is in place, exists to implement functions that allow the CPN can be accessed by the utility to the user or utility to manage load actively. serve the connected home using Internet protocol (IP) and Internet of things (IoT) Intelligent devices enable specific con- based principles. This is a significant bar- trol over energy-consuming appliances rier for many co-op territories that lack within the home. Some of these devices— adequate . such as smart refrigerators and wash- ing machines—are programmed with HEMS TECHNOLOGIES functions that provide inherent energy management capabilities. Others, such HEMS technologies are comprised of as plug-based load controllers, provide three categories of products or applications information and some control leverage 4 as outlined below with their constituent over the devices that are connected to functional elements: them. Ultimately, the programming in these units is oriented around altering the • User Interfaces energy consumption of the device based • Energy Portals on inputs from other intelligent control • Load Monitors systems such as smart hubs or energy management systems. Some devices are • In-Home Displays (IHD) designed with the capability to self- manage their energy consumption.

4 Karlin. Op. cit.

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The true value for utilities exists in the shifting alliances. For utility leaders, a software platforms that communicate detailed, timely industry survey will be data between users, the utility, and the required before finalizing architectural, hardware on the premises. Smart home programmatic, or procurement decisions platforms are intended to provide a pertaining to a utility-connected home Almost all comprehensively managed home energy strategy. definitions of a system. Analytics—the interpretation of HEMS platform meaningful patterns in data—are typically As a part of any strategic decision, a care- encompass the hosted in the cloud and provided by util- ful assessment of market adoption must ability for home ities or third parties. The intention with also be undertaken. It is not clear that dwellers to interact home dwellers are fully embracing the with the energy analytics is to sort through a large amount delivery system of utility and premises data for automated value/promise of these technologies, or grid and, action or useful information for home further complicating the settling of stan- consequently, dwellers. Web services allow for utility dards and brand leadership. the utility. and third-party control over devices on premises as a programmatic interface. Almost all definitions of a HEMS platform encompass the ability for home dwellers Examples of each of these solution types to interact with the energy delivery sys- are numerous and continuously changing. tem or grid and, consequently, the utility. Vendors are entering (and exiting) the The primary purpose of the HEMS solu- marketplace for each HEMS technology. tion is to provide monitoring and control Standards are evolving and new protocols functions, as described in Figure 2.5 are also under development. Collabora- tion opportunities make for continually This framework provides a model by which utilities can clarify their strategic intention in employing the technology. Is there an interest in simply signaling consumers about their energy use so they Home Energy Management can modify it or not, or is there a desire to organize a program to spur a specific action on the consumer’s part based on a price or load condition? Does the util- Information Control ity wish to take direct control of one or more load contributing devices in the home, such as an air conditioner, in order Feedback Prompts Remote Rule-Based to mitigate demand? Or is there automa- tion that can be scheduled according to program rules or a condition-based algo- rithm? These considerations and program Scheduled Optimized design goals will tell the utility what the HEMS technology needs to accomplish. High dependency on Low dependency on Clearly defining the level of automation, consumer behavior consumer behavior customer collaboration, market uptake, and dependence on human behavior are FIGURE 2: Monitoring and Control Functions of Home integral concerns for utility programs Energy Management Systems. making use of a connected home model.

5 Ibid.

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The proliferation of consumer-facing of distributed variable renewable energy, products in the marketplace also make accessing storage, or improving electric it increasingly likely that members will vehicle charging.” This is another exam- select and install their own products ple of concerted efforts to develop stan- based on needs they identify. For co-ops dards and technology to enable interop- to capitalize on this trend, their plans will erability for specific utility outcomes. need to contemplate a ‘bring your own NRECA and a group of cooperatives are device’ (BYOD) policy and design. Ther- participating in a field demonstration mostats, plug load controllers, pool pump of the VOLTTRON system with Pacific controllers, and EV charging systems are Northwest National Lab. all fair game. Technical compatibility, standards, and customer communications DATA AND ANALYTICS become primary concerns so that a co-op As Smart Grid and IoT-based solutions can inform members about available continue to proliferate at utilities, the choices and then incorporate these pos- resulting cascade of data—in increasing sibilities into the design of its technology volumes, velocities, and varieties—poses The utility-connected plan. This is not an easy task. But it is one home presents of the critical components of a successful significant challenges in terms of data a unique context program. curation, analysis, and business value. within which to While this is generally true in many util- leverage data as Various electric utility industry consortia ity business and operational models, the part of an intimate and agencies are engaged in develop- utility-connected home presents a unique customer relationship. ing standards and compatible products context within which to leverage data as aimed at providing dependable interoper- part of an intimate customer relationship. ability for customers and utilities in order to ease the technical engagement process A number of data resources converge for BYOD devices. The Open Automated around the utility-connected home, Demand Response Alliance (OpenADR) including data related to smart meters, is one such example. Its goal is to stan- customer rates and billing, customer dardize communications between power program participation, utility program sellers, utilities, and consumers using rules, utility operational data (load open development principles in order to curves), weather, and more. These data enable demand response. Using a stan- resources must be aggregated and ana- dards-based approach, OpenADR has lyzed for both utility use and delivery achieved significant industry acceptance to customers and their HEMS endpoints and is partnered with the U.S. Department as signals for either information or auto- of Energy (DOE), Federal Energy Reg- mation. Broader data analytics strategies ulatory Commission, and the National are a significant topic in their own right, Association of Regulatory Utility Commis- but, for the utility-connected home, the sioners. A strong roster of product vendors focus is on software and hardware that is engaged in enabling BYOD programs deliver data warehousing, analysis, visual using this standards-based effort. displays, and communications via media such as web or mobile interfaces in a Another program to consider is VOLT- cloud-based platform. Most utilities are TRON, sponsored by DOE. Per its web- entering the analytics discussion carefully site, “VOLTTRON™ is an open-source, at this time and there are commercially secure, extensible, and modular technol- available solutions in the market today ogy that supports a wide range of appli- that are targeting home dwellers directly, cations, such as managing end-use loads, thereby alleviating the need for utilities increasing building efficiency, integration to go it alone.

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The best solutions will take on the burden or operational objectives. The following of processing the data for the utility and are several of the most common goals or delivering information, tuned with behav- benefits identified for a utility-connected ioral science, to interfaces in mobile, web, home strategy: or HEMS environments so that utility program goals such as DR and EE can be • Demand reduction achieved. A number of solutions are in the • Voltage control marketplace that use cloud-based algo- rithms to optimize DR and performance • Frequency regulation monitoring on behalf of utilities for the • Energy efficiency Utility motivation benefit of customers. Some of these solu- might be better tions can adjust settings on devices (such DEMAND REDUCTION described as as thermostats) based on rules and condi- Demand reduction (or demand response) utility value. tions in order to help the home dweller to is often one of the primary goals of save money. A comprehensive utility-con- consumer-facing utility programs and, nected home strategy must incorporate consequently, a utility-connected home the data analytics requirements that sup- program. The ability to shed load during port the business objectives of the utility. times of peak demand is often critical to Co-op Motivation system stability, resource efficiency, and cost reduction. The HEMS solution pro- Utility motivation might be better described vides an opportunity to send signals to as utility value. Looking past member home dwellers to take a specified action. interests to invest in a co-op-connected Most DR programs involve voluntary home technology, the co-op itself must participation on the customer’s part with see value in the effort. a specific action, such as turning off A/C or other high-demand household systems. For most utilities—investor-owned, munici- This would involve the information pro- pal, and cooperative—investments required vision function of the HEMS, or some to engage in a connected home strategy are other service such as web or mobile not trivial. Some co-ops may have some interfaces, and previously arranged of the technology building blocks neces- customer behavior. sary from prior investment. Certain co-ops The ability to shed may possess the organizational capac- There is an administrative cost to this load during times of peak demand ity and expertise necessary to address program in terms of customer engage- is often critical to the programmatic and technical needs. ment and commitment management. system stability, Others may need to consider additional Conversely, the scope of response can be resource efficiency, investments in technology or human capi- relatively easily predicted as customer and cost reduction. tal to meet the desired objectives. In some participation is known in advance. The cases, these needs may be met by engag- degree of automation required is gen- ing partners to address requirements. erally limited to notification only, with Nevertheless, a careful examination of actual response measured on a system- available technologies, competencies, wide basis or, perhaps, at the individual and capacities is necessary to develop a smart meter but only in terms of actual clear strategy for connected homes and demand reduction overall. to define the actions and investments necessary to meet desired goals. Other DR programs may be conceived with a dependency on automated signal- To properly explore the co-op motivation, ing and response. Technology now allows it is best to start with the end in mind. for utilities to send demand reduction Most utility-connected home programs signals to a fleet of homes—or individ- are undertaken to meet specific business ual dwellings—with compatible HEMS

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whose residents have committed to par- aggregate level becomes an exercise in ticipate in DR events via the automated estimation. A utility-connected home limitation of use of specified devices, with a HEMS solution provides for the such as A/C. On the surface, this may not incorporation of smart appliances that seem much different than options such as can modulate their own use of energy remote A/C switch programs that some and provide feedback to the home user co-ops have employed for years. But the about energy costs and usage timing to opportunity to provide information to help balance demand and operate more members, engage in confirmed,two-way efficiently. communications with the HEMS control on member premises, and operate in a granu- Enticing members to use more-efficient lar, informed manner, is a superior option. appliances is one challenge, but alter- ing member behavior is quite another. The program effort is likely to be similar In order to help members to respond to in terms of communications, technical information about energy consumption setup, and event execution. However, and costs, the utility-connected home can results can be managed and monitored allow co-ops to communicate with and Enticing members to much more effectively and, by using auto- signal consumers about peak cost periods use more-efficient mation, dependence on human behavior based on their consumption, rate struc- appliances is one is eliminated or reduced. The utility-con- ture, and demanding weather and grid challenge, but nected home provides for verifiable and conditions. altering member measurable response, by premises, with behavior is specific load reduction performance con- quite another. Energy efficiency programs can be designed firmation. The ability to manage DR on an with behavioral assumptions in mind and area-specific basis, with locational oppor- tuned to meet actual performance, with tunities in terms of system performance specific effectiveness measures for indi- and economics, becomes a realistic possi- vidual homes. Consumer demographic bility. By integrating premises-based con- analysis can be applied to program design trols through the HEMS, a DR program in order to ensure that individual con- has the potential to become a tunable, sumer needs and concerns are taken into non-wired alternative to additional consideration, both in terms of how sig- distribution system investments. nals are delivered and how effectiveness is measured. The goals of reducing energy ENERGY EFFICIENCY consumption or shifting periods of activ- Energy efficiency (EE) programs have ity based on customer action can now be been employed by co-ops for years with more accurately defined and managed. the goal of reducing overall electric con- sumption by members. The effectiveness Further EE gains can be achieved using of traditional programs can be difficult to full automation. For those members using measure and track. Typically, most utilities plug in electric vehicle (PEV) chargers take the approach of portfolio estimation at their homes, the ability of the co-op in an attempt to account for the effective- to engage the charging system directly ness of various programs. Simply replac- offers the opportunity to shift significant ing a refrigerator with a more efficient unit load and reduce overall charging require- is estimated to deliver a certain EE benefit. ments. These systems lend themselves to automated utility control as the consumer Meter data can help to validate reduced expectations provide for degrees of free- consumption at a home overall, but actu- dom in the timing and performance of ally tracking benefits at the premises or the system.

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This freedom contrasts significantly with MEMBER RELATIONSHIPS A/C control automation where comfort Co-ops may also be motivated to use a settings are usually quite noticeable to connected home strategy as a means to customers and are likely to affect partic- improving member relationships. The ipation rates. A PEV can be set to charge likelihood of members employing HEMS more efficiently at times of the day when solutions independent of co-op partici- the distribution system can most tolerate pation is expected to increase. Members Recent studies have the demand, while also reducing overall will purchase devices and systems based suggested that PEVs cost. An additional benefit of automated can participate in on their needs, over time, as capabilities control over PEV charging by the utility frequency regulation. and consumer-facing value continue to is the opportunity to engage the PEV bat- improve. In fact, the market is evolving tery as a source of energy for the grid to rapidly. either serve demand or meet grid security requirements for frequency and voltage Along with these premises-based tools, stabilization. companies are offering services and prod- ucts to manage energy and control home- GRID SECURITY based systems outside of co-op input. Premises-based solar photovoltaic (PV) This circumstance sets up a competitive and energy storage provide the opportu- challenge to co-ops, which can have the nity for frequency regulation and voltage effect of further distancing the member control in a utility-connected home sce- from co-op value-added services or, per- nario, along with the PEV battery. In fact, haps, substituting the utility in a substan- recent studies have suggested that PEVs tial manner in the customer relationship. can participate in frequency regulation.6 With rapid smart grid technology devel- As deployment of DR and storage tech- Co-ops may also be opment, the customer can actively partic- nologies grow, the risks of grid defection motivated to use ipate in demand-side management (DSM) and a future where utilities sell less of their a connected home with the communication of information primary product (energy), the need to hold strategy as a means between the distribution co-op and the members close and engage them mean- to improving member smart devices in real-time. ingfully in this evolution becomes more relationships. pronounced. It could become a key com- Controllable load management not only ponent of being a consumer-centric util- has the advantage of peak shaving, ity. Although the likelihood of individual load balance, frequency regulation, and residential premises defection is currently voltage stability, but is also effective at unlikely, some co-ops are concerned about providing fast balancing services to the understanding and improving member renewable energy grid in the distributed relationships with targeted services. power system.7 These premises-based systems present challenges with small loads and smaller, distributed energy sources, but the technical potential exists and can be enabled in utility-connected home implementation using a combina- tion of technologies.

6 Wu, Chenye, Hamed Mohsenian-Rad, Jianwei Huang, and Juri Jatskevich. “PEV-Based Combined Frequency and Voltage Regulation for Smart Grid.” 2012 IEEE PES Innovative Smart Grid Technologies (ISGT). January 2012. 7 Shen, Jingshuang, Chuanwen Jiang, and Bosong Li. “Controllable Load Management Approaches in Smart Grids.” Energies, vol. 8, no. 10, Oct. 2015, pp. 11187–11202.

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KEY BENEFITS light of connected-home strategic objec- tives, followed by outreach to secure the The co-op motivation to engage in a needed assistance and solutions. Many connected home strategy can typically cooperatives may look to partner with be characterized in terms of the follow- neighboring co-ops or their G&T network ing benefits: to launch such programs. • Operational improvement and stabilization The transformative impact of implement- ing a utility-connected home strategy • Energy efficiency and demand extends well beyond the implementation reduction effort. Utilities should expect to modify • Member engagement improvements components in the following areas as a and partnership result of implementing a connected-home • Integrated customer, system, and pro- strategy: gram management • Technology and technology management • Policy The Transformative Utility Impact • Process In order to understand the value of con- nected homes to a utility, it is important • Workforce to consider what is required in terms of • Culture investment. For reference, a utility consid- A part of ering connected homes would generally TECHNOLOGY PLANNING developing a require the following: The technology challenge for co-ops will utility-connected • A comprehensive utility-connected extend beyond the capital investment and home strategy procurement of the solutions themselves. must address home strategic plan The technology skills required must align necessary • Existing competency in program and with smart grid systems, analytics, and technology- technology management specific skills. HEMS interaction requirements, poten- • A network of partnerships with exper- tially exceeding the existing capabilities of tise and service providers many utilities. Many utilities—particularly • A reference technical architecture8 those that are consumer-owned and less incorporating both utility and end- resource-rich—are built to operate quite user technologies well and manage core technology infra- structure. However, when challenged with • Programs with specific goals defined transformational technology opportuni- to make best use of customer HEMS ties and advanced system management platforms requirements, existing skillsets may not • A basic foundation of smart grid capa- be adequate. A part of developing a utili- bilities, such as smart meters and ty-connected home strategy must address related communications necessary technology-specific skills.

For many but the most well-resourced Beyond implementation and administra- (typically largest) utilities, many of these tion, technology planning will also become needs will be beyond their current reach an important practice for a co-op to culti- in technological, capital, and competency vate culturally. The planning culture is not terms. This will require a searching, real- confined exclusively to the needs of the istic assessment of internal capabilities in connected home, but it is a vital practice to

8 “Reference technical architecture” provides a template structure and common vocabulary to map the relationships among program elements to ensure the consistency and applicability of technology use and information exchange within an organization or program.

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implement for a utility overall. It should • The technology plan is defined, man- be noted that, in many examples, signif- aged, and measured on a regular basis. icant business benefit and technological improvements have been realized through Along with smart grid technology and the adoption of diligent planning. data analytics, connected homes further elevate the need to plan and manage Sound technology planning is typified by technology effectively. Technology and the following best practices: HEMS-device standard policies should be developed to help guide the cooperative • Business-driven functional and project and its members in incorporating prem- needs are identified within a regular ises effectively into the connected-home planning cycle. program. • Technology is viewed as an enabler and capability consultant of the busi- POLICY AND PROCESS ness, not a driver of the business. Policy requirements will be specifically • Technology planning priorities are associated with a connected home. Some identified in support of utility and of those policies may be compelling rea- More and more business functional priorities. sons to adopt a utility-connected home regions in the strategy, such as external drivers influenc- country are moving • Technology maintenance is considered ing greenhouse gas mitigation, renewable progressively to alongside business functional needs. power supply integration, or customer adopt policies that • Projects and investments are properly empowerment. More and more regions will influence planned, funded, and staffed as a part in the country are moving progressively how utilities of a formal governance and approval to adopt policies that will influence how plan resources, process. utilities plan resources, generate and generate and deliver power, and engage customers. deliver power, and • Information Technology (IT) and Oper- engage customers. ational Technology (OT) are managed In terms of policy objectives that are as a portfolio of benefits and costs under utility control, examples include to identify the highest priorities for how technology is leveraged to drive funding. customer behavior, rate and billing pol- • A roadmap of technology projects is icies, program-related policies covering planned and managed. incentives, information security and pri- vacy policies, and technology governance • A stakeholder-oriented, team-based policies to control BYOD interoperability approach is used to engage leader- and connectivity. As a part of governing ship and staff across the organization externally facing practices and standards, in setting priorities and budgets for and to enforce critical internal-process technology. adherence, policy definition and enforce- • Stakeholder steering committees are ment will require careful assessment and used to govern planning and imple- planning in concert with business process mentation of projects. and technology.

• A process exists to allow for unantici- Transforming the way your co-op cur- pated business or technical needs to be rently conducts business is key to obtain- met in-between planning cycles. ing the required value from any technol- • Projects are planned and led with ogy implementation or strategy. As a part an understanding of business value, of executing a connected-home strategy, technology, workflow, and change utilities must consider how the process management. might evolve during cross-functional

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business shifts and the use of new tech- WORKFORCE AND CULTURE nologies inside and outside of the utility. Workforce transition requirements are These impacts should be anticipated in very much dependent upon the core com- the following areas, at a minimum: petencies already in house at the cooper- • Customer service ative. Skills requirements, as noted in this paper, are going to evolve, in particular • Billing in the functional areas listed prior. This is not likely to require a significant hir- • Grid operations and ing plan, but, as a part of the utility-con- communications nected home strategy, a workforce assess- At the intersection • Distribution system ment should be undertaken to determine of technology, planning where key gaps exist or where known policy, process, and transitions are likely to occur. Long-term expertise is privacy • Resource planning skills can be identified along with tran- and security. sitional skillset needs, then a rational, • Energy efficiency programs cost-effective approach can be devised, • Consumer communications including the hiring of temporary exper- and marketing tise to fulfill unique roles or requirements.

• IT/OT technology Culturally, the impact of a connected-home administration strategy may result in minimal change. It depends upon the baseline cultural Best practices indicate that a careful makeup of the cooperative and strength process impact study must be followed of influence exercised by leadership. The up by current process mapping and a customer-centric aspect of a connected- cross-functional process change assess- home strategy may demand a shift, ment. Ideally, the results will include a depending on how the co-op is perceived repository of standardized process doc- and the historical performance of member- The customer-centric uments with specific details pertaining engagement functions. Because the suc- aspect of a connected- to technology intersection and member cess of the strategy will depend upon home strategy may interface. This process analysis will help member engagement and perception, demand a cultural shift, inform the cooperative about changes, trust must be established and maintained. depending on how identify skill gaps, and support train- A misaligned culture will make this a the co-op is perceived ing and other transition requirements, harder task and the results may be pain- and the historical much like any complex technology performance of fully evident externally. The execution of implementation. member-engagement programs designed to take advantage of functions. a connected home will have a bearing on At the intersection of technology, pol- market adoption, which will then affect icy, process, and expertise is privacy and the results that can be achieved. security. As a point of emphasis, it is vital for co-ops that are reaching out directly As a less tangible and measurable aspect into member premises and engaging with of the utility transformation, a cultural new technologies and information to have assessment—including all levels of the a clear understanding of information organization—should be undertaken. privacy and security concerns. Subject Experts skilled in cultural evaluation and matter expertise, either within the coop- change can be obtained to plan, orches- erative or procured for the co-op, must be trate, and support the necessary shifts. employed to develop policies and proce- It is important to recognize that cultural dures governing business processes, cus- transformation is a slow process and one tomer engagement, technical security, and that is hard to recognize other than over ongoing testing. the course of time.

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Member Programs and Adoption Market analysis and professional commu- nications support in planning, selling, and Member programs using HEMS and the delivering customer programs is key. connected home can provide incredible value for co-ops. Alignment of program This leaves the co-op in the position of goals to strategic objectives is a critical maximizing HEMS adoption as a means step, followed by the alignment of HEMS to achieving the best value possible from implementation and execution with pro- the customer programs and the connect- gram design. This is the crux of how the ed-home strategy. The more dwellings The more dwellings savings potential of the connected home that adopt the HEMS platform with utility that adopt the will be realized. Ultimately, the adoption integration, the better the expected sav- HEMS platform with rate of the utility-aligned HEMS platform ings and results from the programs. utility integration, is key, so the rate of that adoption must the better the be both maximized and well-understood Available studies assessing HEMS adop- expected savings in order to properly tune DR and EE pro- tion propensity and actual adoption rates and results from are somewhat dated at this point. Quite a the programs. grams for results. lot of market research dollars are pouring As discussed elsewhere in this paper, suc- into studies of connected-home technol- cessful use of technology and program ogy in general for product and general design is dependent on both automated adoption propensity. Generally, momen- responses and the spectrum of human tum in the connected-home market is behavior. The levers at the co-op’s disposal gaining ground with a roughly 30% com- are contained within the program rules and pound annual growth rate (CAGR) over- incentives. Solid program adoption depends all. This does not refer specifically to the upon incentives, usually aligned with price utility-connected market. signals that compel the desired response on The number of the part of the member participant. Even Some utility-specific insights are avail- smart thermostats where these rules are codified and auto- able. In October 2015, Deutsche Telekom in North American mated in a HEMS system, customer commit- released a study of the multibillion-dol- and European ment is still required for adoption and pro- lar smart-home market that called out homes is projected gram goal realization. The design of specific impressive numbers: The number of smart to increase 64% DR and EE programs is highly utility- thermostats in North American and Euro- annually by 2019. specific, but these goals should be carefully pean homes increased by 105% in 2014 to considered in the requirements specifying a total of 3.2 million units, according to the HEMS platform. Berg Insight, and is projected to increase at a compound annual growth rate of Communications used for customer-facing 64.2% by 2019. Navigant Research pre- programs is an important success factor as dicts global revenue from home energy well. Careful marketing based upon clear management to grow from €533 million customer segmentation and goal alignment ($568 million) in 2014 to €2.18 billion with customer-facing programs should ($2.32 billion) in 2023. Deutsche Telekom support HEMS adoption and customer believes the smart home market will really participation, thereby maximizing expected take off when companies focus on custom- results. Customer participation is, after all, ers’ primary needs, which includes home voluntary at every level in this strategy. energy efficiency.

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The smart home system market is com- demographic trends to be understood. petitive. Consumers can find whole Applying available insights or gathering ecosystems of tech products for their direct study data may support the devel- homes in systems such as Apple’s Home- opment of effective marketing strategies. Kit or Belkin’s WeMo.9 Like many other technology trends, there are indicative Strategies to engage consumers in tak- ing up this technology—and, specifically, TABLE 3: Factors Motivating the Adoption of HEMS Technology. technology that meets a utility’s needs— must include early definition of the pro- HEMS or Related Technology Motivation Factors in Persuasion Stage grammatic requirements, clarity around Home Energy Audit (adopters) • Save energy HEMS requirements (preferably stan- • Reduce costs dards-based), clear communications to • Increase efficiency customers about the benefits and technol- • Improve comfort ogy options, and ongoing marketing. The • Solve particular problems goal is to end up with a clearly described • Issues of health and safety population of HEMS-enabled members, Smart Grid Technologies • Useful to society and the environment with compatible and connected systems, who are interested in participating in the Smart Home Devices • Interoperability cooperative’s programs. Provide as much (intending adopters) • Easy definition and clarity as possible—in eas- • Control ily accessible formats—to help users see • Safety the benefits and understand what to buy. • Convenient Smart Home (adopters) • Novelty Factors motivating the adoption of HEMS • Cost savings technology are noted in Table 3.10 • Reduction in electricity use • Being green Barriers Smart Home (mostly nonadopters) • Safety: Home security, hazard protection Barriers to a utility-connected home are (floods, fire, etc.) noted throughout this paper and summa-  • Information: Home monitoring rized here. It is important to understand • Convenience each in the context of a specific utility • Feel more tech savvy plan and to develop rational, effective • Financial: Monthly fee, cost of equipment, approaches to overcome or address savings on energy bills, insurance discount each one. This is an emerging field of • Ease of use engagement for utilities and risks must be Automation (mostly nonadopters) • Lighting detailed and mitigated in much the same • Temperature way as any other initiative. Load monitor (adopters) • Curiosity These barriers and risks include: • Gathering information • Interoperability in the HEMS • Attributing blame to appliances/devices environment Feedback (recruited users) • Financial savings • Data privacy and security • Environmental concern • Consumer engagement Smart home and advanced • Emergency help telemedical technologies • Prevention and detection of falls • Utility technology management (mostly non-adopters, • Monitoring physiological parameters maturity older adults) • User-friendliness • Third-party providers • Lack of human response • Data analytics maturity

9 Dobush, Grace. “How Smart Homes Help Energy Efficiency.” Blog. Consumer Technology Association. Dec. 9, 2015. 10 Karlin. Op. cit.

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Community Partners Developers can be engaged to provide HEMS technologies as a part of building A number of stakeholders and partners new dwellings in the cooperative ser- will be interested in the opportunity to vice area. Engaging other entities in the support a utility-connected home pro- promotion and installation of the utility gram. Engaging these stakeholders as a standard HEMS solution can only help part of defining the strategic plan and as to drive adoption rates higher. Strength- a part of its execution will result in a more ened relationships with entities like devel- effective program with stronger adoption opers who are a part of elevating living and enhanced technical capability. standards regionally can be a fruitful approach to meeting utility objectives. Engaging other Each utility must consider a stakeholder Co-ops should be aware that developers entities in the analysis carefully. The following are may be partial to a particular solution promotion and important representative examples: alternative, such as a brand of thermostat, installation of the and will be reluctant to change their pre- utility standard • Municipalities HEMS solution ferred vendor. can only help to • Developers Network operators, likewise, are engaged drive adoption • Network Operators rates higher. in developing a variety of solutions across numerous industries. Their primary inter- Municipalities, in particular for est is in driving up IoT device proliferation consumer-owned utilities, are important using their networks for data transmittal stakeholders. These entities may provide and connectivity. Providers such as Veri- additional strategic input for inclusion zon are actively supporting solution inno- in smart city initiatives. Additionally, vation and communication integration municipalities may be advancing with products qualified for direct access communications capabilities that can to LTE networks. This alleviates some of support a utility-connected home, such as the potential for impaired adoption of fiber optics to the premises or municipal HEMS resulting from Internet connectiv- wireless network access. Other municipal ity limitations. Reaching out to regional departments may be able to complement network operators may provide avenues the utility-connected home strategy to technology requirements refinement with additional smart home features and, ultimately, aid in defining a HEMS and technology which can help to spur solution with optimized characteristics for adoption. adoption in a utility’s service area.

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Resources and Information The following resources may be helpful in exploring a utility-connected home strategy further: • U.S. Department of Energy • Pacific Northwest National Laboratory • National Renewable Energy Laboratory • Institute of Electrical and Electronics Engineers • Electric Power Research Institute • Open ADR Alliance • Utilities such as PG&E and Duke Energy, among others

Bibliography Al-Qutayri, Mahmoud A., and Jeedella S. Jeedella. “Integrated Wireless Technologies for Smart Homes Applications.” Smart Home Systems. Feb. 2010. Ali, Tasneem. “Perspectives: Accelerating Connected Home Adoption.” Insights. The Nielsen Company, LLC. April 21, 2017. Gartner, Inc. “Connected Home.” IT Glossary, 11 Mar. 2016. Lomas, Natasha. “Most Consumers Not Being Turned on by Connected Home, Study Finds.” TechCrunch. March 6, 2017. Powerley. “The Energy-Driven Smart Home Has Arrived.” Utility Dive. Sept. 28, 2017.

About the Author Joseph Blackwell is an energy utility consulting executive with more than 35 years of experience in the IT industry. He has deep experience with utility technology planning and business transformation and offers extensive experience in managing programs, customer relationships and support, business process analysis, and organizational change. Joe serves as Director of Commercial Energy Solutions for Leidos Engineering.

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