In my last post, I introduced you to step one of the CLASS framework, CLARIFY. I explained that, as with anything you do, personal or professional, for it to deliver sustained success, your ‘why’ must be clear and compelling.
In my last post, I introduced the CLASS framework. Five steps, that when followed, will increase the likelihood of a successful demand response program at scale.
Step one in the CLASS framework is CLARIFY. As with anything you do, personal or professional, for it to deliver sustained success, your why must be clear and compelling.
Lawrence Berkley National Laboratory recently published a potential demand response study, within which they identified four reasons why you should consider demand response. To date, this is the best categorisation I have seen to help you clarify your why.
What demand response programs you embark on will change over time, but your reason why should not. When I first started out, the focus of our demand response efforts was on the deferral or avoidance of future generation assets. Years later this moved onto how demand response can be used to manage location-specific network constraints. These are two very different demand response programs. However, the why was always the same – to reduce the cost of electricity to all consumers.
In step three of the CLASS framework I talk about the need to articulate your story to stakeholders. For consumers and the communities you serve to buy into your story, your why must be authentic. Unfortunately, in many parts of the world, consumers do not trust that their energy provider has their best interests at heart, so this is an uphill battle. Without trust, what is the reason they would partner with you and reduce their energy consumption at a time when they need it the most? Consumers often think they are being asked to reduce their energy usage due to poor grid management by the utilities over the years. Others believe demand response rewards wealthy consumers who have high energy use and places vulnerable energy users at risk.
Many consumers do not care about earning a few extra dollars if it would mean having to remember to change their behaviour at certain times, or handing over control of their home appliances and devices to their Utility. However, if those same people understood that by reducing their consumption, their efforts were helping avoid investments in infrastructure that in turn would reduce, or at the very least slow down the increase in the costs of energy to everyone, you may experience a very different outcome.
Your challenge is to be authentic and act with integrity. Where consumers have actively participated in demand response programs, you need to ensure those savings are passed on to your consumers by way of downward pressure on the rates they should pay. Show your consumers that their actions have had a direct impact on the deferral or avoidance of expensive infrastructure investments.
Does your demand response program have a clear and compelling why that places consumers and the communities you serve at its heart?
Wayne is the author of the Amazon bestseller The Digital Utility and CEO of The Chapel Group.
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Having been involved in designing and delivering demand response programs for many years, I often get asked “what is your approach” or “what lessons have you learnt”.
Demand Response is deservedly getting increased attention here in Australia, and as a result of the recent COAG Energy Council meeting, it will not be too long before it becomes a core part of our energy mix.
In recent weeks, I have been involved in several conversations about distributors (DBs) not being able to include demand response investments in their asset base. Instead they will need to contract in demand response services from third parties. The rationale behind this is Regulators want to create a competitive market, which they believe cannot be achieved if DR goes into a DBs asset base.
The potential of blockchain in the energy industry, which most people know as the distributed ledger technology powering Bitcoin, has had me excited for some time. The more I delve into blockchain, assuming the known issues are ironed out in the coming years, the more use cases I can imagine.
As Australia continues to navigate the evolution of demand response, an interesting question has emerged. Who is accountable for the network ‘going dark’ if the distributors are forced to use contracted demand response?
“The theme for Foresighting Forum 18 is take charge, shifting power to consumers, in the using, making, and trading of energy”.
It is a great step forward to see the COAG Energy Council’s consultation paper, Facilitating Access to Consumer Energy Data. I am pleased with the overall direction. I believe we could move faster than the recommended timeframes, but then I am always impatient and believe we should be able to move faster than we actually do.
I made the following key observations in my submission, and would be interested in your thoughts:
- The paper talks about leveraging existing rules and structures where possible to expedite the process. I agree, but I believe some of the recommendations may not be in the best long term interests of the consumer. In that case, existing structures and rules should not be leveraged.
- I was unsure why the distributor, or DNSP, was the recommended party to source and share meter data. Under the new market structure, it makes more sense for the Meter Data Provider, or MDP to source and share the meter data. I submitted a series of reasons as to why the MDP is better positioned to provide this service.
- I agree that AEMO should act as the central hub to manage all transactions. I did question the value in AEMO storing all meter data when the reality is, a small percentage of the population will ever have their energy data accessed. With the proposed model we will be paying large sums to capture and manage a lot of data where the majority of it will never be used to deliver value to consumers. Instead, I wondered if it would be better for AEMO to manage the security and integrity of the transactions.
- I asked to what extent the research has leveraged the work done by the Green Button Alliance (GBA)? If we were to leverage the GBA framework, Australian start-ups would have instant access to the lucrative US market.
- Finally, it was not clear to me the granularity, timeliness, and frequency of data to be made available. I suggested it should start off being in line with current market practices. In other words an approved third party should get access to the data in the same way a Retailer, and Distributor does.
This is a very important initiative that, if well designed, will deliver significant benefits to consumers and our community. Your voice is important. What do you think about the proposals set out in the paper?
Since 2012 I have been leading smart energy programs and helping develop digital utility roadmaps. The most important lesson I learned along the way is to focus on services that are in the best interests of the consumers and communities you serve. This in turn will be in the best interests of your shareholders. Having the right roadmap is just the beginning. You must have a compelling narrative. One that is authentic and can explain why your roadmap helps solves real world problems. You must engage your stakeholders early and often. Collaborating with stakeholders on your roadmap is a never ending journey.