For a very long time the electricity market has been dominated by providers. The Spinoff spoke to a company shifting the balance towards the consumer.
Imagine sitting at the pub having a beer on a cold winter’s night and your phone vibrates in your pocket alerting you to a sharp drop in the spot price of electricity. Using the same technology that let you know the price was down, you now switch on your heat pump and start warming your home for your return while it’s most affordable. Or you could make it automatic, tied to environmental parameters, so when the carbon entering the grid drops beneath a certain level your electric car decides to charge itself.
Well this Jetson-like functional future is now. One of the companies leading the technological development in New Zealand is GoodMeasure that provides real-time, direct access to power meter data, and relays that information back to the consumer for them to make informed decisions. This technology is empowering the consumer to have control over their electricity use they’ve been denied for a long time.
GoodMeasure are running a trial with Flick Electric on a product called If This Then That (IFTTT) where the consumer can define a simple chain of events based on price and carbon consumption (“if this”) which if they occur automatically turns power heavy appliances on and off (“then that”). It allows consumers to save money, and make powerful statements about the type of power they want to use.
Simon Day spoke to GoodMeasure Chief Technology Officer, Regan Ryan, about how it works and why it’s taken so long for the electricity industry to evolve.
What is GoodMeasure?
We call GoodMeasure connectivity as a service platform – CaaS. You might have heard of the term Software as a Service (Saas). A good example of that is something like Xero – delivering financial management and accountancy services to people through software that is available over the internet.
What we do is deliver a service to customers as well. But it is a slightly different approach. Instead of delivering software, we deliver connectivity, this is connectivity between the cloud and devices that are in the field. These might be for metering, monitoring or controlling energy use.
We help our clients get access to that data, in a format and manner they find easy to work with. We also give them the ability to act on that information.
That could be sending energy information to any kind of software, comparing that to current market prices, then making a decision to turn things off until it is cheaper to turn them on.
There will be other companies that will specialise in the management of information for other domains – that could be monitoring beehives or monitoring rodent traps. There are all sorts of things that could be done. Our area of specialisation is the energy sector.
My co-founder Dean (Gowans) has been working in the industry since the late 1970s. And for me, since the late 1980s. We’ve seen a lot of change in the sector. We’d like to think we’ve pioneered some of those changes as well. We’ve always been big advocates for the use of telecommunications technology, for the use of the cloud in the industry, and where we’ve seen opportunities to introduce it, we’ve brought it into play.
Why is the energy sector so fertile for companies like yours to offer consumers greater power?
If you compare the energy sector to the telecommunications sector, telecommunications has changed an awful lot of the past 25-30 years. In comparison, the energy sector has endured slower, deliberate change. The technology being used to read meters and calculate bills and to manage the network of electricity hasn’t changed in decades. It is an industry that is relatively resistant to change.
But there are all sorts of things that are coming into effect like the focus on renewable energy and the growing popularity of electric vehicles (EVs) that are starting to change that. All of these things are actually going to force the hands of the participants in the energy sector. They can’t be avoided or smothered.
Because doing nothing is too risky an option. New Zealand is quite fortunate that about 85% of the electricity we consume comes from renewable resources, and there are drivers to increase it further. But if we increase it further there is potential to introduce instabilities in the balance of the network. If you increase the amount of solar or wind generation you need to have a resilient and responsive grid that actually adapts to the changes in the amount of supply available.
You can’t guarantee that all the solar panels that are out there will continue to generate electricity throughout the day. There may be periods when it gets cloudy and there is unavailability of some solar panels. And similarly with wind generation. The grid has to have means in place to cope with that.
There are two ways of doing that. You can either have reserve capacity of generation available to step up every time wind or solar generation drops off. Or you can put smart equipment out in the field to control the demand side. This is where consumers are actually using smart technology to switch things off. So you are finding a balance that way.
And this is where services like GoodMeasure can step in and empower consumers?
We offer the connectivity part. We make it easy for our clients to get connections to smart meters, electric vehicle chargers, to distribution transformers, to substations, to banks of electricity meters that might be in office buildings or in schools, monitoring of solar panels and connecting battery storage – all of those things. We manage connectivity and deliver information in real time to our clients. Our clients can look at the information and decide, based on the insight at hand, what they need to switch off or ramp up. We provide the glue between all these disparate elements.
What is a smart meter and what makes it smart?
I think there has been a fair bit of criticism in the media about smart meters not actually delivering a lot of value to people, and I think that is a pretty fair assessment of what has happened over the last ten or so years.
Now you have about 1.5 million smart meters installed around New Zealand.
And while the smart meters themselves are quite smart, the way they’re used is not smart at all. The smart meters have quite a few nifty features in them, but the market participants who use them really can’t get access to those features. Instead they make do with stale information, often delivered days and days after the electricity has been consumed and measured.
In what ways are they not effectively being used?
Smart meters can look at this data and provide the means for market participants to not only count up how much energy is being used, but act upon that as well. If a household in one part of the country is using quite a bit of electricity at that point in time, then you would be able to control other facilities in other parts of the country – things like refrigeration or water heating – that we can turn off or turn down momentarily, to keep the network balanced.
I think this is becoming particularly evident with the rise of electric vehicles. EVs are going to provide a significant amount of demand on the grid. When I talk about demand it is not the amount of energy required to charge an electric vehicle, but the amount of power or capacity required to charge an electric vehicle at any point in time.
What is the difference?
The energy side is the amount of water that you need to fill your swimming pool, but the demand is the size of the hose you’ve got to fill the pool. If you’ve got a really wide hose you can fill the pool quickly. If you’ve got a really narrow hose then it could take hours and hours.
And EV drivers have an expectation that they can charge their vehicles really quickly. In order for that to happen you have to have a really big pipe to provide all that energy in a short space of time. And if you are doing something like that, that energy has to come from somewhere and it is going to be using capacity in the network. There is a risk that the use of that energy at that particular point in time could place pressure on transformers, it could place pressure on fuses in people’s home, and on switch boards.
Our way of dealing with that is too move the charging of electric vehicles, or the heating of hot water cylinders to times of day when you are not going to be consuming a lot of electricity. The other thing you can do is switch other things in the house or office off, to ease the contention for capacity.
How does that happen?
I don’t think there is an expectation that people will sit there with their phones or in front of their computer and say “it’s coming up to 11am, I’d better start charging my car now, so I need to switch off my fridge”.
What makes far more sense is a background service, offered as an automated switch for these things. The service can turn these things off while your car is charging, ensuring it is happening at just the right time.
Does it allow you to be more environmentally motivated with your use of power?
It gives you the opportunity to heat your hot water cylinder or charge your car at a time when you know the amount of renewable generation is at its highest. These are exactly the sort of things that sophisticated, smart energy services can do.
Is that something GoodMeasure can do?
What we do is provide the connectivity part, and working with retailers like Flick (who is currently running a trial), we provide access to the information and the ability to control the devices. They can then take that information and the access to this control and say “how do we integrate that with market prices, customer preferences and provide the best and most effective service for the customer?”.
How are energy retailers doing at the moment in terms of providing an empowered consumer experience?
At the moment a lot of the retailers are still severely limited by their lack of access to information. If they’re lucky, they can get their customers energy use four days after it happened. Sometimes it is not until a month later. That makes it very difficult for the retailers to be able to offer responsive, customer focused services.
So we are trying to change that. We are bringing the ability to the retailers to not only get that information faster but to get it in real time. They could be getting this information within milliseconds.
How does that then change the environment for consumers?
Customers have the choice of retailer at the moment. I think you will continue to see innovative retailers offer innovative services, and if those services start to catch on, other retailers will have to offer similar approaches as well. But this is a thing a lot of the retailers have struggled with because they have not had access to fresh information in the past, it’s a critical enabler.
The way meter reading services have been set up is to deliver only what is necessary to bill customers. They haven’t been set up to provide value added services to customers.
Because it does feel like our metering systems are very old school, if not archaic?
This is not just a New Zealand problem. A lot of countries have tried different ways of pressing ahead with smart metering, and a lot of them struggled with the management of the information, trying to read millions and millions of meters within a short space of time.
What you’ve seen is smart meters being successfully deployed but the only thing that they’ve actually sorted out is the need to send meter readers out to read the meters. That has been a benefit to the retailer, it is not a benefit to the customer.
We think you will start to see changes over the next couple of years as new mechanisms become available allowing people to get access to this information. The customers can then vote with their feet as far as retailer choice is concerned. If retailers offer innovative services they have a chance to pick up more customers.
I think a lot of the promises that have been made about the benefits of smart meters to consumers just haven’t been seen yet.
What is Flick’s “If This Then That” product trial?
The fact that “If This Then That” has been used by Flick in an ongoing trial, demonstrates the power of flexibility you get from the internet. Our role is to provide connectivity for Flick. GoodMeasure services allow Flick and ultimately their customers to get access to that information every few seconds. They can take that information and use a smart service like “If This Then That” to make decisions.
If you are using a lot of power at home – you’ve got the oven on, you’ve got the heat pump on – it might make sense to turn the hot water cylinder off. “If This Then That” is the framework that allows you to define rules that can make decisions based on that, and then send out an instruction to switch off the hot water cylinder safely.
As these opportunities grow for consumers to have more power, how will this affect the electricity market?
I think you will see new markets evolve. You can already see the beginnings of this happening. There’s a willingness for residential customers to buy and sell electricity off each other. If your neighbour has solar panels, there will be times where they don’t require all the energy being generated. Instead of just exporting it to the grid and selling it at market price, it might make far more sense for the neighbour to sell electricity to someone who is next door. It’s not only a neighbourly thing, it’s a sound choice for the health of the grid.
It appears to be shifting the balance of power towards the consumer?
Absolutely. You’ve had the traditional model – generators at the top generate electricity; that electricity is then injected into the transmission system; then it goes to the distribution networks; from those distribution networks it eventually ends up in your home.
This top-down model from generators all the way to your home is going to change. Rather than having generators solely at the top you could have generation anywhere and everywhere. People could be generating at home, you could be generating at your office building, you could have generation at the end of your street.
Rather than a one way flow of electricity, you can see a far more complicated, convoluted arrangement where electricity is flying in every direction between thousands and thousands of smaller generators. And thousands and thousands of consumers.
In unleashing the capacity of those smaller generators and consumers, is that better for the environment as well?
Particularly if you have smart devices in the field, rather than just responding to prices, you can be looking at criteria to say: “I want to switch things off when there is diesel being burnt.” You can tie your electricity consumption to wind or solar generation. You can tie the way you use energy at home to the generation that you want to support, that you want to use.
And if people start making those decisions and the demand for renewables to go up does that mean there will be more investment in that type of energy?
Absolutely. The public has already expressed sentiments around the burning of coal and gas. That said, those things still have a part to play in the supply side for the New Zealand industry. I don’t think it is feasible for us to consider throwing away those sources of generation in the near term.
The most important thing people value as far as their electricity supply is concerned is its availability, making sure you have electricity when you want it. The gas-fired and coal-fired stations provide some of that resilience by being there as a back up in the event that some of our newer, renewable sources aren’t available.
But if you’re aware that we are burning a lot of coal or gas at a certain moment, then you could walk around the house and start switching things off. However, it would be much much more convenient and much more efficient if you could just let your devices make that decision themselves.
How far away are we from a mass ability to make these decisions on a day to day basis? For upper middle class families, and for student flats in Dunedin.
People have the ability to curb their electricity use now when the prices go up. If you’re a Flick customer and you have the app on your phone you will get warnings of when the prices go high or your electricity is generated from gas or coal sources. You could then run around the house and switch things off. What we are talking about here are smarter services that can actually do that on your behalf.
They can also look at your house and conclude, despite prices being momentarily high, you’re not using a lot of electricity at the moment. Consequently, there’s no point pestering you with warnings.
The technical side of this is all possible. We have been working on a trial with Flick for a few months, and this has been in an effort to showcase that the technology is there and ready to do it. And for Flick’s consideration, it’s really about how it can be packaged up into a clever service that would help customers manage their energy usage in a comfortable way.
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