Today’s hype around Smart Grid 2.0 continues to be focused on utilities and the homeowner.

Policy makers predict intelligent networks of electrons flowing in and out of the home.  The theory is that during peak-pricing, high-demand periods, utilities will save homeowners money by automatically slowing down their air conditioners and refrigerators and buying electricity from their solar array and the electric vehicles plugged into their garage.  And consumers, receiving continuous electricity usage & cost updates via web, email, text, Facebook and Nintendo, will change their behavior.

This last point is the trickiest.  Our engineers can model energy savings from intelligent systems based on past operating history, but predicting savings from behavior change is more challenging.  We’ve seen $4 gasoline drive behavior change.   At some price, consumers will choose to dry their clothes at 11pm instead of 4pm.  But for now we’re still guessing on how significantly electricity cost signaling can drive consumer behavior change.

Recently we installed an energy monitoring and control system for a large industrial customer.  Like the utility Smart Grid, this Enterprise Smart Grid provides our customer with visibility, intelligent control and integration into their business.

The system monitors facility-wide consumption of gas, electricity and water.  Instead of monthly utility bills sitting in boxes in the purchasing department, current and historical usage is continuously reported, visible across the corporate intranet, with alarming for extraordinary events enabled.

The business rules around controlling demand, integrating with OpenADR and participating in Demand Response events can now be built into the system.

But the system’s most powerful effect comes from its integration with the company’s accounting system.

Previously energy costs were considered general overhead, assigned pro-rata to each department or product line based on an annual management estimate.  As line managers couldn’t change this overhead allocation, they had limited motivation to reduce energy consumption. Participating in Demand Response events was an annoyance.  And when our team installed an energy-saving retrofit project somewhere in the plant it didn’t show up on that manager’s radar screen.

With sub-meters on pumps, presses and furnaces actual product line energy usage and costs are now reported into the P&L, giving line managers a new metric:  cost of energy per product produced. Which means it matters.  Demand Response dollars can now flow back into their business as contribution margin.  All of a sudden shutting down a large gas-fired furnace for the weekend during a quiet period has a direct impact on their bottom line.   And all this affects that manager’s performance bonus.

Now that intelligence really has the chance to drive behavior change.