The More You Know...

A groundbreaking 'smart grid' test in Boulder, Colo., is delivering some surprises for both consumers and utilities

By STEPHANIE SIMON
Boulder, Colo. -- A bold experiment is transforming this college town into a living laboratory by changing the way utilities manage -- and customers use -- electricity.
The Journal Report

Participants in the project, called SmartGridCity, can go online to see exactly how much power they're using or calculate how much it cost to crank up the hot tub the previous evening.
Soon, they'll be able to program some appliances over the Web and even choose where they want their electricity to come from. They might set their dishwasher to run only when wind power is available, for instance.
The plan will also give the local utility, Xcel Energy Inc., a vastly bigger reach. To ease strain on the power grid, Xcel will be able to reach into a neighborhood remotely and temporarily turn down thermostats or shut off hot-water heaters in participating homes.
Tomorrow's Grid
This $100 million experiment is the first full-fledged test of a high-tech "smart grid" in the U.S. -- and it comes at an important time. President Obama and Congress have declared it a priority to modernize the electrical system, and they've put smart grids at the center of those efforts. An early draft of the stimulus package includes $30 billion for developing smart grids and expanding the use of renewable resources.
Power Play
See how a house on a smart grid would allow customers and utilities new options.
So, utilities across the country will be watching how Xcel fares in Boulder. Already, the plan faces challenges. Xcel must deal with a host of technical issues, not to mention some political ones -- such as persuading regulators and consumer advocates to accept a radical new rate structure now in the planning stages.
Beyond that, the very concept of the smart grid is controversial on many fronts. Some homeowners find it Orwellian, while consumer advocates tend to see it as a wasteful extravagance; they say utilities should focus on improving efficiency instead of spending billions on futuristic technology -- and passing the tab on to ratepayers.
So far, Xcel has been running only a limited trial of the smart grid, to gauge customer reaction, measure energy conservation and quantify cost savings, among other things. But over the next few months, about 10,000 homes will try out many of the smart grid's features, such as monitoring and regulating their energy use through a Web portal.
Now's the time for "testing how far we can go with this," says Michael Carlson, chief information officer for Xcel, which is funding and implementing the experiment with a consortium of high-tech partners, including Accenture Ltd., Current Group LLC, GridPoint Inc., Ventyx Inc. and Schweitzer Engineering Laboratories Inc.
Initial results have yielded some surprises. Though Boulder was chosen in part because of its highly educated population, some customers have complained that all the high-tech bells and whistles are too confusing. And even some of the most committed environmentalists in this proudly liberal city of 94,000 have been slow to change their habits.
Consider Dennis Arfmann. The 57-year-old environmental attorney couldn't wait to join the smart grid, expecting it would help him conserve. But when the system prompted him to evaluate his energy use, he found that he and his wife, Julie, had different priorities.
He saw their extra freezer as wasteful. She liked it to store her homemade cherry pies. He wanted to unplug the dryer. As the spouse in charge of laundry, she resisted.
To make his case, Mr. Arfmann printed out weekly reports of their energy use from the smart-grid Web portal and bought a hand-held device that measured how much each individual appliance used. He even promised he'd personally hang the laundry on a clothesline.
"It took about four months to negotiate," Mr. Arfmann says. In the end, his wife, a dentist, agreed to ditch the extra freezer and let him use the clothesline -- even in winter. Mr. Arfmann's concession: bumping up the thermostat a few degrees over Christmas, when they had lots of house guests.
Other customers tracking daily energy use on the Web portal say it has become a game to try to keep their numbers low. "It's definitely a challenge," says Ray Tuomey, who unplugs his toaster after breakfast to save every fraction of a kilowatt-hour.
Encouraging conservation, of course, is problematic for utilities: The less electricity they sell, the less profit they make.
GridPoint
ENERGY SAVER GridPoint's Web portal for homeowners
Let Prices Fluctuate
So, Xcel plans to use the data gathered in Boulder to press state regulators to approve a radically new business model in Colorado and then, perhaps, across its eight-state service area. The goal: to let prices fluctuate as often as every five or 10 minutes according to demand, so that customers pay more during the equivalent of rush hour on the grid. Xcel says this will ease strain, prevent blackouts and encourage conservation.
To make real-time pricing work, however, the utility must let customers see the cost -- and perhaps even the source -- of the electricity they're using at any time. Xcel is testing various ways to send this information, including text-messaging customers' cellphones.
Another option, which has been used elsewhere for commercial and industrial customers: outfit each home with a softball-size orb in constant Wi-Fi communication with the grid. It could glow green when wind farms are flooding the grid with renewable power -- or turn red when the price of electricity spikes.
For now, Xcel is focused on automating a home's response to price and environmental signals so customers "don't have to interrupt their life on a minute-by-minute basis to check their BlackBerrys to see whether the wind is blowing hard," says Ray Gogel, the utility's chief administrative officer.
To test out the automated system, Xcel is equipping about 10,000 homes with free devices that can control certain appliances remotely. Customers will go to the utility's Web portal and set goals for energy use. Do they want to run the dishwasher only when wind power is available? Are they willing to let Xcel turn down the heat in their home when the grid is straining? Will they agree to turn off their hot-water heater every Tuesday afternoon to save electricity?
Once the parameters are set, Xcel can control designated appliances remotely, within the customer's guidelines. The customer retains override power.
Executives also have their eyes on a far bigger prize: reducing the need to build costly new coal-fired generation plants. That goal has led to one of SmartGridCity's most ambitious efforts -- turning homes, and even cars, into miniature green power plants.
The technology is too expensive to be widely used, so Xcel has chosen just a few homes in Boulder for this part of the experiment. One is the official residence of University of Colorado Chancellor G.P. "Bud" Peterson and his wife, Val. Xcel and its partners spent tens of thousands of dollars to turn it into a futuristic showcase.
Xcel Energy
GETTING A CHARGE OUT OF IT John Bryan, Xcel Energy consultant, and Rep. John Hall of New York with a hybrid Ford Escape that's been converted to a plug-in electric car
In the Petersons' utility room, a battery pack about the size of two minibar fridges collects solar energy from photovoltaic panels on their roof. This is backup power for the Petersons; in the event of an outage, it will keep their refrigerator and security system running. It's also backup power for Xcel. When the grid is strained, the utility can draw solar power from the Petersons' battery -- whether or not the sun happens to be shining that day.
The battery, which costs about $4,000, stores just 40 hours of limited power for one home. But there's extensive research under way to improve such batteries, and bring down the cost.
"They're basically Tivo-ing electricity" by capturing the sun's rays now and using them later, says Andrew Tang, who manages smart-grid projects for a California utility, Pacific Gas & Electric Co.
A similar experiment plays out in the Petersons' garage, where a hybrid Ford Escape has been converted to a plug-in electric car. It draws power from the home's solar panels, stores it -- and can send it back to the grid on demand.
The Petersons' experience with the smart grid has not been entirely smooth. Mrs. Peterson says it can be cumbersome -- and "boring" -- to use the smart-grid Web site to manage her home's energy use. She has to set more than a dozen data points just to get her bedroom temperature where she wants it through the week.
Her husband finds some of the online charts that track his home's energy use too abstract. "If I told you that today you saved four pounds...of carbon emissions, what does that mean to you?" he asks. He prefers when the software serves up analogies he can visualize: He's saved enough energy to microwave 9,550 frozen pizzas or to light a major-league ballgame for three innings.
System engineers at GridPoint, a smart-grid technology firm in Arlington, Va., that's working with Xcel, are modifying the software in response to this feedback.
Gripes aside, the Petersons say they're sold on the concept: "This is the future," Mrs. Peterson says.
Not all consumers are likely to be so enthusiastic. Some early experiments with smart-grid ideas have seen considerable opposition. In California last year, regulatory officials drew a storm of protest when they considered requiring all new homes to have thermostats that utilities could remotely adjust. They withdrew the proposal, which critics said smacked of Big Brother.
Arshad Mansoor, a vice president of the Electric Power Research Institute, calls customer response a significant roadblock to smart grid. He's hopeful that the Boulder experiment will help utilities figure out how to smooth the way.
Another obstacle is beyond the scope of Boulder: Utilities, regulators and manufacturers of dozens of appliances and meters will have to settle on a uniform language so they can talk to one another.
"This is not VCR versus Betamax, where there was just one industry involved," says Mr. Mansoor. "It's a big hurdle."
Meanwhile, consumer advocates are already warning they will fight any proposal that boosts rates for customers who don't have the time, the sophistication or the desire to fiddle with Web portals and cede control of their appliances.
"I like the concept of smart grid, absolutely," says Jim Greenwood, who directs Colorado's Office of Consumer Counsel. "But not at any cost."—Ms. Simon is a staff reporter for The Wall Street Journal in Denver.
Write to Stephanie Simon at stephanie.simon@wsj.com