The last quarter of '09 witnessed a big federal push behind smart grid technology, to the tune of $4.2B deployed to utilities out of the stimulus package. That gives buoyancy to near the same amount of private investment in smart grid companies from late '08 thru '09. What is interesting is that the federal money is intended for smart meters and intelligent utility infrastructure, where as the private money has primarily funded consumer side intelligent devices.
Seems like a great double sided stimulus doesn't it, to get to real demand side management [DSM]. Well...
The trouble is the so called 'behavior economics' which says that a rational individual will choose the most economic path for themselves if information is freely available. In other words if I can save a buck then I will take the action that saves me a buck. Number1 - this is the same base economic argument that underlies Free Markets, and we surely know by now that irrational exuberance is as much a decision driver as is so called rational banking. We must admit that psychology behind consumer or investment decisions is an emotional one, supported hopefully by facts and knowledge but emotional non the less.
What the behavioral economists believe, and the entirety of the smart grid community, is that - consumers will turn off their air conditioners when its hot; charge their EV at night; hang out their laundry; buy new in-home electric meter devices, and new intelligent appliances; and generally run around turning off lights based on watching the live price of electricity.
Number2 - people are far too busy to outs lots of effort behind saving $15/mo, and there is no way they'll spend $15k so that their appliances self regulate. Not in this economy where scrapping for income goes a lot farther than saving a little.
So if its not about economics as the purists' would have us believe, then its about change behavior based on societal norms. I think its prudent here to cite one of our last big evolutions in this society, that wasn't about economics but about conservation and quality of environment - recycling. We all do it now, almost all of us, as long it is readily available and especially if our neighbors do it. So how did we get here? A teared up native american was the initial image, emotional quilt the drive to actually go out of your way, a lot of awareness building, definitely peer pressure, and eventually a robust infrastructure to allow easy of doing the right thing. But is sure isn't about economics.
So what can we learn from the migration to wide adoption of recycling? Now continuing forward to zero waste. First that it takes education and awareness. Utilities: note this, it takes a human 8 times to be introduced to a new way of things before it is accepted (and often overtly rejected along the way). Second that it takes a robust outreach/engagement program, within communities in order to create the peer pressure and top of mind behavior shift. Third that it is usually the kids in the house that take the lead and keep us reminded of what we are doing and why. Fourth that a little competition goes a long way in our society, especially with a dose of nationalism. And fifth that results should be easily accessed and compared to substantiate the results and reinforce the change.
Its psychology not economics!
