Is This America’s Smartest City?

Dan McAtee and Laura Spoor’s utility bill last year came to $631. That’s not bad considering the average annual electric bill in Austin, the Texas capital, is more than $1,000, largely because air-conditioning may be the only thing locals love more than barbecue. But it’s even more impressive once you realize the bill actually came to negative $631. The solar panels on their roof mean McAtee and Spoor produce more electricity than they consume. “We got the biggest system we could get,” says McAtee, pointing to the array of panels laid atop their one-story home like domino tiles. “Now we’ve got what you might call overgeneration.”

But while the solar panels stand out–such arrays are rare in Texas–what really sets McAtee and Spoor’s home apart can’t be seen at all. Smart circuits are tracking their electricity use on a minute-by-minute and appliance-by-appliance basis, providing a running record of how power flows through their home. On his computer, McAtee opens a website that shows in near real time the rise and fall of their electricity use over the months. When Spoor opens the refrigerator to get a pitcher of lemonade, the readings spike for a moment, reflecting the extra watts consumed as the appliance compensates for the rush of warmer air. “You can literally see when a lightbulb is turned on,” says McAtee, 73, who spent years as an engineer at IBM before his retirement.

These insights come courtesy of Pecan Street Inc., a research group running the most extensive energy-tracking study in U.S. history (backed in part by the Department of Energy). Its ground zero is Mueller, a planned green community in Austin where hundreds of households have signed up to have their electricity use monitored on a granular level. Researchers track when and why Mueller’s residents consume power and how fast-growing new technologies–like solar panels, connected appliances and electric cars–are affecting the grid. (Thanks in part to an incentive program, Mueller has more electric vehicles per capita than any other U.S. neighborhood.)

That kind of data is unprecedented in the electricity industry, whose essentials have remained largely unchanged since 1882, when Thomas Edison opened America’s first commercial power plant. The Pecan Street team is already using it to upend long-held theories about electricity use and test provocative new distribution methods, which could make our power cleaner and cheaper. With U.S. demand for electricity projected to rise at least 30% over the next 30 years, the methods it pioneers may be our best shot at avoiding a future full of brownouts, blackouts and sky-high energy bills. “Mueller is the community of the near future,” says Suzanne Russo, chief operating officer at Pecan Street. “But everything we’re learning is going to be applicable to every community in America.”

To get why Pecan Street and Mueller are so special, it’s important to understand how data-poor the electricity business has been for most of its existence. Until just a few years ago, power utilities had two basic functions: to make sure they could meet the highest level of demand at any given moment–in Texas, that’s usually an afternoon in the late summer, when people start blasting their AC as soon as they arrive home from work–and to estimate how much electricity people use every month, a.k.a. the kilowatt-hours that show up on a utility bill. Beyond that, they had little incentive to maximize efficiency. They made money according to how much power they sold, not how much they saved. That made for a grid that was inherently less stable; during blackouts, utilities often didn’t know which consumers had lost power until they called to complain.

That began to change about five years ago as progressive utilities–aided by billions of dollars in stimulus funding from the new Obama Administration–started to install smart meters, two-way devices that can track electricity use at least once an hour. Today there are more than 40 million in use, part of a larger national effort to make the U.S. electrical grid better able to prevent events like the Northeast blackout of 2003, in which more than 50 million people temporarily lost power.

The Pecan Street devices are even smarter than smart meters, recording data from different appliances essentially in real time. At any given moment, the Pecan Street engineers–who work in partnership with the University of Texas and local utility Austin Energy–know exactly how much electricity their subjects are using and how that use changes in response to the time of day, weather patterns, even fluctuations in power price. (They don’t know who is using the power, though; all household data is anonymous.) “It’s by far the most aggressive [data-collection] project that I know of,” said Ernest Moniz, U.S. Energy Secretary, during a visit to Pecan Street in February.

Already, the numbers have challenged some conventional wisdom about solar power, which is becoming increasingly popular in the U.S. For years, experts assumed that panels should face south in order to catch the most total sunlight and produce the most power. But Pecan Street found that it’s better for the grid if they face west. That way, they’re catching the most sunlight and generating the most electricity at the very moment in late afternoon when power usage is highest and utilities often bring polluting, expensive “peaker” plants online to prevent brownouts. Since those costs get passed on to consumers, more solar panels–used more effectively–should mean lower bills for everyone.

Pecan Street has dismissed longstanding objections to electric cars as well. As more drivers buy them, utilities have expressed concern that they will all start charging at the same time (after work, in tandem with AC use), creating a massive strain on the grid. But that hasn’t been the case in Mueller, where most people have opted for overnight, off-peak charging–especially if their utility makes it cheaper to do so. Pecan Street engineers are even testing a system that would enable electric cars to store excess solar power during the day and use it at night to power your home for free. “It really shows the value of having a smart home,” says Jim Robertson, another participant in the Mueller project.

Of course, the rest of America may never realize Mueller’s vision for the future. Solar power won’t work as well in cold, cloudy states like Alaska, for example. And not every consumer will be as open to micro-monitoring or surge pricing as the ones who live in Mueller, even if it will ultimately save them money. “Pecan Street is an innovative project,” says Jerry Jackson, director of the Smart Grid Research Consortium. “But right now I don’t think there’s a broad scope of consumers who are that interested in this technology.”

Yet in a world that’s becoming ever more dependent on a clean, steady supply of electricity–consider life without your iPhone or laptop–everyone has a stake in building a more efficient grid. And the status quo won’t change unless there are metrics to prove that it should.

In that vein, Pecan Street is expanding its study to other cities, including San Diego and Boulder, Colo. In May, the White House introduced an initiative to make energy data much more widely available–two months after Pecan Street made its own database freely available online. “It’s our chance to build the utility of the future,” says Kara Mertz, who is managing the Boulder Pecan Street project.

All of which means we may soon be living in a world where everyone likes their energy bills as much as Mueller’s McAtee. “Saving the environment is good,” he says. “But financially viable–that’s good too.”