Smart grid powers up privacy worries

The next Big Data threat to our privacy may come from the electricity we consume in our homes.

“Smart” online power meters are tracking energy use — and that data may soon be worth more than the electricity they distribute.


The Department of Energy is publishing in January the final draft of a voluntary code of conduct governing data privacy for smart meters, 38 million of which have already been installed nationwide. The meters gather information about household electricity consumption and transmit it wirelessly at regular intervals to the supplier. It’s a key element in the push for the so-called smart grid, a more efficient way to distribute the nation’s electricity.

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But, despite the voluntary code, critics fear consumers will still be cajoled or conned into giving up their data, not just to power companies but to third-party data aggregators. Too much money is at stake, they say. And the huge profits to be made could upend the business model of energy utilities.

“I think the data is going to be worth a lot more than the commodity that’s being consumed to generate the data,” said Miles Keogh, director of grants and research at the National Association of Regulatory Utility Commissioners.

All sorts of inferences about people’s private lives are potentially available from detailed energy consumption data. The number of people inside a house. Daily routines. Degree of religious observance. Household appliance usage. Even, according to two German hackers, what’s on the television, given a fast enough meter refresh rate.

“Very sensitive information can be revealed about homes, and homes are the most sacred privacy environment,” said Nancy King, an Oregon State University business law and ethics academic who’s studying smart meter deployments.

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Access and control of that energy usage data will be key, she added. “Most consumers are just unaware about how their data feeds into the Big Data machine and are powerless to do much about it.”

For now, electric utilities collecting the data use it to improve how they manage the distribution of power. They envision a smart grid of greater reliability and efficiency, able to respond rapidly to fluctuations in demand. A smart grid would be more economical and have a smaller environmental footprint.

The market for the kind of Big Data energy analytics that will run the smart grid will reach a billion dollars annually in the United States and Canada by 2019, predicts analysis firm Navigant Research.

But that same data could also be a gold mine for other purposes — retailers deciding where to open their next store, marketers profiling neighborhoods with an even finer tooth comb, or in ways we have yet to even think up.

Exhaustive electricity consumption data “is a holy grail, in many ways” for marketing analysts and consumer data aggregators, said Lee Tien, a senior attorney for the Electronic Frontier Foundation. “Few other types of data get inside the home the way that electrical usage data does.”

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The privacy-invading potential of smart meters hasn’t gone unnoticed by the Energy Department, which in September published a draft voluntary code of conduct governing data privacy and the smart grid.

“Almost two years ago now, we said we should probably facilitate something among the industry that addresses the privacy concerns around this area before it really becomes an issue, before there’s really a lot of demand for that data,” said Eric Lightner, director of the Federal Smart Grid Task Force. He anticipates publication of the final draft in January.

Central to the draft code is “customer choice and consent,” the concept that rate payers should control access to their data by third parties. Already there’s a developing market for devices that hook up to smart meters and collect data at a rate far quicker than utilities. Home security vendor ADT, for example, can connect to smart meters in near real time for an energy management offering.

Critics wonder whether the code of conduct will stand up to the changes that Big Data will create in the energy industry. “When you become a company whose most valuable asset is not the kilowatt-hours but the data, that fundamentally changes what kind of company you are,” Keogh warned.

For example, an exception to the consumer consent principle in the draft code is “aggregated or anonymized data” — data at the level that Keogh predicts will be the most valuable for data miners. Consumer market analysts don’t care “whether I am washing my dishes at 4 in the afternoon or 5 in the afternoon,” he said. But they do care about regional patterns formed by that individual usage.

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Utilities might find it a “lucrative business line for them to do the synthesis of the data, and then provide it to third parties,” he suggested.

But many power utilities, operating in one of the world’s most heavily regulated industries, are highly cautious businesses, and at least one says they are barred from using data like that. “Interval data is considered personally identifiable data, even if it’s anonymized,” said an executive with a West Coast public utility who asked not to be identified. “We just can’t give that kind of thing up.”

But that points to the other loophole contained in the code of conduct — the power of voluntary consent. Not even the most heavy-handed utility regulator can do much if consumers decide to permit access to their consumption data — perhaps in exchange for a price break.

“If the customer wants to share that kind of information with a third party, then that’s a different story. They’ve allowed it to happen. It’s their usage data,” said the executive. DOE’s Lightner agreed.

Consumers have a history of trading privacy for “very little monetary reward,” noted King. “It would be fair to probably assume that many, many consumers would give unfettered access to their data through a smart meter to providers who would give them free energy.”

So far, nobody appears to be proposing that, nor even lesser incentives, in exchange for consumers’ meter data.

That leads some to believe that estimates of the value of smart meter consumption data are overblown — or at any rate, that it’s too early to say whether the next big gold rush of consumer data will come from the smart grid.

“It’s … speculative to assume that the data will be incredibly valuable,” said Richard Caperton, director of national policy and partnerships at Opower. The Arlington, Va.-based company has a stake in the energy Big Data game already. It partners with utilities to give consumers comparative analyses of their energy usage measured against similar households, letting them know if their consumption is greater or less than their neighbors.

Ultimately a voluntary code of conduct is too fragile a way to protect household data, says King, the privacy professor. Neither is the concept of consumer choice necessarily an ideal way to protect consumer privacy, she added. DOE, of course, has little choice but to go the voluntary route, since it doesn’t have regulatory authority over the consumer end of the power system.

The solution, she says, is a “basic, comprehensive data law in this country, and it does not need to be based on notice and consent,” King said.

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