Published on November 3rd, 2014 | by Rocky Mountain Institute0
6 Lessons Retail Electricity Pricing Can Learn from Parking Apps
November 3rd, 2014 by Rocky Mountain Institute
Even as some foretell a coming future of smart parking—part of a broader ongoing evolution toward intelligent transportation systems (ITS)—a third-party-driven revolution in parking (and its pricing) is already here. That revolution has come by way of a recent proliferation of parking apps for smartphones.
Retail electricity pricing is similarly poised to undergo an evolution in the near future. As utilities, regulators, third-party technology providers, and others think about what evolved electricity pricing might look like, it’s worth considering at least six lessons they can learn from parking apps.
1. Consumers Want MORE Info, Not Less
Though many parking apps exist at the city-specific and regional level, two of the most prominent nationally (and even internationally) are ParkMe and Streetline’s Parker. ParkMe’s database includes 30,000 locations in 1,800 cities in 40 countries. Parker, meanwhile, covers 24,000 parking lots and garages in more than 30 cities and university campuses in the U.S. and U.K. Both apps offer consumers parking information, and plenty of it. And that information—and the real-time, historical, and predictive data behind it—offers consumers one thing: customized parking choices that meet a consumer’s needs, preferences, and specified criteria.
2. That Information Falls Into Three Logical Categories
All that information falls into one of three logical categories that can be thought of as the when, where, and what of parking pricing, not dissimilar to the electricity pricing continuums my colleagues advocate in Rate Design for the Distribution Edge.
- When: Drivers can use the parking apps to search for spaces that are available now, or that could be reserved for later. Or that have a certain cost at certain times or on certain days, or that are free before or after certain hours or on certain blackout days such as weekends or holidays. Or that have dynamically varying prices, such as the demand-responsive pricing programs in San Francisco and Calgary.
- Where: Drivers can also, of course, search for parking spaces by location, whether by neighborhood or within a certain distance of their destination.
- What: And drivers can search for parking spaces by all sorts of additional criteria, such as on- vs. off-street parking, covered vs. uncovered parking, ADA accessibility, EV charging station access, and much more.
3. Customized Options, Yes, But Not Unnecessary Complexity
While parking apps and the big data behind them give customers options, they don’t create unnecessary complexity by inundating customers with levels of detail and kinds of information that are best left behind the wizard’s curtain for parking administrators. Yes, I can now easily find a parking space within walking distance of the Denver Convention Center in a covered, off-street garage for a certain price and with an EV charging station (yay for my Nissan LEAF!), but I don’t need to know, for example, my parking fee’s contribution to the salary of the security person patrolling the floors of the garage or the capital cost recovery for the charging station. The pricing should reflect my relative cost of service, but I don’t need to actually know what that cost of service is.
4. More Sophisticated Pricing Can Yield System Benefits
There is no shortage of parallels between highway infrastructure and the electric grid, including taking a system-level perspective on issues like congestion, whether street traffic or transmission/distribution capacity. Similarly, the kind of more-sophisticated pricing parking apps offer can yield system-level benefits, such as reducing urban congestion and wasted time by helping drivers avoid the unpleasant problem of circling city blocks looking for an open space. Instead, they can either reserve a space or simply assess availability ahead of time, or pull over in real time and consult a parking app to find a nearby spot. More sophisticated electricity pricing can do the same thing, by giving customers better price signals that can more optimally encourage investment in and deployment of distributed energy resources in ways that benefit not just the customers themselves but also the greater grid and society, such as by more closely aligning distributed generation to times when it can provide more meaningful contributions against grid demand.
5. But Accessing Those Opportunities Will Require Advanced Infrastructure and Standardized, Transparent Data
Third-party, “distributed” solutions like parking apps offer exciting opportunities, but they don’t come without requirements that help unlock their full possibility, such as advanced infrastructure (like sensors that can detect whether a parking space is vacant or occupied), and standardized, transparent data that allows a common parking platform like ParkMe to aggregate data from myriad sources (such as a city’s parking department plus multiple private parking operators). So too will an electricity pricing revolution require advanced metering, transparent “heat maps” that note locational differences in transmission and distribution congestion, a better view into cost of service for customers, and more.
6. Centralized Incumbents May Resist, But Progressive Stakeholders Will Move
Despite the potential benefits parking apps offer, a number of centralized incumbents—from local governments to parking operators, from San Francisco to Boston—have resisted, at least to certain forms of parking apps, even as other communities are looking to parking apps to help alleviate their parking and traffic congestion woes. For certain, some degree of caution is warranted. Solutions such as parking apps need to be carefully thought out, and not every solution may be the best solution or even the right solution. It’s appropriate for stakeholders to think carefully about them. By the same token, many progressive utilities—including SMUD and SDG&E in California, among others—are already experimenting with more sophisticated electricity prices and evaluating their best options for the road head, while for many others, the comfortable status quo of block, volumetric per-kWh pricing is bliss.
I don’t pretend that parking apps hold the silver bullet solution to the future of retail electricity pricing, but they can offer lessons like these to avoid reinventing the wheel and speeding electricity pricing’s path along what might very well be a similar learning curve.
Source: Rocky Mountain Institute. Reprinted with permission.
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