Although general electricity usage has leveled off over time with improvements in technology and energy efficiency, peak demand — periods when consumer demand for electricity is at its highest — continues to have a large effect on how electric utilities operate.
With the growing popularity and affordability of smart home and related appliances, though, utilities are seeing promising opportunities to ensure they can provide safe, reliable and affordable service.
Many devices that are achieving more market presence today, such as Wi-Fi-enabled thermostats, grid-interactive water heaters, variable-capacity heat pumps, electric vehicle (EV) charging stations and battery storage, can be utilized to support demand response and load management initiatives. This capability isn’t necessarily new — forms of it have been around for decades — but with recent advancements, utilities now have more influence and information, and can minimize impacts to customers.
Whether it’s through smart home components that use two-way communication and open communication standards or standalone high efficiency equipment, utilities can strengthen the reliability and efficiency of the electric grid while supporting their customers in innovative, all-electric ways.
Benefits to Utilities
- Unlock novel opportunities to support grid optimization through demand response, load management and renewable energy integration that help reduce costs for all
- Open value streams that benefit utilities and customers
- Gain additional routes to grid resiliency
- Expand ways to improve customer comfort, satisfaction and quality of life
- Grow participation in time-of-use or dynamic pricing programs with easier-to-manage devices
- Reduce greenhouse gas emissions
Program and Component Examples
Advanced Energy has collaborated with utilities to assess various components that can help manage demand, including the following.
Smart Thermostats: Smart thermostat programs are flexible and able to leverage offerings from multiple manufacturers to maximize program effectiveness and customer satisfaction. Tapping into smart thermostats can reduce or shift load by offsetting temperatures or cycling heating and cooling units on and off during anticipated peak events. Here are some considerations:
- Incentives — Different forms can be offered: for purchasing, upfront participation, ongoing participation or a combination.
- Participant Capabilities — Can customers opt out of demand response events or override their devices? How often? Is there a penalty or performance-based incentive?
- Program Structure — Common variations include:
- Bring-your-own-thermostat, in which customers self-install qualified devices.
- Direct-install, in which the utility provides customers with and installs a specific thermostat model.
- Buy-down, in which a utility partners with a manufacturer to buy down the cost of a device that can then be self-installed or direct-installed.
- Possible Hurdles — Smart and Wi-Fi-enabled devices must be connected to the cloud and installed/set up correctly to optimize goals.
HVAC Systems: Advances in all-electric heating and cooling systems are improving comfort and lowering seasonal utility bills. Variable-speed components adjust heating and cooling output to the heat loss/heat gain of the home, contributing to more consistent indoor temperatures, quieter operation and enhanced equipment life. Variable-speed heating systems can save coincident peak power during winter peaks without needing external controls.
High SEER, variable-capacity heat pumps, ductless mini-splits, modulating furnaces and geothermal/ground-source heat pumps are all terms associated with this newer equipment. These systems have fewer installation challenges than single-speed and two-stage units and are easier for HVAC contractors to set up, service and troubleshoot. Manufacturer or third-party controls can be utilized separately or integrated into demand response management systems for additional savings. Potential drawbacks to this equipment include higher retail installation prices, fewer installation/service contractor options and kWh erosion.
Water Heating: Grid-interactive water heaters (sometimes called grid-integrated or grid-enabled water heaters) can seamlessly improve grid operation without affecting performance for customers. This technology can be a boon for demand response and load shifting, allowing utilities to delay or disable water heating equipment during peak events. Units can be either manufactured or retrofitted with grid-interactive controls that enable a utility or third party to manage the water heater as an adaptable electric load. In addition to grid optimization, a primary goal of any water heater program should be that users do not notice a change in hot water temperature during control events.
EV Charging: Utilities are beginning to plan and implement strategies to navigate EV charging, and as more vehicles hit the road, this need will only grow. Because charging is often malleable, utilities can use incentives, such as time-of-use rates, to encourage it during off-peak hours. Active demand response efforts are also being piloted, allowing utilities to more directly manage when charging stations operate and stagger them if needed. These approaches may be coupled with customer perks, such as monthly credits or a rebate for a home Level 2 charging station.
Battery Storage: Like EVs, residential battery storage is becoming more popular and affordable and is starting to be incorporated into utility pilots. Calling upon battery storage through demand response can augment the reliability and resiliency of the grid and improve operational flexibility by shaving peak demand. The storage system can be owned by the utility or by the homeowner, and it can also be paired with renewable energy for additional benefits. Controls and impacts are accessible through manufacturer-specific platforms and third-party demand response management systems.
As more people adopt and install emerging home technologies, more utilities will gain opportunities to draw on the devices and appliances to enhance grid operation, electricity delivery and customer satisfaction.