Smart thermostats change game for residential demand response

Worldwide revenue from residential demand response is expected to grow from $332 million in 2014 to $2.3 billion in 2023, according to Navigant Research.

The development of smart grid technology — particularly advanced metering infrastructure (AMI) and smart, two-way communicating thermostats — is enabling utilities in many countries to offer residential demand response programs.

These systems allow utilities to discreetly dispatch customers according to the load on the grid, and customers to control their own devices through mobile applications, giving them more control over their energy usage and spending.

“Advanced two-way thermostats are changing the business model for utility residential demand response programs,” says Brett Feldman, senior research analyst with Navigant Research. “The so-called “Ëœbring your own thermostat’ model, in which consumers purchase thermostats at retail stores, can vastly reduce the acquisition costs for programs and lead to greater customer satisfaction, since they are the parties choosing their own devices and initiating the participation process.”

At the same time, residential demand response will be an integral part of the development of a more resilient grid and the spread of microgrids, trends that have gained increased urgency following recent extreme weather events.

The advent of grid modernization is closely tied to these new approaches to designing the grid, according to the report. In the U.S., residential plug-in electric vehicles are being eyed as demand response assets, and almost every domestic auto manufacturer has launched some sort of energy use optimization pilot.

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