Traditional demand response (DR) can ask customers to make what can be seen as unfair tradeoffs; forsaking comfort to save money. It asks customers to put aside their needs for the needs of the utility. All in all, demand response can lose sight of the fact that there are actual human beings in these houses being asked to stop their air conditioning in the dead heat of summer.
With so many utilities offering personalized energy options to customers, why can’t we apply these same applicable lessons to create better, consumer-friendly demand response programs? It’s not a new trend, the personalization of energy. Sure, energy customization is still evolving, but energy providers far and wide have begun to see its benefits: improved customer satisfaction, an uptick in cross-sell opportunities, better return on investment for marketing campaigns.
But while data analytics have enabled energy providers to send personalized home energy reports with energy savings tips unique to each residence, capitalize on program offers known in advance to meet potential customers’ unique needs, and micro target their communications to the consumers most likely to respond, they haven’t extended this personalization to demand response.
In fact, to date, behavioral demand response programs tend to be anything but tuned in to customers’ needs. They use social pressure to encourage customers to turn down their air conditioners—voluntarily—to help their energy providers manage load. Sure, customers receive some compensation for their participation in DR events, but they’re being compensated to deny themselves of something essential, like tolerable cool air during a suffocating heat wave. In some cases, participating in one of these prescribed DR events could be downright dangerous for customers, which is a risk no energy provider should feel comfortable taking.
At their best, these traditional DR events are still inconvenient. They represent a crude form of customer communication, one that’s top down and, because of the inconvenience it causes, limited in application: how many times can energy providers really ask their customers to sacrifice their well being for the benefit of their energy suppliers? Not too many, which is why DR only provides a viable solution to load management a handful of times each year.
But what if DR took a page from the customer-centric, figurative book on energy efficiency programs? What if DR became such a seamless operation that customers didn’t know it was happening continuously throughout their homes, with no interruption to their lives?
It may sound impossible. It’s not.
Data Driven demand response
In this age of personalized customer communication and service, consumers expect to have comfort and convenience, constantly. It should be no different with energy, especially because energy is so critical to daily life.
To bring such customer-friendly DR to life, energy providers need technology solutions that treat DR as a nimble tool designed to meet customers’ needs at the lowest cost possible, not a blunt instrument to wield at the discretion of the provider a few times per year. With this new approach to demand response, energy providers can speak their customers’ language rather than expecting them to comprehend kilowatt-hours or other technicalities. Instead, customers can be comfortable and keep their energy costs down with no additional hassle.
Such technology must depend on data analytics that give deep insight into how customers use energy uniquely within their homes, how their homes are constructed, and how their HVAC systems are configured. From this data, energy providers would be able to construct virtual energy usage models of homes and then employ those models to make high precision predictions about how to optimize the operation of the homes’ cooling and heating systems. The models would show the best time of day to run the air conditioner, for example, so that doing so precools the home at off-peak times, allowing the home to stay cool during peak times without demanding much more air conditioning. The opposite would be true in the winter: the DR technology would sync with the home’s heating system to heat the house during the warmer hours during the day, avoiding the need to run the heat during the morning peak.
When energy providers have this type of demand management technology at the ready, they can shift load seamlessly out of peak periods and reduce total consumption, all while maintaining their customers’ comfort. No longer will customers have to turn off their power when they need it most, which will result in stronger, longer, and more engaged customer relationships. It’s the natural continuation of the work energy providers have already done in the areas of energy efficiency and program marketing: bringing DR up to speed in the new consumer-facing energy paradigm is simply the logical, beneficial and essential next step.
About the author: Brad Langley is the director of corporate marketing and communications at Tendril. He has 15 years of experience increasing awareness for some of the world’s largest technology companies. In his role at Tendril, Brad leads the company’s marketing department, including corporate, field, brand and public relations.