Colin Gibbs, Sense
Utilities have entered an era of greater complexity. While they make the challenging transition to low-carbon and more distributed energy resources, utilities are simultaneously responding to extreme weather events that stress the stability of the grid. These underlying trends will continue and heighten with the anticipated explosive growth of beneficial electrification triggering enormous additional demand.
Demand response programs helped maintain grid reliability in 2020, but they’ll need to respond more flexibly and dynamically to changing conditions in the future. And demand response programs depend on collaboration between utility operators and customers to successfully harmonize the grid — a collaboration that has been halting at best and elusive at worst.
Lack of visibility at the grid edge makes closer coordination nearly unobtainable. Operators have been unable to pinpoint device-level consumption that could inform their efforts to target flexible loads. Likewise, most consumers don’t get personalized insights about their behavior that could impact the grid and rely instead on their monthly bill to see how their electricity use has affected their costs.
The advent of real-time, dynamic energy data has the potential to dramatically reshape the customer and utility relationship. Whether as part of a demand response program or a time-of-use (TOU) rate plan, customers could examine their device level usage at the exact moment when prices are higher or incentives are available for reduced demand. This experience is of particular relevance to the massive electrification trends on the horizon. Consider the expected surge in consumer EV adoption. The Biden administration plan calls for $100B in new consumer rebates and $15B in EV charging infrastructures. Industry analysts predict a jump in EV sales from 358,000 in 2020 to 4 million by 2030.
EV Charging and Dynamic Carbon Intensity
A study of EV charging by Sense and Carbonara shows that dynamic carbon intensity from grid operators can be used in combination with smart home technology to enable customers to automate residential EV charging based on the current fuel mix of the system. This approach can deliver average carbon savings of 8-14% across the country, and up to 43% in the state of California.
The analysis of 100,000 sessions of in-field electric vehicle charging data showed that many owners simply plug in to charge when they get home from their daily commute or errands, while others set their EV charger for certain time preferences based on their utility’s time of use rate structure. But time of use rates do not always correspond to periods of lowest carbon intensity. Instead, in all regions, carbon optimization leads to the lowest carbon impact.
The study points to a significant carbon reduction potential for utilities who encourage customers to automate EV charging to optimize for carbon intensity. These solutions will have an important role to play as utilities and policy makers look for effective ways to meet carbon emissions goals and balance the increasing complexities on both the supply and demand sides of the power grid.
When customers use automation to move charging sessions to optimal periods, it generates immense opportunities for utilities to respond in real time to carbon intensity fluctuations from power sources. The same could be done for periods of grid constraint or high costs. Dispatchable demand resources that can be available for all of these objectives make program development a higher-value proposition than it is today.
The Demand Flexibility Mindset
Solving the carbon challenge demands a new mindset–a shift from demand response and demand side management to demand flexibility. Where demand response has forcefully curtailed load, and demand side management has generated long term capacity benefits, demand flexibility aims to dynamically shift energy consumption to periods of lower prices and cleaner generation sources. It’s not simply about curtailing demand in a defined period; rather it’s about fully utilizing clean sources of energy when they are abundantly available.
Increasingly, customers have the ability to use connected water heaters, heat pumps, thermostats, and EV charging equipment to calibrate usage to price and carbon intensity signals in an automated way. Further, as connected devices continue to proliferate, the opportunities to automate demand flexibility are enormous. While capacity markets can often obscure the real cost of energy, if grid operators can provide accurate and real time price signals, demand flexibility can be calibrated for maximum customer satisfaction and carbon reduction benefits.
As utilities think about demand flexibility, they need to consider customer preferences and behaviors as smart homes are becoming the norm. In many ways, this necessitates a shift away from viewing customers only as consumers, but also as a resource that, when aggregated, is capable of satisfying demand and generating carbon free capacity. Fully realizing the potential of customers-as-a-resource requires that utilities leverage growing smart home automation solutions that satisfy varied customer preferences and fit seamlessly into daily routines.
And while the race is on in the smart home market to see which thermostat, smart speaker or other platform will win customers’ hearts, customers still expect utilities to provide energy savings assistance. Studies have consistently shown that customers trust their utility as a source of information, and smart home devices open up new pathways for utilities to reach customers. By integrating new messaging techniques and leveraging automation calibrated to price signals, carbon reduction goals will become far more attainable.
Extreme weather has stressed relationships between utilities and their customers but also offers an opportunity for more effective collaboration. In a recent consumer survey, Sense found that more than half of U.S. homeowners have personally experienced extreme weather and are more concerned about climate change as a result. Most homeowners believe that they can have an impact on climate change at home, and nearly half (48%) looked for ways to reduce electricity consumption over the past year. These consumer sentiments point to an opportunity for utilities to engage around climate change and energy savings as more customers are impacted in their daily lives.
Broad calls for conservation measures during peak events triggered by severe weather may not have the desired impact and can negatively impact customer satisfaction. In contrast, when demand response efforts combine dynamic data with automated, real-time programs, utilities can execute with more precision to balance the grid and reach carbon goals while engaging customers around shared values.
About the Author
Colin Gibbs is Vice President of Energy Services at Sense, a provider of home energy monitoring solutions.