By Doug Houseman, Capgemini
Demand-side management (DSM) is the hot topic today. Go to any conference, sign on to any industry blog and DSM is one of the most debated topics. Which hardware? How much does the price have to move? How many customers will participate? Will there be fallout over time? As the technology has gotten better the questions have started to focus on customers and their behavior. The questions about DSM are “How will people react?” “What will they do?” “How long are they willing to do it?” “How high will we have to raise the price?” Price-based systems rely on people and their behavior or the automation of equipment and programming by the people who use them. There is a training and behavioral ramp that will need to be climbed to make price- or time-based DSM work.
The Zigbee and HomePlug Powerline alliances are working to make smart energy work in both sets of hardware. Other organizations are emerging to compete with these two standards. There are still some issues, and security is still under debate, but given another three to fiver years, most of these issues will be under control. For most DSM deployments, it is not going to be a technology issue, but a people issue.
The other choice is direct load control (DLC). The largest North American residential DLC program is at Florida Power and Light (FP&L), a program more than 20 years old with more than 900,000 homes 3 million devices participating.
Some people think air conditioner interrupter programs are all there is to DLC. They know consumers don’t like them because they remove the load consumers want most when they most want it. Good DLC programs go after other loads—water heaters on warm days, for instance. Yes, air conditioning is the largest load in most homes on hot days. With a small percentage of the customers participating in DLC, it is the only real choice to get to the load reduction required. But people don’t like it, so what can utilities do differently? An average new home has 20 breakers in the main panel. Some are connected heating and air conditioning, others to lighting and cooking. In some homes, they are connected to hot water or pool pumps. An average home has more than 50 electrical devices, each of which is a potential target for DLC. The trick is determining which devices are on and not the focus of consumers at that time load reduction is needed. For a DLC program to be successful, a utility must find devices that consumers do not need and that are receiving no customer attention, and then be able to turn off those items.
Here is a test: During lunchtime, take a mile-long walk in a residential neighborhood and notice what is on. You’ll see security lighting on—even on a bright day—path lighting, and pumps when no one’s in the pool, fans in windows while the air conditioning also runs, and more. People consume energy without realizing it.
DLC makes up for many oops moments by turning off the lights after consumers leave their homes. No worries about programming for a critical-peak day or not knowing to program the washer and dryer. Instead, customers can leave it all to the remote control by utilities or third-party providers. It takes the burden off the consumers’ backs, as well as the requirement for them to change their habits. This makes the program easier to predict and easier to sell to the technological phobic. DLC also can be more subtle than just turning on and off by staggering starts for equipment across homes or slowing moving thermostats. It no longer must be a simple on or off decision.
DLC is a proven solution to DSM, but only if DLC operators plays smart. Turning off televisions during a major football game, stopping washing machines midwash or otherwise getting noticed in your control actions can prompt customers to opt out. FP&L has spent more than 20 years building a playbook on what to stop when and for whom, and it knows how to do it invisibly for most customers. The invisible option is why the program has received the most favorable rating of any major North American DSM program.
But does it make financial sense? In 2007, FP&L reported that its DLC program had saved customers more than $8 billion at a cost of just more than $1 billion: an 8-to-1 return on investment and incentive payments to customers.
What about the control of customer appliances, the issue Rush Limbaugh raised about the thermostat specification in California? Customers don’t mind if the program runs without significant impact on lifestyle or comfort.
DLC has another advantage: There is no tiered or critical-peak pricing, so there are no shocking bills if the washer is programmed incorrectly or the kids run the air conditioner with the doors and windows open.
If installed and set up correctly, ZigBee and HomePlug equipment can be effective parts of DLC programs. Utilities and third parties can build and run DLC programs. All it takes is the right regulatory framework.
Doug Houseman is CTO for Capgemini’s global energy, utilities & chemicals practice.