The Evolution of Demand Response

By Steve Smith, Honeywell Utility Solutions

Utilities have an exciting value proposition they can bring to customers: Sign up for a smart thermostat program and a professional installer will put a new thermostat in your home. The thermostat features touchscreen interactivity, programming options, a modern design and features to reduce energy consumption by as much as 20 percent.

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Homeowners, recognizing the value, tend to respond en masse.

What does a utility get out of all this? The thermostat, it turns out, doubles as the load-control device for its demand response program, an arrangement the customers agree to when they sign up for the program. So, no surprises arise. Customers may even get a notification on the screen in their home when a demand response event starts.

The program is an ideal union of customer service and energy management. But, the technology at the heart of it is a long way from the hardware that once dominated demand response.

An Inconspicuous Start

Demand response hardware got its start as a load-control relay (LCR) wired into the air conditioning circuit outside the house. The idea was elegant enough, and it met load curtailment goals during peak summer demand periods. Typically customers never knew that a peak demand control event was occurring.

It was ingenious except that it was so low-profile, so unglamorous that customers were slow to enroll. The use of incentives for end users changed the enrollment picture significantly. When a utility offered a substantial credit in exchange for installing a switch, customer participation increased.

Making the Switch

Demand response made a big leap forward with the installation of communicating thermostats. By transitioning from a switch to a thermostat, utilities were able to develop demand response programs that were more user-friendly and attractive. The thermostats gave programs a tangible face that customers could see and touch. They also provided potential heating and cooling savings—a benefit significant enough to mitigate the need for rebates and other incentives.

The advantage to utilities was that the thermostat became the load-curtailment signal receiver. The peak load-control strategy hadn’t changed, but the enabling hardware now benefited both utilities and end users. It was an important evolutionary step in demand response infrastructure and marketing.

The challenge with the initial thermostats, however, was that they could be difficult for homeowners to program and operate. Users often found it hard to read the small screens and set schedules, decreasing the potential for maximum cost savings. Plus, for some homeowners, enrolling in a demand response program meant replacing a modern, feature-rich thermostat with older, less appealing technology.

In addition, these thermostats didn’t allow utilities to completely leverage the built-in link to customers or take advantage of the burgeoning smart grid.

Second Generation

The utility industry is starting to see a new wave of thermostats to address the limitations of the first-generation technology. These devices address several market drivers, from both customer and utility perspectives.

A technician shows a homeowner all the bells and whistles of a smart thermostat.
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For customers, the thermostats offer enticing features to help drive enrollment.

First, they are modern and user-friendly. The new devices are built on the latest programmable- thermostat platforms, providing an enticing upgrade for many users. They offer features like those in the opening example—simple, user-friendly interfaces, touchscreen displays, online programming, etc.—and can help maximize energy savings as a result.

Second, they bring precise in-home comfort. Today’s thermostats are more accurate and exacting, and the same is true for their demand response counterparts. The Honeywell UtilityPRO programmable thermostat, for example, maintains in-home comfort with a fault tolerance of less than one degree Fahrenheit. This feature, combined with its one-touch temperature control and programmable fan capabilities, gives users the ability to control their environment with confidence and precision.

On the supply side, the new thermostats allow utilities to do more than just cycle air conditioners on and off. Relevant features include:

  • Communication with customers. Utilities can now send text messages, such as weather forecasts, energy-saving tips and conservation program updates, to customers through thermostats.
  • Multiple communication modules. Some thermostats are capable of accommodating multiple communication protocols based on utilities’ preferences and needs. This makes the technology versatile and viable for a wide spectrum of demand response programs.
  • Smart, future-proof technology. To keep pace with evolving utility needs, the latest demand response thermostats are often built on an open framework. That allows for the integration of new technologies, giving utilities a more sound, future-proof investment. For example, some vendors are adding two-way communication capabilities to leverage advanced metering infrastructure (AMI) networks through open protocols like ZigBee.

Next Stop: Smart Grid

Soon, demand response thermostats will be integrated into the smart meter systems that are emerging. This will enable two-way communication, as well as enhanced data capabilities.

When two-way communication is fully realized, the contribution to the smart grid will be substantial. Utilities will be able to measure loads with even greater precision, pinpointing and responding to trouble spots with better speed, and offering important usage and price data to their customers.

The new demand response thermostats are a significant element in the development of the smart grid, and, by extension, a significant element in improving grid efficiency and reliability. To achieve maximum effectiveness, the smart grid must consider consumer behavior. The communication capabilities offered by these thermostats allow utilities to provide consumers with the practical, detailed information they need to be fully aware of their own energy consumption and conscientious about efficiency. This technology will effectively double as in-home displays and make homeowners a genuine part of the grid management equation.

Smith is the director of sales and marketing for Honeywell Utility Solutions. He’s worked with utilities for more than 16 years. Smith can be reached at

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