It’s a program strategy that utilities have been using for decades, enabling them to work more closely with customers to match electrical supply and demand by curtailing electricity use at times of peak usage. And it’s been successful. According to the U.S. Energy Information Administration, about 9.3 million customers in the United States participated in demand response (DR) programs in 2014, with the average residential customer saving about 100 kilowatt hours annually.
Through DR programs, data and information is aggregated so utilities can react faster with their customer base. It advances a utilities’ ability to predict demand, especially during peak periods, like summer afternoons, and reduces the likelihood of power outages. In essence, it’s all about maximizing the grid’s efficiencies.
“BYOD, enables utilities to further deepen customer relationships involved in BDR programs”
The U.S. Department of Energy sums up DR nicely, stating, “Demand response provides an opportunity for consumers to play a significant role in the operation of the electric grid by reducing or shifting their electricity usage during peak periods in response to time-based rates or other forms of financial incentives.” Net utilities develop and promote programs that their customers can opt-in to, enabling them to get notifications (tweets, texts, emails) asking them to reduce their power usage during peak energy times.
Behavioral demand response (BDR) takes it one step further. As data analytics, social media and cloud computing continue to gain traction, utilities are developing device-less, predictable BDR programs that combine the power of real-time analytics and a two-way dialogue to gain increased engagement at an individual-home level. It enables utilities to make sure there is efficient use of the grid while reaching a broader consumer base and improving customer satisfaction.
We work with AutoGrid, a software provider, to offer BDR programs to utilities across North America. AutoGrid is hardware-vendor neutral, lending itself to BDR programs that create more meaningful and lasting relationships with consumers. In fact, one North American utility that worked with us and Autogrid on a BDR program brought it to a whole new localized level, getting consumers’ communities involved in its efforts. The utility worked with local businesses, like the local pizza shop, to offer customers participating in the BDR program coupons during peak load periods, providing incentive for participants to get out of the house and offload some energy use. It truly is a unique program that encouraged load reduction through tailored communications over phone, text, email and web.
To add yet another layer to the mix, BYOD, or “bring-your-own-device,” enables utilities to further deepen customer relationships involved in BDR programs. Think about it—as a customer, would you prefer that a utility dictates which devices you install to manage your energy or would you rather choose the device on your own. More than not, consumers will choose the latter. And we’re now at a point that utilities can make this a reality. By allowing consumers to decide which devices to install and leverage to monitor and adjust their energy usage, often remotely, it puts more control in the customer’s hands. This increases the likelihood of customers opting into BDR programs and actually using it to their advantage. It’s a win-win for everyone.
Working with The Energy Trust of Oregon, my team implemented a pilot program that studied the ever-popular Nest smart thermostat, determining whether or not the device would represent a viable method of controlling customer electricity costs during the heating season. After studying 185 Nest-installed homes, the results of the pilot program showed that Nest users saved 781 kWh per year, or 12 percent of electric heating load. The data that the Nest thermostat was able to provide during the pilot is the exact data that utilities could leverage to develop specialized programs that aim to get the full value of a customer’s personal device. Consumers should be able to install a Nest thermostat if that’s the device they want and not have to settle for what a utility requires them to have.
It's not to say that personal devices from third-party vendors don’t come with some challenges. There is an influx of vendors who are creating smart devices that help consumers manage their energy use, varying from thermostats to water heaters. But many of these vendors do not fully grasp the nuances of the power grid. Third-party vendors developing network-connected devices may not understand what information or data is the most important for utilities as they try to manage peak demand loads. That’s precisely why utilities need to work with a partner that knows the ins and outs of the space. This partner can help a utility develop a specialized program that aims to get the full value of a customer’s personal device while developing a practical pay structure based on performance.
As stated, BDR coupled with BYOD provides a real opportunity for utilities to manage peak loads while creating impactful and long-lasting relationships with customers. To be frank, we’re at the point where consumers expect a lot from their service providers including their utilities. They want them to be flexible and adapt to their needs, not the other way around. And utilities shouldn’t balk at this notion—they should seize the opportunity to be seen as a true partner to consumers.