Friday, June 12, 2015

Using Smart Home Technologies to Build a Smarter Grid

By Amelia Schlusser, Staff Attorney

Summer has arrived in the United States, and rising temperatures are causing electricity demand to rise across the nation. U.S. electricity demand typically peaks during the summer months, as homes and businesses rely on energy-intensive air conditioning units to combat rising temperatures.  This increase in energy demand creates challenges for electricity providers, which often must rely on expensive and inefficient “peaking” plants—typically fueled by natural gas—to provide sufficient power to satisfy consumer energy needs.

Electricity users can help to offset the need for back-up peaking power by reducing the amount of energy they consume. However, many consumers may be unable or unwilling to voluntarily reduce consumption during peak demand periods. To motivate consumers to reduce their energy demand during these periods, many utilities are deploying smart grid technologies as components of their demand response programs. Demand response programs encourage electricity consumers to shift or reduce their energy consumption during peak demand periods. Smart grid technologies facilitate demand response by providing consumers with real-time information on their electricity rates and usage, or allowing utilities to directly control certain types of customer load during peak demand periods. Demand response programs and related smart grid investments can reduce electricity rates for participating consumers, and they have the potential to lower costs for all ratepayers by reducing the need for additional peaking generating units that only operate during periods of high demand.

In Illinois, Commonwealth Edison (ComEd) recently announced the launch of an innovative demand response program in partnership with Nest Labs and Comcast’s Xfinity Home program. Under the new program, ComEd is offering customers up to $40 to use connected “smart” thermostats that enable the utility to remotely adjust customers’ thermostat settings during peak demand periods. To participate in the program, customers must first enroll in Nest’s Rush Hour Rewards or Xfinity Home’s Summer Energy Management Program. Xfinity customers are also eligible to receive a free Xfinity Home thermostat when they enroll in the ComEd program.

According to Utility Dive, the program presents a simpler, less expensive opportunity to increase demand response from ComEd’s customers. While the program is a bit less reliable than demand response programs that give utilities direct control over customer appliances, it requires far less participation from ComEd itself, which results in cost savings for the utility and its ratepayers. The utility doesn’t have to install or operate any extra equipment in participants’ homes, and Nest and Comcast are helping to market the program to customers. 

Given the recent proliferation of smart home and smart grid technologies, the partnership between a utility, an internet provider, and a “smart” product manufacturer feels like a logical progression for our evolving electricity sector. These types of corporate relationships should help grid operators integrate renewable energy resources onto the grid, by enabling utilities to balance variable renewable output through adjustments in customer energy use. ComEd’s program relies on smart thermostats, but given the current rate of deployment of “smart” home products, future demand response programs could enable utilities to control other energy-hungry appliances, such as refrigerators, dishwashers, and hot water heaters. To help build a smarter grid, utilities should follow ComEd’s lead and integrate smart home technologies into their demand response programs.

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