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For decades, utilities have used smart thermostats to reduce strain on the grid when electricity consumption is super-high. Paying customers to let utilities turn down air conditioning on hot summer afternoons or electric heating on cold winter mornings is called demand response, and it’s delivering gigawatts of valuable grid relief today.
Phoenix’s Ahwatukee Foothills neighborhood is served by the utility Salt River Project, an early mover in tapping smart thermostats to reduce pressure on the grid. (Hunter Trick [Trick Hunter], CC BY-SA 4.0 via Wikimedia Commons)
But millions more of these smart thermostats are shifting households’ temperatures on a daily basis — and not on behalf of utilities. Instead, the owners of these devices have agreed to let smart thermostat companies modify their temperature settings to avoid costly peak power rates, or to use more clean energy and less dirty energy.
While this energy shifting has largely been invisible to them, some utilities are now gathering data on how these under-the-radar systems could be leveraged to avoid costly infrastructure upgrades or to burn less fossil fuels. Put simply, the more smart thermostats that utilities can recruit to lower peak demand, the less they have to run dirty power plants and the fewer wires and poles they need to transport electrons.
Big Arizona utility Salt River Project is one early mover on this front. Last year, it worked with smart thermostat firm Renew Home to see how thousands of the company’s thermostat-equipped customers in and around the Phoenix area could reduce strain on the grid. Those thermostats belonged to households that opted into Renew Home’s Energy Shift program, which lets the company automatically adjust their temperature settings throughout the day. Nationwide, about 5 million customers representing 4 gigawatts of capacity have signed on to that initiative.
The tracking effort revealed that customers enrolled in Energy Shift are easing peak grid pressures nearly as effectively as those enrolled in the utility’s smart thermostat demand-response program.
Over the course of six test events last August and September, about 28,500 Energy Shift–enabled homes each delivered about 1.1 kilowatts of peak load reduction on average, for a total of about 27 megawatts, Josh Logan, Salt River Project’s senior product manager, said during a March webinar.
That’s not quite as much energy reduction as the average 1.3 kilowatts per thermostat that Salt River Project gets from the roughly 75,000 customers enrolled in its standard demand-response program, he said. But an additional 27 megawatts of peak relief happening more or less automatically is nothing to sneeze at, he added.
It’s worth pausing to note the trickiness of comparing customer load-reduction programs like Energy Shift to typical utility demand-response initiatives. Utilities and regulators have always thought of demand response as something that happens during emergencies to directly alter how customers would have otherwise used energy. Utilities want to see a direct reduction in energy demand from some typical baseline.
Energy Shift’s frequent tweaks to millions of household thermostats upend those benchmark expectations, said Will Baker, Renew Home’s senior director of market integration. To measure the impact of its test events in Arizona and elsewhere, the company uses randomized control trials that pull data from a broad range of customers to determine a baseline, he said.
The company’s results are prompting Salt River Project to examine the idea of offering Energy Shift customers incentives for expanding how often or deeply they’re willing to shift their energy use. While the utility isn’t disclosing what financial arrangements it might be working out to more reliably tap into those smart thermostats in the future, Logan expected the results would be “extremely cost-effective” for the utility.
Renew Home worked with the company EnergyHub to reveal this particular data to Salt River Project, free of charge. The utility already uses EnergyHub’s online platform to manage its existing demand-response programs, and the smart thermostat data from Renew Home was rolled into the tool to allow an easy viewing experience.
Arizona isn’t the only place where EnergyHub and Renew Home are collaborating to surface the value of what they call “background virtual power plants” — networks of distributed energy resources that operate with no utility management.
During Winter Storm Fern in January, for example, the two companies found that Energy Shift customers reduced load for an unnamed Southeast U.S. utility by 50 megawatts, said Megan Nyquist, EnergyHub’s senior product market manager. That’s about twice as much winter peak reduction as that utility has enrolled in its official smart thermostat demand-response program, she said.
“Utility programs will continue to be a huge part of how [virtual power plants] grow and scale. But they’re not the only source of flexible capacity out there,” Nyquist added.
Last summer, Renew Home reported that it was able to provide 380 megawatts of load reduction over two hours on a hot July afternoon in the territory of PJM Interconnection. PJM faces a cost crisis in meeting its peak demands for the grid it manages for more than 67 million people in 13 states and Washington, D.C.
Tyson Brown, Renew Home’s head of utility partnerships, noted during the March webinar that this achievement came from “only a fraction of the available fleet. If we actually dispatched the entire Energy Shift–enabled fleet in PJM, the impact would have been closer to 800 megawatts.”
One important advantage of Energy Shift’s day-to-day adjustments is that they are generally less disruptive to household comfort than traditional demand-response programs, Brown said. Utilities that ask customers to shiver through the coldest mornings or swelter through the hottest afternoons struggle to keep households enrolled.
“The goal here is for it to really be imperceptible, such that the end user feels as if the thermostat is doing the things that it’s already been doing for them,” he said, noting that customers are always free to cancel their participation if they want to.
Paying consumers to use less energy during times of peak demand can help save all utility customers money in the long run, Baker noted. That’s because utilities pass on the costs of building and operating power plants and grid infrastructure to meet peak loads on to all customers as a portion of their utility rates. Anything that utilities can do to reduce those costs can eventually lead to lower rates across the board.
Renew Home is a member of the Utilize Coalition, a group of companies promoting virtual power plants as a means of reducing rising utility bills. Baker declined to name other utilities that might be considering methods to pay Energy Shift customers for committing to reduce peak energy use. But he did say, “We’re going into our preseason planning with our utilities — and there’s not a single utility we’re not talking with about this.”
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