When temperatures soared into the high 90s last August, the California Independent System Operator (CAISO) issued an alert to encourage conservation efforts among homeowners and businesses. As the state's main overseer of California's electric grid, CAISO was concerned that record use of air conditions would threaten the state's energy supply.
Following up on the conservation request, Pacific Gas & Electric called its demand response programs into effect, asking its customers to reduce demand during peak afternoon hours. The call for action was a huge success. California residents and businesses reduced energy use by nearly 1,000 megawatts on the steamy afternoon of Aug. 2, helping to maintain grid reliability across the state.
Of that total, more than half of the energy conservation (575 megawatts) came from customers enrolled in PG&E's voluntary demand response programs. PG&E customers participated in more than 10 demand response events during hot days last summer and fall.
It's easy to see why utilities are increasing their focus and investing more resources on demand response and energy conservation programs. The energy conserved on that one August afternoon had a major impact. The 4,100 large business customers who cut back on usage that day reduced peak demand by 475 MW, equal to the output of a major natural gas-fired generator.
And the more than 155,000 PG&E residential and small business customers enrolled in the utility's SmartAC program, which allows PG&E to dial down their air conditioners during peak usage hours, reduced demand by another 100 megawatts. To put that in perspective, PG&E estimates that it would take about 800 acres of land filled with solar panels to produce that much power.
"Automated demand response programs work today to help customers to deliver quick and reliable reductions in energy use," said Andrew Hoffman, manager of demand response programs at PG&E. "We're also conducting pilot programs with other stakeholders to look into how demand response can provide load balancing needs when solar is ramping up or down throughout the day."
Demand response will become a bigger issue in the years to come in order to balance real time needs on the grid as solar and wind become a larger portion of the energy mix. California has one of the most aggressive renewable energy standards in the U.S., with a mandate to have one-third of its energy produced from renewable sources by 2020. The state is currently at 20 percent.
With that goal in mind, PG&E signed up nearly 80,000 residential customers for its voluntary SmartRate program in 2012. The program offers customers with electric smart meters a discount on their summer electric bills when they trim energy use on high peak days, except on peak-demand days (no more than 15 each year) when rates jump 60 cents per kilowatt-hour during peak afternoon hours. PG&E has rolled out four million smart meters to its customers.
Hoffman said that SmartRate customers reduced their peak energy use on those days by an average of 13 percent, saving an average of $27 over the course of the summer.
This year PG&E hopes to add 20,000 new customers to the SmartRate program, boosting membership to over 100,000. While that represents a fraction of PG&E's total customers (about two percent saturation), the benefits are substantial when it comes to managing the electricity load. And, PG&E figures to rapidly expand the program, providing even more grid flexibility during hot summer months and increased overall conservation efforts.
While the SmartRate program is only put into action a dozen or so times a year, officials at PG&E and other utilities have noticed an interesting development; once consumers get a feel for the conservation efforts behind the program, they tend to extend peak usage conservation to their everyday lifestyle. So energy conservation efforts by many are extended from a few high temperature days in the summer to a year-round basis.
PG&E reported that some of its customers have shaved $150- $200 a month off their electricity bills by limiting the use of appliances during peak afternoon periods. Hoffman said it's not uncommon for customers to get rid of extra refrigerators that they don't need and pay extra attention to make sure lights are turned off. Many customers also begin to track their electricity usage online after being exposed to the SmartRate program.
SmartRate is the largest residential critical peak-pricing program in the country. There are larger time-of-use pricing programs for residential customers, "but we think it's impressive as a model of what can be accomplished, with strong customer support, once such programs are enabled by AMI," said Hoffman.
"It almost becomes a game for some people to see how much they can save," added Hoffman. "We only began marketing the program to customers last year, and we've seen strong growth by making people aware that they can save money by some very modest changes in their behavior. It also helps that it is a voluntary program."
PG&E initially offered small incentive payments for signing up for SmartRate. The utility has also offered a year's worth of bill protection so customers could exit easily in case the program didn't work out for them.
Austin Energy details
Austin Energy (AE) in Texas is taking demand response a step further by piloting Wi-Fi-enabled thermostats that allow the utility to remotely adjust thermostats by up to four degrees on hot days between June and September. Customers who sign up will receive an $85 rebate for each Wi-Fi thermostat they install as part of the Texas utility's Power Partner Thermostat Program.
Scott Jarman, Austin Energy's Interim director of Energy Efficiency Services, said that 79 customers are enrolled in the pilot. Austin Energy has signed on with three vendors of Wi-Fi thermostats, and customers can choose whichever product they prefer. The utility hopes to sign up 50 customers for each vendor. Austin Energy has also accepted a multi-family housing unit into the program that will represent another 150-plus Wi-Fi units.
Austin Energy has a goal of achieving 800MW of peak demand savings by 2020. While demand response programs will play a key role in meeting that goal, a new and innovative rate structure will also go a long way towards promoting greater energy conservation and energy efficiency. Austin Energy typically calls in about 12-15 demand response events a year, averaging about three hours, although Jarman says technology is allowing the utility to be smarter about the real window needed to reach peak demand energy saving goals. Sometimes, that results in a narrower two-hour time frame. Austin Energy does not currently offer peak pricing rates, although it does have a residential time-of-use option.
"We've design a program where customers with these thermostats can enroll in our DR program," said Jarman. "From a utility portal we can raise the temperature up by four degrees on a hot summer afternoon when we are calling in a demand response event.
"When we know they are online, we can see the actual space temperature in the house and get feedback on whether the AC unit in that house actually went off. It gives us the assurance and the knowledge that the unit shut off, whereas with the current system we have no way of knowing if it really went off."
Once Austin energy is able to verify the functionality of the pilot project this spring, the utility hopes to open enrollment for additional customers with the participating vendors to assure increased participation for this summer. AE will also begin more demonstrations and testing with additional vendors.
The utility will begin marketing the program to customers through Austin Energy Green Building, Home Performance with Energy Star, and other general marketing efforts. Lastly, AE will integrate the participating Wi-Fi thermostat vendors with the Demand Response Automation System (DRAS) pilot that it is participating in this summer.
While residential customers represent a great opportunity for demand response programs, a recent research study produced by Pike Research, part of Navigant's Energy Practice, reveals commercial accounts represent a sweet spot for DR programs. Pike notes that the number of commercial facilities participating in DR programs worldwide will rise from fewer than 600,000 in 2012 to more than 1.4 million sites by 2018.
"Although DR programs are offered to a broad range of customers, the commercial sector offers a significant opportunity for growth in the DR market," said senior research analyst Marianne Hedin. "With a huge number of buildings and facilities accounting for a substantial amount of electricity consumption, the commercial sector represents a major underserved market."
Hedin said that the increasing use of automated DR (ADR) and open standards-based communications capabilities is enabling utilities, grid operators, and curtailment service providers (CSPs) to not only offer DR to a much broader end user market, but also offer more sophisticated forms of DR programs, such as dynamic pricing and ancillary services.
The increasing deployment of smart metering installations, which are expected to pick up in the small and medium business market segment, will make it considerably easier for businesses and institutions to participate in the economic demand response market, where they can take advantage of price-responsive DR programs to obtain reduced rate structures.
DR represents a huge opportunity for utilities to increase peak demand savings. Consider that commercial buildings consume about one-quarter of all energy on a global basis. Pike Research estimates that during peak demand periods, commercial buildings account for 50 percent or more of peak loads in the U.S.
John R. Johnson is a Boston-based freelance writer specializing in utility best practices, energy and technology topics.