Navigant Research Blog

New OpenADR Spec Will Boost Auto-Demand Response

— August 18, 2012

The long-awaited OpenADR 2.0a profile specification was launched on August 8. Expected to have a positive impact on the demand response (DR) market, especially automated DR (ADR), the new spec will spur the development and deployment of new OpenADR-certified smart grid technologies that utilities and grid operators across the world can use to facilitate and augment DR programs.  In particular, devices based on this new specification will operate on a lower-cost, faster, and more reliable and efficient communications system.  Using a common language (XML) and existing Internet technology, DR signals can be sent directly from a demand response automated server (DRAS) via a client to the building automation and control systems on customer sites.  Thanks to this two-way messaging capability between a DRAS, which publishes information, and a client that subscribes to the information, utilities, grid operators, and curtailment service providers (CSPs) will be able to manage peak demand and load shifting in an automated fashion.

OpenADR 2.0a is the first of three profile specifications that will be developed and tested using a standard data model based on the OASIS Energy Interoperation (EI) specification.  While the objective of the 2.0a specification is to support the simplest devices installed in commercial, industrial, and residential settings, future specifications will address more complex situations, such as dynamic pricing.  As such, further iterations will be able to address a much broader DR market that takes wholesale pricing into account.  The second spec, OpenADR 2.0b, is currently being developed by the OpenADR Alliance in coordination with the ISO/RTO Council to enable price-based DR.

Before the launch, OpenADR 2.0a  underwent numerous tests and refinements by various OpenADR members, such as Akuacom, a unit of Honeywell, EnerNOC, IPKeys Technologies, and Universal Devices.  Using a newly developed OpenADR Test Tool by QualityLogic, they have confirmed that the specification successfully interoperates with their respective products.  Going forward, this test tool will be used for all certification tests, including pretesting and development of new first-generation smart grid technologies.

OpenADR 2.0a will not only spur new design and development of standardized and interoperable products to help utilities, grid operators, and CSPs accelerate their implementations of ADR, but it will also enable full-scale implementation of OpenADR by lowering the cost of technology, thereby boosting adoption.  The OpenADR standard will eventually become an integral part of ADR implementations in the United States and in other countries where DR is taking root.

 

Heat Wave Activates Utilities’ Demand Response Systems

— July 31, 2012

The 2012 summer has seen 2 weeks of brutal heat waves across large parts of the United States.  The first one occurred during the week of June 25, and the most recent one struck a few weeks later during the week of July 16.

A new 2012 peak for electrical demand, 12,836 megawatts (MW), was reached this year by Con Edison on July 17 when New York City hit 96 degrees Fahrenheit.  During the same week, the Midwest Independent Transmission System Operator (MISO), which operates all or part of the power grid in 11 U.S. Midwestern states and the province of Manitoba in Canada, reported that its entire territory hit well above historical average temperatures, contributing to record demand for power during several days.

To manage the high demand for electricity, some of the utilities and grid operators activated demand response (DR) systems to ensure grid reliability.  Con Edison, for example, asked its 3.2 million customers in the New York metropolitan area to conserve power during the steamy week of July 16.  The utility also took extra precaution by reducing the voltage used in New York City by, for example, dimming lights and letting hot water heaters take longer to heat water.  Thanks to these curtailment efforts, according to Con Edison, only 97 customers lost power, a remarkable accomplishment for a utility of its size.  At the same time, the New York ISO, which operates the grid in the state, requested that customers – both residents and businesses – who participate in its DR programs reduce their power usage.

MISO also had to take action to take some stress off its grid during the same week.  Besides declaring the need for energy conservation for 5 consecutive days, it issued numerous alerts for maximum generation by asking generators and transmission owners to put off unnecessary maintenance on the grid.  It also requested that generators in neighboring grids sell power into its system.  In addition, on July 18, PJM Interconnection (PJM), the biggest U.S.  grid operator, which serves over 60 million people in 13 Mid-Atlantic and Midwestern states and the District of Columbia, dispatched both short-lead and long-lead emergency DR in many of its eastern utilities, representing a total of 2,098 MW of capacity.

The hot weather has also kept EnerNOC, PJM’s largest aggregator, busier than usual.   So far, it has executed a record number of load-shedding programs this summer.  During the recent heat wave, it dispatched DR 32 times, accounting for about 3,000 MW of DR capacity, to its resources in 14 states, the District of Columbia, and Ontario, Canada.  Its automatic DR capability plays a significant role in enabling DR programs of many of the large grid operators, such as PJM, New York ISO, New England ISO, and California ISO.  This summer has certainly not been an exception.

With the potential for more heat waves in the coming months of August and September, aggregators, utilities, and grid operators will be able to demonstrate further that DR has become a critical resource in managing demand for electricity during peak times and to avert power outages.

 

Smart Thermostats Power Residential Demand Response

— July 26, 2012

Old-fashioned thermostats are morphing into smart thermostats, also referred to as programmable communicating thermostats (PCTs), which enable residents to manage their energy usage more effectively and actively, and at a much more granular level than ever before.  These devices have also made it increasingly easier and more convenient for consumers to participate in utility demand response (DR) programs.  Continued software enhancements, along with connectivity to the Internet, is turning smart thermostats into mini-PCs that the utility customer can access remotely from a smart phone, iPad, or website.

Having used smart thermostats for some time already to enable DR in homes, U.S. utilities are increasingly relying on these more advanced devices as the technology of choice in supporting their direct load control as well as dynamic pricing programs.  Smart thermostats that support two-way communications allow the utility to execute load management automatically by sending a signal to the thermostat to adjust the temperature in the home by a few degrees (agreed to by the customer in advance) to reduce the use of an air-conditioning or heating system for a certain period of time during peak demand.  For their part, customers can program a smart thermostat to adjust the temperature in the home  when rates become high in order to reduce their utility bill.  Most important, this technology helps utilities engage their customers more effectively in DR programs by offering them a device that makes such involvement easy, convenient, and even fun, while at the same time be able to save money.  Some smart thermostat vendors claim that they can help consumers save at least 20% or perhaps as much as 30% to 50% on their energy bills.

A wide variety of smart thermostats is available in the market, but Honeywell’s UtilityPRO thermostat has gained attention lately because of its rich functionality and its many software features – thanks to its reliable operation and smart grid capabilities, developed in partnership with Cooper Power Systems.  A touchscreen programmable thermostat exclusively designed for residential DR, the UtilityPRO is currently one of the company’s top-selling advanced thermostats, and has so far been installed in about 600,000 homes and small businesses in North America.  The UtilityPRO can communicate via paging signals, or via wireless technology based on the ZigBee Smart Energy communication standard.  ZigBee communication enables consumers to program the thermostat online from any location at any time.  It also allows utilities to communicate with the thermostat to automatically regulate heating and cooling systems to curtail or shift peak demand.  At the same time, the utility can verify that the thermostat is able to respond when it receives a DR event or price signal.  Because UtilityPRO has a backlit display and messaging capability, utilities can also deliver near, real-time usage and billing data to residents.  Honeywell has estimated that in 2011 UtilityPRO gave utilities combined control of more than 500 megawatts of peak energy use.

In the years ahead, smart thermostats will continue to develop to offer even more advanced capabilities. It is quite possible that PCTs will become a serious competitive threat to the in-home display units that some vendors are trying, with limited success, to push in the market.  As consumers increasingly assume the role of home energy manager, they would most likely choose a device that is inexpensive and easy to install (no hard-wiring) but also offers a user-friendly web interface along with access to data and information that motivate them to take action with respect to their energy consumption.

 

Prepay Opponents Use Outdated Arguments

— June 27, 2012

Prepaid electricity services have been around for at least two decades in the United States, but they’re less common than in other parts of the world, such as the United Kingdom, Ireland, Australia, New Zealand, India, China, the Philippines, Brazil, Mexico, Turkey, South Africa, and many other African nations.  In these countries, prepayment for power is considered a very basic and standard form of utility payment.  Now, according to Pike Research’s report, Prepaid Electric Metering, more and more U.S. utilities are starting to offer prepayment options to their customers, especially with the introduction of new smart metering and communication technology to facilitate these types of services.  Pressure to improve customer service to give more choices to consumers is also a major driver.  In this new “demand” economy, offering more choices has become a corporate imperative.

One of the reasons why U.S. utilities have been slow to offer prepaid services is opposition from consumer advocacy groups, such as a recent report from the National Consumer Law Center (NCLC), claiming that these programs discriminate against low- and moderate-income households by creating an inequitable two-tiered customer delivery system.  This opposition is not new – over the years it’s been dredged up repeatedly by various consumer protection groups.  But a close examination of existing and new prepaid programs invariably shows that these objections are now outdated and no longer relevant.  Today, the majority of prepay programs don’t target a specific customer segment, such as “high risk credit” households.  Instead, most U.S. utilities target all of their customers with these programs, regardless of financial or socioeconomic status.  And many consumers – if given a choice – opt for prepayment because it provides them with greater flexibility in managing their finances, as they can choose the amount and frequency of payments.

Also, customers do not have to pay a large upfront deposit or face a credit check when initiating electric services and are able to avoid paying any disconnect and reconnect fees.  These benefits are especially valuable to the lower-income consumers that NCLC is so concerned about.

NCLC also points out that there could be an immediate loss of electricity when a customer’s credit reaches a threshold or zero.  Again, this concern is no longer valid.  Many utilities offer an emergency credit that can be used by consumers after their credit has been depleted, such as during the night, a weekend, or a holiday.  Furthermore, prior to any disconnect, the consumer receives an alert from the utility – via phone, email, and text message – which is sent far enough in advance to allow him/her to replenish the account balance.  And, if electricity has been terminated for whatever reason, the utility is able to turn the power back on relatively quickly (at least within a few hours) upon receipt of payment, thanks to the advanced technology that supports their prepaid programs.

The NCLC report also neglects to mention another important benefit to consumers.  By prepaying, consumers usually gain access to detailed information about their energy consumption, giving them the opportunity to manage their usage in order to save on their electricity bill.   Studies have consistently shown that prepaid programs can achieve a reduction in electricity use of about 12% to 14%.  This has been the experience of Salt River Project’s M-Power prepaid program, the largest and oldest electric prepay program in the United States.

Considering the general success of electric prepaid services as well as the high customer satisfaction levels among program participants, it’s unfortunate that consumer advocacy groups keep raising objections and stirring up fears that are based upon outdated assumptions and are contrary to the experience of most prepay customers.

 

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