Cleantech Market Intelligence
Opower Tries to Change the DR Game
Opower, best known for its customer engagement solutions for the utility industry, announced on September 11 its new behavioral demand response (BDR) solution. According to the company, this solution is a game-changer in the utility industry.
BDR is an online software-as-a-service (SaaS) solution that is based upon Opower’s behavioral design and big data software capabilities. It helps utilities communicate with their residential customers to motivate them to participate in demand response (DR) programs in order to reduce their energy use during periods of peak demand for power. Leveraging data from smart meters, Opower is able to gain insights into a utility’s customers to craft targeted and personalized messages to encourage them to become active DR participants. By communicating with customers before (e.g., to recommend ways to reduce energy use) as well as after a DR event (e.g., to inform customers about their cost savings and how to do better at the next DR event), and by using the customers’ preferred communications channels, Opower believes it will increase their level of interest and engagement.
For years, utilities have grappled with how to achieve better DR participation rates. According to Navigant Research’s report, Market Data: Demand Response, about 5.5% of all households in North America are involved in a DR initiative. To improve the participation rate, utilities must adopt new and better communications techniques. Near real-time communications, tailored to specific customer segments, will be helpful, especially when utilities want to engage customers in their more advanced dynamic pricing programs.
BDR is currently being deployed by Baltimore Gas and Electric (BGE) as part of its Smart Energy Rewards program, which consists of a peak-time rebate dynamic pricing scheme that rewards customers by giving rebates for using less energy at peak times during the summer season. About 300,000 customers are enrolled in this DR program today (including some also enrolled in BGE’s traditional direct load control [DLC] program, PeakRewards). The utility expects to sign up all of its 1.2 million customers by 2015. Opower will support the utility throughout the various phases of implementation as it rolls out smart meters to every household in its customer base.
Opower expects to land similar BDR contracts with other utilities in the near future. The ability to introduce DR without having to purchase and install any hardware devices to directly curtail customers’ loads, such as a programmable communicating thermostat or a control switch on a central AC unit or pool pump, is a major cost benefit. Opower claims that BDR cuts 40% of the cost per kilowatt per year compared to the cost of a DR program that requires a device.
Although such a significant cost savings is a good reason for a utility to adopt BDR, Opower must still demonstrate that BDR’s load curtailment performance is equal to or better than a conventional automated DLC program, requiring no personal involvement by the DR participant and no special communications techniques. After all, utilities have relied on automation for decades to generate load reduction. BDR could become a disruptive technology to usher in a new era of operating more cost-effective residential DR programs with a higher participation rate. At the very least, it will be another tool in utilities’ kits to promote energy management and conservation.