Managing the electric grid during times of peak power consumption is a perennial challenge for utilities. It’s been estimated that 10-20% of the overall cost of providing electricity each year in the US comes from just 100 hours of the year — largely corresponding to the highest-usage hours when air conditioners are relentlessly gobbling up electricity.
To ease the strain of peak usage, US utilities spend nearly $1 billion annually to encourage customers to lighten their electricity load on sizzling summer days. A large portion of this spending goes toward the residential sector, given that US households (9 out of 10 of whom now own air-conditioners) represent up to 60% of the grid’s peak power demand. These programs often involve customers receiving a fixed cash payment (e.g. $20-60) in exchange for allowing their utility to cycle off their A/C for short intervals on hot days, via a wireless switch.
Another promising method to shave peak demand is to vary the price of electricity throughout the day – a real-time, market-based capability that’s made possible by smart meters. Utilities have run more than 100 pricing pilots in North America: some charge higher prices during peak hours, in exchange for lower prices during times of lower electric demand; other pilots have incorporated rebates and incentives to encourage customers to reduce usage when the grid is overburdened. For the most part these small pilots have been successful, but utilities have struggled to deploy them at scale.
What’s common across both of these types of demand response programs (i.e. A/C cycling and dynamic pricing)? It’s the difficulty to raise program awareness among customers and drive comprehensive participation. To date, only 5% of US households participate in a demand response program. And as a result of this low participation nationwide, FERC reports that US-based utilities are only achieving 20% of the potential cost savings and reliability improvements available to them from demand response. We think there is a better way…
A bigger, better, and behavioral solution to help manage the power grid
Today, we announce the arrival of a fresh approach to demand response. It’s based on a powerful intersection of smart meter technology, big data analytics, and personalized communications. The result is a peak-time energy savings platform that reaches all customers, rather than just a few, in a utility’s service territory.
Say goodbye to low levels of customer participation. Say goodbye to small-scale results.
Say hello to an era of demand response that customers want to be a part of, that leaves them feeling empowered, and that yields large-scale reductions in electricity use when it matters most.
Say hello to Behavioral Demand Response by Opower.
How does Behavioral Demand Response work?
From the beginning, Opower’s success in driving large-scale energy efficiency has been based on empowering millions of utility customers with the personalized insights and feedback they need to save energy and money.
Our Behavioral Demand Response solution builds on Opower’s proven approach: it taps into the power of customer behavior and leverages the Opower platform to provide each customer timely and personalized insights on how to best trim their electricity use on days when the grid is strained.
Say that a utility is anticipating peak energy demand tomorrow afternoon and so wants to alert their customer base about the importance of saving electricity during that time. Opower’s multi-channel communications platform can be deployed at a moment’s notice to send personalized alerts (via email, text, or phone) to millions of customers across the utility’s service territory. The alerts announce tomorrow’s peak demand event, provide personalized advice to each customer on how to save energy, and, if the utility chooses, explain how customers can earn rewards or qualify for preferential rates if they trim their time-specific usage.
Customers receive notification prior to peak demand events, via the communication channel of their choice
Then, after the peak day event, customers receive a personalized report giving a clear explanation of how much energy they saved during the event. Importantly, from a behavioral design perspective, they can also see how their savings performance stacked up against that of their neighbors, see a day-by-day breakdown to track their progress over time, and learn about additional energy-savings tips they can adopt during future peak demand events (including signing up for other demand response programs.)
Shortly after a peak demand event, customers receive feedback about their energy savings performance
Behind the scenes, the Opower platform provides flexibility to the customer and the utility. For the customer, participants select how they wish to be notified across a variety of channels. For the utility, BDR is designed to test hundreds of combinations of both message content and channel of communication. This allows each utility to focus on the combinations that are optimized specifically for their rate structures, their broader demand response portfolio, and their energy savings targets.
A typical utility may choose to engage their customers’ around 10 times per summer to help relieve pressure on the grid. For each one, Opower’s Behavioral Demand Response solution is ready to deliver millions of near real-time personalized communications before, during, and after each event to keep customers informed, empowered, and engaged.
Communications and feedback are personalized to optimize program effectiveness over time
Why should you be excited about Behavioral Demand Response?
BDR marks the end of an era in which a paltry 5% of households participate in demand response programs. Its ability to cost-effectively scale across an entire service territory – overcoming the low-participation roadblock that has impeded traditional DR programs — is good news for utilities and consumers alike.
Even better news: BDR can be deployed as a standalone solution to manage peak demand, or it can be seamlessly integrated into utilities’ broader demand response portfolio to help bring out the best in their other peak reduction efforts.
Are you a utility stakeholder curious to find out how Behavioral Demand Response can start tapping an unprecedented energy savings resource across millions of customers in your service territory? Contact us at firstname.lastname@example.org to find out more.
Josh Lich is Solutions Marketing Manager for Behavioral Demand Response at Opower. Tom Mercer is a Senior Product Manager at Opower.