How Residential Demand-Side Management is Helping Electric Utilities Cope with Seismic Industry Changes

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// There is no doubt that the electric utility industry is dealing with changes that were unanticipated even a few years ago. Stop for a moment and consider how much the state of the industry has changed in recent years:

• Low-cost base-loaded generating technologies like coal are being phased out due to environmental reasons. Nuclear is becoming more economically uncompetitive as cost structures shift.
• Natural gas-fired turbines that were once saved for peaker service are now base-loaded due to the low cost of gas.
• Renewables such as wind and solar are gaining production share but output is erratic. The areas that generate the most power are often far away from consumers where transmission capabilities are inadequate.
• As large base-loaded facilities are being replaced by distributed energy resources (DERs), the function of the grid is rapidly changing, but long-standing cost structures remain.

Those changes are just on the production end. The relationship between utility and customer has changed drastically as well. In many highly deregulated markets, customers find it easier to change electrical energy suppliers than a cell phone provider, even changing on a monthly basis, chasing opportunities to save a few bucks during high-demand seasons.

In the face of all these changes, one constant has emerged: the need to manage demand. Regardless of the source of power—coal, nuclear, or wind, stabilizing demand and reducing overall loading has had a huge positive effect, and the process has really just started. Schneider Electric and others have already made major advances in improving energy efficiency in the industrial and commercial sectors. As factories, shopping centers, and office buildings have gotten more efficient, demand has declined and become more predictable. But that is only part of the picture.

The next opportunity for advancement will focus on residential demand management where there are many gains still to be realized. In many areas of the southern US, 40% of power generation can be consumed by air conditioning routinely during peak summer months. Many users leave the AC running all day, even if nobody is at home. When the cost of power to consumers is a lump sum at the end of the month, it’s hard for them to realize that the cost of producing power usually increases during the day, so they make no attempt to reduce its use when it costs the most. Industrial and commercial users are subject to time-of-use or other fluctuating costs and understand that reality, but residential users, for the most part, do not. Demand management has to begin with educating those users and providing them a means to see the cost of power.

That can involve a simple device to inform customers of the cost of energy at any time of the day, and a means to control consumption. Wiser North America offers a complete solution for all energy efficiency and demand response needs to help customers understand and regulate their use of power themselves. Utilities reward this behavior with rate compensation. Those products also allow the utility to partner with consumers to reduce consumption during times of peak demand or grid emergencies. The Wiser North America solution offers innovative hardware, engaging user apps and behavioral tools to help consumers manage their own energy use, combined with a mechanism for the utility to reduce demand when necessary. This strategic combination provides a new way for utilities and users to interact in a very positive way. Add in the benefits of promoting more energy-efficient appliances, and the result can be a stronger utility-to-customer relationship built on shared goals.