Accurately predicting load and reducing peak demand is top-of-mind for electric utility planners. And in the age of electrification, this is only going to become more important as customers’ reliance on electricity increases. Relying on a peaker plant for additional power is often necessary, but that comes at a cost. Both environmental, since it’s usually more carbon intensive, and monetarily, since it’s much more expensive than a traditional power generation source. 

Today, utilities are increasingly turning to non-wire alternative programs, like demand response, for answers. To jumpstart your demand response journey, we’ve identified three elements that will help you build a load management program that excels: 

1) Deploy a Traditional Load Control Program

Although they aren’t the most exciting solution, Load Control Modules (LCM) get the job done. By adding LCMs to high-energy use products, such as air conditioners, water heaters or pool pumps, utilities are able to automate load shedding by controlling and cycling these devices during periods of peak demand.  

These tried-and-true programs are essential components of all demand resourcing planning efforts and benefit both the customer and the utility. Consumers receive a monetary stipend in exchange for giving up some control during a peak load event, and utilities can target load reduction at  specific feeders or substations—often saving a substantial amount of money.

The key to a program’s success lies in reliable and low-latency communications. For instance, if you are using an Advanced Metering Infrastructure (AMI) network to communicate with LCMs, it’s important to understand the limitations of your system.  Can it handle the real-time demands of a large scale event?  Do you receive a status confirmation from the LCM after an event?  It’s important to understand the outsized role that different AMI architectures can play with a traditional load control program.

2) Bring Your Own Thermostat Program

In 2007, the programmable thermostat underwent a metamorphosis and hasn’t looked back. Wi-Fi was added. The first smart thermostat was born. This connected thermostat gave users better energy visibility and control, but it also provided utilities with a fantastic opportunity to create innovative demand response programs. Utilities could now remotely control a smart thermostat—which launched many Bring Your Own Thermostat (BYOT) programs.

One of the best-known is Nest Rush Hour Rewards. Like most BYOT programs, it works by incentivizing residents to set a more efficient temperature during extreme summer or winter events. These programs have been so successful that some utilities are giving discounts, or even offering free smart thermostats, for load reduction. Other utilities have found similar success with their programs.  As more consumers install smart thermostats, these programs will have greater impact.

3) Behavioral Demand Response

Through behavioral nudges, it’s possible for utilities to curb energy use in a more indirect manner. The utility doesn’t need to take action by turning off a high-energy consumption device or by controlling a thermostat, as the customer is influenced to do it on their own.

There’s numerous proven Behavioral Demand Response (BDR) programs, but the most common is through a time-of-use (TOU) program. By switching from a traditional flat-rate tariff to a variable rate schedule, customers are incentivized through their pocketbook to change behavior. Residents are charged more during peak hours, but charged less at off-peak periods.  For instance, Alliant Energy in Iowa offers a “Time of Day” program where the price per kWh ranges from $.05 off-peak to $.16 on-peak (figure 1).

It’s only been recently, with the proliferation of AMI systems, that utilities are starting to make the switch away from flat rates. In a recent Utility Dive article, Brattle Group Principal Ahmad Faruqui said, “On average, residential customers reduce their on-peak usage by 6.5% for every 10% increase in the peak-to-off-peak price ratio.”

With extreme weather events becoming more common and the influx of electric vehicles, it’s more important now than ever before to manage peak load.  The examples above are just a few of the ways that utilities can more effectively manage load on the grid.