2015: The year technology transformed demand management

Utilities are increasingly looking to solve energy issues with data, rather than building new infrastructure

The omnibus appropriations bill signed this month included billions for energy research, with more than $1 billion targeting advanced computing. Research into exascale computing – developing a computer capable of a billion billion calculations per second – is getting more than $230 million.

That funding is for “vital energy and research priorities,” according to U.S. Senator Lamar Alexander (R-TN), and it underscores the direction energy efficiency and demand management are heading.

Increasingly, energy issues are becoming complex analytical problems – solvable by predicting or shifting demand, reducing future needs, finding untapped efficiencies. Owning computing power is becoming unlocking cheaper and cleaner ways to meet customer needs, rather than always resorting to new generation or grid infrastructure. 

The technological evolution created new power demand – all those devices, always plugged and connected – but it may also be creating the tools to manage that demand. Enormous amounts of data being collected and parsed, allowing utilities to better prepare and engage with customers.

“We've spent a lot of time and effort this year using analytics as a part of demand response,” said CLEAResult CTO David McCann. Based in Austin, CLEAResult helps design and implement energy programs and McCann said technology played a large role in demand management's evolution this past year, “providing more insights and utilizing big data as part of a customer experience.”

“Whether it's demand response or energy efficiency … the way we approach customers has been rapidly changing,” he said. “Last year, energy efficiency was very project-based. What we're seeing now, across all of our utility partners, is engagement at the customer level.”

"We're seeing the proliferation of smart devices – everything from a wi-fi thermostat to light bulbs to a washer and dryer or water heater," said Earth Networks' Chief Marketing Officer Leslie Ferry. The company, which owns the popular WeatherBug app, has been working to integrate its extensive weather data into utilities' demand response offerings.

"The Internet of Things will help us get much more intelligent, at a very personal level, at an individual-home level, to ultimately help the utility manage operations and the efficient use of the grid," she said.

The rise of behavioral demand response

Gone are the days when demand response was synonymous with direct-control utility programs that simply addressed cooling loads. Now, the term can mean a host of different program types from third-party aggregation to gentle energy-use cues.

So-called “behavioral demand response” programs are really data analytics paired with effective messaging to reduce customer energy consumption. And those programs have moved from general calls for broad conservation to home-specific requests, as advanced metering infrastructure has allowed more granular data. For the utility or other company that can examine the data coming out of a smart meter and utilize it to manage demand, the economic potential is significant.

Bearing in mind that the industry is relatively new, Navigant is predicting worldwide spending on behavioral and analytical demand management will grow from about $215 million this year to $2.5 billion in 2024. Most of that spending, about $1.5 billion, will take place in the United States.

“Ease of deployment is a key factor,” says Navigant Senior Research Analyst Brett Feldman. “It is relatively easy for a utility to start a pilot program without much regulatory scrutiny."

The key is the lack of direct control, and frequently a rate component as well. Behavioral programs work by asking customers to reduce usage, often by showing them how their usage compares to their neighbors or displaying consumption patterns on mobile apps and online. And while the results are not as deep or reliable as they would be via direct-control, data-intensive companies like Opower are beginning to develop a body of consistent results. 

When Opower announced the results of its 2015 summer demand response programs, it had saved utilities 3% to 5% off peak demand – the same savings it saw in 2014. That's a big deal in an industry where reliability is essential. And being able to repeat those results will be a large part of the market expansion and utilities' ability to really lean on behavioral demand response. The company is looking to grow its demand response offerings into the wholesale market, where reliability is essential, and expects to have the resource participating in at least one market next summer.

Efficiency and the Clean Power Plan

The Obama administration's signature climate legislation was a big win for energy efficiency, despite what on its face could appear to be a loss. Between the proposed and final regulations, efficiency was removed as a building block for compliance

But EE was likely removed to make the final rule easier to defend in court, against challenges that the regulations would go far beyond the U.S. Environmental Protection Agency's usual jurisdiction. Instead, efficiency was preserved as a main compliance tool for states and power companies to reduce emisions to comply with the regulations.

“It encourages energy efficiency as the most cost-effective compliance mechanism,” said Kelly Speakes-Backman, senior vice president at the Alliance to Save Energy and a former Maryland utility regulator. She considers the Clean Power Plan to be a big win for energy efficiency.

While more than half of states are joining legal challenges to the rules, utilities have largely been absent from the front lines, even pushing apprehensive state regulators to consider compliance plans as their states challenge the regulations in court. That, the plan's backers say, is a strong indication utilities see how the greenhouse gas limits can be met. 

“The lack of significant utility push back on the Clean Power Plan was a surprise for many in the industry,” said Jim Kapsis, vice president of global policy and regulatory affairs for Opower. “Rather than fighting a public battle against the EPA, utilities are making the investments they need to succeed in this new reality.”

In their quest for compliance with the state-specific targets, utilities are expected to utilize more sophisticated efficiency and demand management techniques. A MWh saved, efficiency backers point out, is usually cheaper than a MWh generated. 

“The tipping point on clean energy has been reached, and now the industry needs to focus on managing, if not profiting, from the transition,” Kapsis said.

Virtual Power Plants

As utilities increasingly turn to software and computing to solve energy problems, the virtual power plant concept has been increasingly popular. Also known as a Distributed Energy Resource Management System, the basic concept is to view a power grid as a single integrated system. But because every power grid is different, each DERMS is typically built to order. That has slowed growth of the systems, but standards for data are likely to accelerate the sector.

The Electric Power Research Institute and the National Renewable Energy Laboratory have been working together on data standards, and earlier this year completed testing of a standard messaging platform.

But according to Earth Network's Ferry, "we're not there yet."

"It's so nascent, the amount of data we're able to gather," she said. "But she said data standards will likely be developed in the future, helping to accelerate analytic energy solutions.

According to GTM Research, total spend in the DERMS market will rise from about $50 million last year to reach $110 million by 2018. “The market will more than double,” said Omar Saadeh, a senior analyst with GTM, “as utilities invest in platforms that meet their specific needs.”

In Massachusetts, Unitil has proposed developing a DERMS to monitor and control distributed resources across its service territory. The technology could be implemented as a module to work with a distribution management system or as a stand-alone system, the company told regulators

Siemens and German energy company RWE Deutschland AG are addressing the data standards issue as well. The two companies last month announced they are collaborating on a virtual power plant, with a focus on making it capable of controlling a large number of resources in a way that "is both suitable for the mass market and can handle multiple clients."

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