A new white paper from AutoGrid shows how electric utilities can build successful demand-response (DR) strategies through effective use of Bring Your Own Thermostat programs.
The report, “Demand Response and BYOT™: Understanding BYOT and the value it brings to utilities,” is a good introduction for utilities looking to scale their DR efforts. The paper not only describes how well-executed BYOT programs spread benefits across the value chain, but it also lays out the nitty-gritty of how to do it.
“Utility managers have become frustrated with the standard thermostat programs because of their cost and complexity,” says Sadia Raveendran. “The new BYOT programs hold great promise, but the key to making them work is to produce cost savings while making it easy for all stakeholders to participate.”
Delivering value to all stakeholders
The white paper describes how well-executed BYOT programs deliver value to the four stakeholders in the value chain: utilities, original equipment manufacturers (OEMs), energy-services providers, and the end-consumer.
“What utilities like is that a good BYOT program can extract dispatch-grade energy from smart thermostats at the lowest cost,” says Sadia Raveendran. “At the same time, they’re engaging their customers in a highly satisfactory program without the hassles of marketing and administering the program.”
Four Building Blocks of Success
Building a BYOT initiative requires a comprehensive approach, says Sadia Raveendran. “We’ve developed four building blocks that lay the foundation for a successful end-to-end program.”
The four building blocks are market, materialize, measure and manage.
The marketing stage is all about designing the program, targeting the right customers, developing the marketing campaign and enrolling customers.
Materializing means turning enrolled devices into reliable, dispatchable assets.
Retaining customers is all about making their experience seamless and easy. That calls for robust measurement and verification methods. “By quickly showing consumers how much energy and money they’ve saved, they’re more likely to stay engaged in the program,” says Rahul Kar.
The final BYOT building block is managing the contractual and working relationships between all the stakeholders. With turnkey BYOT programs, an energy services provider delivers the platform and connected smart thermostats ready for dispatching. Or, the utility can choose a build-own-operate model, where it orchestrates all the moving parts with the stakeholders.
Crunching the numbers
How do you measure BYOT value? Using an all-inclusive cost-and-benefit analysis on a base case, the paper’s authors posit the gross and net economic value of a BYOT program to a utility. What’s clear is that improved profits come from controlling costs, getting high levels of consumer enrollment, sustaining engagement and minimizing customer churn rates. And that, in turn, takes finding the right set of stakeholder partners for all four of the building blocks.
The white paper offers greater depth on the success factors of BYOT programs. For example, it’s important to deploy a software program that is OEM-agnostic. This avoids locking in any one manufacturer’s product and guards against technology obsolescence. The ability to connect with many product brands also gives utilities a larger pool of target customers to start with.
A good BYOT program simplifies the consumer experience. For example, consumers can easily pre-qualify, enroll and sign up for available rebates with a series of clicks in a utility-branded portal. And don’t discount the importance of communication throughout the customer journey. When utilities stay in touch with customers before, during and after a DR event, it pays off in higher levels of participation, engagement and retention.
“Increasing enrollment and engagement levels provide a net positive impact on value to utilities,” says Chris Sternberg. “That makes it imperative to provide a seamless customer experience.”
DRMS Should Provide Flexibility
All of that is enabled by a robust demand-response management system (DRMS). “Choosing a software provider for your BYOT program should be driven by platform flexibility, not by a custom solution for any one OEM type,” says Chris Sternberg. “You want to create a pathway for scalability to all customer classes and device types.”
It’s a virtuous circle. The right DRMS, combined with skilled execution of the four building blocks of a BYOT program, maximizes the number of thermostats enrolled at the lowest per-megawatt cost for the utility. That makes it easy to outsource recruiting and marketing to the energy service provider and device OEMs. In turn, more customers are satisfied, leading to higher levels of retention and recruitment of new customers.
To read the full white paper, Demand Response and BYOT™: Understanding BYOT and the value it brings to utilities, click here.