Leaving the Nest: 'Bring your own' efficiency programs grow beyond thermostats
The following is a viewpoint by Brett Feldman, research director at Navigant.
Distributed energy resources (DER) are starting to outpace centralized power generation in terms of new annual capacity additions in the electric industry. This shift positions the bring your own device (BYOD) market to allow customers to choose and use a range of smart, grid-interactive technologies. Such solutions allow customers to manage their energy consumption while maintaining optimal comfort.
BYOD refers to utility and non-utility programs that encourage customers to buy their own pre-approved devices from a vendor of their choosing. Customers can enroll the devices into demand response (DR) or energy efficiency programs managed through the utility, an energy supplier or a third-party systems integrator.
Three fundamental shifts are taking place in the bring your own (BYO) market:
- BYOD broadens the range of consumer technologies eligible to participate in programs beyond thermostats. Thermostats still constitute the majority of BYOD programs, but battery storage, electric vehicles, water heaters, smart appliances and smart solar inverters also present opportunities to manage energy usage.
- Bring your own thermostat (BYOT) programs have mainly been used for DR programs. The broader BYOD programs are exploring the energy efficiency and load shifting applications of these programs as well.
- Initially, BYOT programs required utility program administration to confirm customer eligibility for DR efforts. Today, BYOD programs are being initiated by retail electricity suppliers in deregulated markets and other energy service providers.
The shift from BYOT programs toward broader BYOD initiatives suggests the BYO model will continue to grow, securing energy and cost savings for customers and energy providers.
BYOT programs have been a successful channel for customer enrollment in utility DR programs. Therefore, market players are looking to expand the scope of the BYO business model.
Enrollment in BYOD programs is dependent on the location of the project and the corresponding business model. However, other enrollment drivers generally include multiple device synergies, customer choice, product diversification, cost-effectiveness and the emergence of non-utility business models.
Despite the launch of over 50 BYOD programs across North America to date, most programs currently only enroll thermostats. However, the emerging BYOD model has sparked interest from some utilities and third-party providers launching pilot BYOD programs as they explore the viability of larger-scale program deployment.
Program administrators are determining how to circumvent early barriers to BYOD program adoption, including cost-prohibitive customer enrollment challenges, resolving customer disputes, and load curtailment reliability.
As BYOD expands across the U.S., projects are beginning to include new types of devices, energy efficiency applications and business models that engage retail choice electricity suppliers and energy service providers.
In May 2018, National Grid partnered with EnergyHub to expand its BYOT ConnectedSolutions program — a BYOD project that incorporated energy storage into DR events. National Grid used EnergyHub's platform, which increased its list of approved thermostats from three to eight popular models, and integrated the ability to include BrightBox batteries, a Sunrun solar storage solution, into its BYOD portfolio.
By including storage in its DR program, National Grid can shift the timing of its supply from renewable sources to help manage demand during peak load. Synergizing stored energy discharge with curtailed demand from adjusted thermostats allows National Grid to remain flexible during periods of peak energy demand. Further, granting multiple technologies entry into the program has increased National Grid's goals for customer participation to 30,000 residential devices enrolled by 2021.
The utility suspects that many enrollments will come from the retrofitting market as individuals with existing thermostats secure — or customers already with solar installations decide to optimize — their system by investing in battery storage capabilities.
Xcel Energy's AC Rewards DR program offers customers a $25 per year incentive to allow Xcel Energy to remotely control their smart thermostat to reduce energy load during periods of peak demand. The number of customers enrolling in AC Rewards through the BYOD channel is about 50%, larger than initially predicted, allowing Xcel Energy to compare BYOD costs to its other direct-install initiatives.
Where marketing and personnel costs for a hired electrician to install a smart thermostat raise the cost of direct install programs, BYOD does not exempt the utility of all program expenses. Xcel Energy still pays enrollment rebates to smart thermostat owners who sign up for AC Rewards.
However, as the electrician charges are omitted, Xcel Energy finds that a BYOD program is between one-third and one-quarter of the cost of direct install, depending on the incentive structure in a given state. BYOD then serves as a lower cost mechanism to help Xcel Energy achieve its DR targets.
The BYOD market is getting ready for strong growth based on advances in technology, utility willingness to try new means of customer outreach, and a myriad of other drivers for DSM in general and these products specifically.