Natural gas, water heaters, connected devices and EVs lead DR trends to watch
Peak Load Management Alliance Executive Director Ed Thomas talks about trends in an industry that is being fundamentally changed by energy technology.
Natural gas, water heaters, connected devices and electric vehicles are at the core of some of the top trends in demand response now.
But how did we get here? Utility Dive spoke to Ed Thomas, executive director at the Peak Load Management Alliance (PLMA). The group was founded almost 20 years ago as a forum for people involved with demand response programs.
"A lot of the folks who built these programs to dodge a peak are suddenly saying 'Wait a minute — what if we use that to fill a valley?'" explained Thomas. And whereas peak demand might have been 10 hours a year in 1998 (when PLMA was founded), some utilities are flipping their switches multiple times a day.
"That's not market forces," Thomas said. "That's operational."
Alongside this shift in how demand response is being utilized, there are also more technologies being included under the DR tent. It has morphed into a demand management hybrid that can make for strange bedfellows, said Thomas. Energy efficiency is often paired or bundled with demand response efforts, and increasingly PLMA is seeing interest from solar+storage providers, Thomas noted. They want to better understand the value propositions around peak demand, and learn how to bundle renewables and storage "so they can play in the demand response markets."
"I hope I live long enough to see both of those camps come together," said Thomas. "Unfortunately, we don't usually get all three. God forbid, energy efficiency, renewables and DR would all come together. But we think that's the definition of distributed energy resources."
"Water heater control programs all of the sudden are sexy."
Executive Director, Peak Load Management Alliance
And as utilities change the way they utilize demand response, they are also looking for more connected resources.
A report written by Navigant and the Smart Electric Power Alliance earlier this year found programs focused on air conditioning cycling have the most customers with more than 2.6 million. However, utilities say water heater programs provide more flexibility; they called DR events an average of 36 times per year for water heaters, versus 8 for air conditioning.
"Water heater control programs all of the sudden are sexy," said Thomas.
"The other thing we're seeing, the gas guys are coming to this party — it's not just about electricity. The natural gas folks have peak demand driven by the pipeline [capacity], or if a supply source gets cut off," said Thomas.
"Gas guys have never told people to use less," said Thomas. But increasingly they are facing similar issues and are following in the electricity sector's footsteps.
From gas demand response to reverse demand response, here are several utility programs that highlight these trends and serve as signs of the industry's future.
National Grid's electric approach to gas DR
It is a familiar story for many electric utilities: National Grid has seen flat or declining natural gas demand in its service territory, but still faces a peak demand problem over a very short duration. The utility wants to avoid or delay costly upgrades, and so it is looking at solutions not often seen on the gas side.
In New York City and Long Island, the utility faces a potential constraint between 6 a.m. and 9 a.m. during the winter heating season, from Dec. 1 through Feb. 28. National Grid tapped AutoGrid and IPKeys for a pilot natural gas demand response program. It will launch this winter, sending automated signals to connected direct load-control devices, cycling enrolled customers’ furnaces, boilers and other gas-fired equipment.
National Grid rolled out direct load control devices for furnaces, boilers and other gas-fired equipment in facilities, including city agencies, schools and commercial buildings. As with electric utilities, gas during peak demand times is expensive. And so the rebates offered are significant, running into the thousands of dollars.
Businesses are looking to it as additional revenue, allowing some of them to save substantially. "It is an interesting opportunity for customers to make some additional money," Carlos Nouel, vice president of new energy solutions for National Grid, told Utility Dive.
Reverse demand response in Arizona
Arizona Public Service is taking a novel approach to excess renewable energy generated on its system. In order to reduce curtailments, it has identified specific dispatchable loads which can be called on to use free energy.
The catch is that the loads must be non-essential. For instance, beautification efforts like a town fountain that only runs during negative pricing. During negative pricing periods, consumers able to take the power are paid by generators who want to avoid curtailment. Those revenues are used to help lower bills.
We see opportunities to be able to engage our customers to help better balance the system in real-time, but also absorb negative pricing, which also lowers their bills.
Manager of Customer Technology and Product Development, APS
Kent Walter, manager of customer technology and product development at APS, told Utility Dive that the company sees ample need for new load during the fall, winter and spring, reflecting in negative pricing and steep ramps. A reverse demand response program is one possible solution.
"With the growth of solar generation, load growth hasn't kept up," Walter said. "We see opportunities to be able to engage our customers to help better balance the system in real-time, but also absorb negative pricing, which also lowers their bills."
Water heaters: The hidden battery
There are several utility programs already targeting water heaters. But for the most part, they are batteries hiding in plain sight (or in utility closets).
A Brattle report last year, "The Hidden Battery: Opportunities in Electric Water Heating," estimated there are 50 million electric water heaters in the country — and if put to work properly, they could save consumers up to $200 annually while allowing utilities better control over their load curves. Utilities seem to have taken notice.
This year, Green Mountain Power launched its eSmartwater pilot program, providing up to 540 customers with an Aquanta water heater controller and a Nest Learning Thermostat. Customers pay about a dollar a month, but expect to see much larger savings, up to $145 annually.
And benefits could extend beyond Green Mountain's system. The utility may also be able to aggregate water heaters and provide frequency regulation to ISO New England once the program’s water heating capacity reaches 1 MW.
Continued growth of connected devices
Thermostats in demand response programs are not new, but it is a spot where utilities can double down on a solution that works. The devices are included in new builds and coveted by many homeowners. That creates an opportunity for upgrades.
Kansas City Power & Light partnered with Nest on its "Rush Hour Rewards," aiming to replace 35,000 older one-way devices in the first phase of the program. The utility launched Missouri's first thermostat offering in 2004, but the technology behind smart thermostats has come a long way since then. KCP&L rolled out more than 8,000 thermostats last year.
Commonwealth Edison has been searching for new ways to reach customers. This year, the Chicago utility rolled out a new marketplace where customers can purchase discounted thermostats as part of the utility's "One Million Smart Thermostats" initiative begun two years ago.
The utility targeted 25,000 thermostats during the first year of the program, with an average 300 kWh saved annually for every home with a smart thermostat. It now has about 50,000 smart thermostats in its territory.
The future: Electric vehicles
Earlier this year, the Edison Electric Institute teamed up with the Institute for Electric Innovation on a new report that predicted a major boom in sales of plug-in electric vehicles over the next several years. They expect 7 million of the zero-emission vehicles will be on the road by 2025 — up from 567,000 at the end of 2016.
Utilities already seeing declining load are viewing EV charging as a potential boon. And if the load can be turned into a grid management resource, all the better.
PLMA is going to form an interest group examining "strategic load growth," but Thomas cautioned there are technical difficulties. "Car manufacturers are not imagining a utility might cycle that battery three or four times," he said. Batteries degrade, and customers and warranties they must comply. "There's a lot to be worked out," Thomas told Utility Dive.
But ultimately, EVs as a grid resource will hinge on adoption. Edison Electric Institute Sustainable Technology Manager Kellen Schefter said that to be an asset of grid-scale value, "EVs would need to be at least 5% to 10% of new car sales." Right now, they are around 1%.
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