Can Free Smart Thermostats Get Homeowners to Enroll in Summertime Demand Response?

For years, utilities have been offeringdiscounts and rebates on
smart thermostats to customers willing to turn them over to air
conditioning load-shifting programs that reduce peak loads on hot
summer afternoons. 

But there’s a big difference between discounts and straight-up
free thermostat giveaways. At least that’s what Michigan utility
Consumers Energy is hoping. 

On Tuesday, Consumers announced it has started giving away up to
100,000 Google Nest E thermostats to customers in a bid to boost
energy efficiency as part of its 50
percent clean energy by 2030
 goals. In exchange, customers must
agree to let energy services provider Uplight remotely control
their thermostats to reduce air conditioner loads up to four hours
per day during no more than 14 of the hottest days per year. 

Consumers Energy is relying on this load reduction to yield as
much as 14 megawatts of peak capacity to bid into the markets of
midwestern grid operator MISO. That’s a conservative estimate,
and could end up being significantly higher, Lauren Youngdahl
Snyder, vice president of customer experience, said in an
interview. 

It’s not as much as the roughly 500 megawatts enrolled in
Consumers’ current commercial and industrial demand response
programs, or the roughly 30 megawatts available from its existing
residential direct air conditioner load control program. 

But with Uplight and Nest able to pre-cool homes by cranking up
AC before peak hours, the new program should be a much more
sustainable and customer-friendly version of demand response than
simply switching off air conditioners. And Consumers’ 1.6 million
residential electrical customers are a far larger prospective
customer base than its roughly 215,000 commercial and 1,500
industrial customers.

That’s where the free offering comes in. Consumers is
discounting the cost of a Nest E, which retails at $169, with a $50
rebate and a $75 demand response payment. The remainder of the
costs are being absorbed by Google and Uplight, which want to prove
they can deliver reliable load reduction and lower customers bills
amid the COVID-19 pandemic, Youngdahl Snyder said. 

Participants can expect to save nearly 20 percent on their
summer utility bills, she said.

Like
other utilities
, Consumers has seen an increase in residential
energy consumption since Michigan put its stay-at-home orders in
place in March, while commercial and industrial loads have
dropped. 

Residential demand response and energy efficiency are one way to
mitigate these impacts, giving utilities and technology vendors an
incentive to find ways to
expand their scope
 and effectiveness before
summer arrives
 to stress power grids and customer utility bills
alike. 

Avoiding the AC ‘snapback’ effect

Uplight, the company formed by the acquisition of Tendril
and Simple Energy
 by private equity firm Rubicon Technology
Partners and investor AES Corp., is
providing
 the online marketplace, customer web portals, home
energy reports and behind-the-scenes analytics for the Consumers
offering. 

Consumers tested Uplight’s offering in a 2,400-customer pilot
project last year. By analyzing how homes retain cooling throughout
the day and adjusting settings to maximize energy reduction without
letting homes get too warm, the program achieved an average load
reduction of 1.2 kilowatts per customer over a four-hour period,
said Justin Segall, Uplight’s chief strategy officer. 

That’s important, given that MISO’s capacity market requires
a consistent load drop for the entirety of that time, Segall said.
Well-orchestrated pre-cooling also limits the “snapback effectâ€
of homeowners cranking up air conditioning and causing new energy
spikes after events.  

This method of pre-cooling homes to limit how hot they get
during demand-reduction periods differentiates Consumers’ new
program from its existing direct load control (DLC) programs, which
simply turn AC systems on and off. Utilities often struggle to
retain DLC customers, since demand response events can leave them
sweltering on the hottest days of the year, said Fei Wang, senior
analyst with Wood Mackenzie Power & Renewables. DLC programs
also rely on utilities installing specialized equipment and paying
customers for participating, as opposed to thermostats already
installed in homes, she said.

Wang noted that Consumers’ goal of enrolling 100,000 customers
is an “extremely ambitious†one. Still, being able to offer
them for free “really removes a barrier,†she said. 

Youngdahl Snyder said Consumers is “going all-out with
customer communications†to boost adoption, via email, direct
mail, radio ads and other marketing channels, and has set a
“conservative†goal of enrolling about 60,000 customers this
summer.

Consumers wants to double energy efficiency from 10 percent to
20 percent of peak capacity by 2030, to allow it to retire coal
plants and reduce its reliance on natural gas peaker plants. That
will require major changes to how customers use energy, including a
shift to summer time of use (TOU) rates that were supposed to start
this year but have been delayed to 2021 to avoid harming customers
under COVID-19 lockdowns. 

Eventually, Consumers intends to expand Uplight’s control
platform to a â€œbring your own thermostat†(BYOT) programs that
can interact with thermostats from vendors such as Ecobee,
Honeywell, Emerson and others, she said. But in the meantime,
“we’re eliminating the first hurdle†to getting thermostats
in customers’ homes. 

Utilities have offered free thermostats in pilot projects, or at
larger scale via federal stimulus grants, as with Oklahoma
Gas & Electric’s 2012 rollout
 of more than 40,000 free
smart thermostats to provide megawatts of peak load reduction. But
the Consumers project is different both in scale and in offering a
well-known brand instead of a lower-cost “white-labeledâ€
thermostat, said Emilie Tullis, Uplight’s head of demand
management solutions.

“That gives us confidence that we can reach these adoption
numbers,” Tullis said.

Source: FS – GreenTech Media
Can Free Smart Thermostats Get Homeowners to Enroll in
Summertime Demand Response?