Bring your own thermostat demand response programmes –a $3 billion market

Utilities must ensure interoperability with multiple thermostat brands and learn to work with vendors more as partners than contractors.
Published: Wed 14 Sep 2016

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Today's consumers want more choice in how they participate in demand response programmes and what devices they use to participate with the features that they prefer. This is according to Navigant Research which has just carried out an analysis of bring your own thermostat (BYOT) demand response (DR) programmes in the US market.  

BYOT refers to utility policies that allow customers to purchase their own device from a number of potential vendors but still participate in demand response (DR) and other load-curtailing programmes which are still managed by the utility. The report highlights that with 50,000 customers currently participating, plus drivers such as lower adoption cost, demand for customer choice, and improved synergies with dynamic pricing programmes, BYOT programmes have the potential to continue to grow significantly. In fact, the customer base for BYOT DR programmes is estimated at 20 million, representing a $3 billion market.

“Utilities across the United States have been piloting BYOT DR programmes since 2012, supplementing legacy direct install strategies that use pre-selected one-way thermostat models,” says Brett Feldman, senior research analyst at Navigant Research. “By taking advantage of two-way communicating smart thermostats, BYOT DR programmes can help utilities reduce acquisition costs for load curtailment programmes and improve customer satisfaction.”

Ensuring interoperability of thermostat models

Because today’s customers want more choice in the devices they use to participate in DR programmes,utilities should be offering more than one thermostat model, according to the report. As numerous technology vendors develop user-friendly thermostats, utilities also need to ensure interoperability with multiple brands and learn to work with vendors more as partners than contractors to maintain solid system interaction and customer service.

To ensure a grid of the future, utilities must adopt a “BYOD mentality” that ensures legacy technology systems and smart meter networks work with all the latest gadgets out there. Interoperability, flexibility and choice are paramount if utilities want to be around in the future. Devices must work flawlessly across today’s Green Button, HAN, ZigBee, OpenADR and Wi-Fi standards -- as well as standards that haven’t even seen the light of day yet.

There are extra benefits to adopting the BYOD approach. Firstly, all devices connect with the smart grid, which means that utilities can run more programmes with even more customers. Added to this is the fact that utilities essentially get a free infrastructure (ie.paid for by their customers).

Customers want hassle-free & flexibility

By allowing customers to bring their own device helps build a consumer-friendly brand, demonstrating a commitment to providing a hassle-free approach to helping customers save money.

Increasingly, surveys reveal that engaged customers are better customers which inevitably helps utilities to achieve their goals, reduce operational costs and thrive.

A great example of this in action is the platform that utility San Diego Gas & Electric (SDG&E) has rolled out. Their customers can connect a range of pre-approved energy devices to SDG&E’s smart meter network. Customers gain immediate visibility into their energy consumption while retaining convenience, control and comfort.

At the same time, SDG&E maintains a digital touch point with its customers and can better target them for more efficient demand response and energy efficiency programs.

It’s a classic win-win.

While devices will come and go, an exceptional experience is what will keep consumers from leaving. BYOD is critical when it comes to helping utilities expand their infrastructure, improve customer relationships and run better demand response programmes.

Flexibility and interoperability in an unpredictable and complex energy future will be essential to revealing the real potential of the smart grid.

We discuss the latest demand response trends in both the UK and US in our webinar, The Demand Response Masters - EU vs USA Perspectives which forms part of our 'Demand Response' In Focus track on Engerati. Follow this link for more insights.

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