Customer Behaviour (not incentives) Can Shave Peak Demand

Utilities may no longer need to spend millions on residential demand response programmes.
Published: Thu 30 Oct 2014

In the US, utilities spent US$580million on residential demand response programmes in 2013. The value of demand response is immense; avoiding the need for each kilowatt of peak generation capacity is worth on average $94 per kw annually across the 50 states.

Simply ask for a power reduction

But now, a new pilot programme shows that this spend may not even be necessary. It seems that power users are happy to reduce demand simply by being asked. This is according to a pilot Behavioural Demand Response (BDR) programme undertaken by customer engagement and analytics provider Opower.

The findings reveal that even without extra economic incentive, many people are willing to turn down the thermostat when asked. It would seem that generally, power consumers want to conserve when utilities ask them to.

"Behavioural Demand Response will fundamentally change how our clients pursue residential demand response programs," said Opower CEO, Dan Yates. "In partnership with innovative utilities, we delivered reliable demand reduction through the use of behavioural science, big data analytics, and real-time communication on the Opower 5.5: Flex platform. BDR proves that customer behaviour can play a significant role in helping to shave peak demand."

Opower 5.5: Flex continues the company’s investment along the themes of intelligence, personalization, and flexibility. New capabilities include patent-pending customer analytics and automation that deliver better personalization and can scale effortlessly to millions of customers in real-time:

  • Load Curve Archetypes use machine learning to cluster customers based on energy usage patterns. Utilities can create on-the-fly segments to differentiate marketing content to customers based on their load profiles, such as late afternoon peakers or midday users.
  • Non-AMI disaggregation breaks down household usage into heating, cooling, appliances, hot water heating, and other categories without smart meter infrastructure. These insights are coupled with behavioural science techniques to deliver outbound communications that reduce call centre volume, extending the reach of key Opower analytics beyond AMI meters to encompass entire AMI and non-AMI residential service territories at utilities.

  • Visual Segmentation 2.0, the second release of Opower’s Visual Segmentation tool, optimizes customer communications and program enrollment in response to behavioural patterns. For instance, through a new automatic enrollment capability, customers who recently moved into a new home or called a utility call centre are provided tailored and timely communications to meet their unique needs automatically, without the need for a costly, people-intensive segmentation revision.

Opower's BDR service uses AMI data, proprietary analytics, behavioural science, and highly personalized communication. BDR drives measurable peak reduction without a price signal or device in the home.

Across multiple utility partners and 10 events, the cloud-based service delivered consistent and cost effective savings with the overwhelming majority of customers surveyed reporting that they were satisfied with the programme.

In Southern California, when temperatures hit record highs, BDR delivered a residential peak load reduction of 5% at 5 pm local time.

Opower claims that if BDR were deployed nationally, associated peak load reduction could deliver 4,700MW or 113% of the total capacity available today from existing residential demand response programs. Reducing peak demand by this amount is equivalent to avoiding the need to build 94 peaking power plants.

"Behavioural Demand Response is the biggest advancement in residential demand response programs in decades," the company said in a statement.

Traditional DR programmes not as effective

Traditionally, utilities have deployed expensive device focused programs that rely on a thermostat or switch to cycle air conditioning on hot days. These programs depend on outdated technology, are expensive to deploy, and can take years to reach meaningful scale. In fact, less than 5% of households in the US participate in demand response programs today. Using data, behavioural science, and highly personalized communication to drive peak reduction, BDR builds upon Opower's legacy of developing innovative solutions for its utility partners.

The service, which is powered by Opower 5.5: Flex, was deployed on an opt-out basis to over 1 million homes this summer across multiple utilities and Independent System Operators (ISOs) including the PJM Interconnection, the Midcontinent Independent System Operator (MISO), and ISO New England. Glendale Water & Power, and Efficiency Vermont, in partnership with Green Mountain Power, were two of the utilities that deployed BDR to their customers this summer.

"Our goal is to engage our customers at all levels in achieving cost-effective energy savings," said Jim Merriam of Efficiency Vermont. "This innovative demand response offering, implemented in partnership with Green Mountain Power and Opower, gave us an opportunity to reach 32,000 customers immediately with clear and actionable messages that produced short term electricity usage reductions."

Further reading

Opower- Opower reinvents residential demand response, changes economics of smart grid