Energy Efficiency and Demand Response Bundling for Better Results

Bundled energy efficiency and demand response portfolios enable improved energy efficiency and valuable customer service benefits.
Published: Thu 07 Aug 2014

Many view their energy efficiency and demand response (DR) programs as two separate entities, completely independent of eachother even though they achieve similar objectives: reducing demand on the power grid and helping customers manage their consumption more effectively. [Engerati-How to Win a Customer’s Interest in Demand Response.]

Jeremy Klingel, Vice President of Client Solutions at Comverge, explains that when these programmes are implemented separately and measured on a standalone basis, a natural tension may develop as the programs have the potential to cannibalize each other.

However, when demand response and energy efficiency programmes are implemented in an integrated, coordinated manner, they can increase the level of customer engagement and energy reduction significantly. Their impact can also be captured collectively for the purpose of measurement and verification.

“With this approach, the program’s success will mean achieving the goal of shifting the load and reducing total consumption,” explains Klingel.


Programmes working in tandem

Energy efficiency and behavioural-driven peak-time rebates are in many ways the opposite of traditional demand response. When ideally designed and implemented, traditional demand response is unobtrusive to consumers while their energy consumption during peak times is automatically reduced.

In contrast, energy efficiency initiatives and other participatory energy management programs aim to empower consumers with information and technology. The aim of these programmes is to engage and motivate consumers to curtail their consumption levels. [Engerati-Quantifying the Potential of Behavioural Energy Efficiency in Europe.]

Despite the difference between these programs, they actually have the ability to work effectively in tandem and will help utilities achieve the results they need.


Why bundling works

Klingel lists three main reasons why energy efficiency and demand response should be bundled together into the same portfolio:

Mutually Reinforcing Participant Recruitment - Priming customers with messaging around energy efficiency and conservation helps end-users to better understand the value proposition of all programs that reduce energy demand, including demand response. A packaged portfolio can deliver an easy customer journey where customers begin where they’re comfortable.

Dual Management in a Single Interface - Management of energy efficiency and demand response on a single software platform enables coordinated customer and program information so that a utility can speak to its customers with a single unified voice. Disjointed messaging regarding the need to shift or curtail usage versus the need to reduce total consumption will lead to customer confusion, frustration, and ultimately the potential for reduced participation. Integration of energy efficiency and demand response offers notable benefits from a customer service perspective.

Opening New Communication Channels - Energy efficiency and demand response can now be merged in one consumer engagement portal. Trends suggest that these portals, a new way for utilities to communicate with their customers, may be how customers prefer to interact with their utilities. A Comverge survey, undertaken in January 2013, revealed that 57% prefer a centralized location to manage all their utility-driven energy management programs.

The consumer engagement portal that Comverge is delivering to one large utility includes energy efficiency tips as well as demand response load control event messaging. It offers remote thermostat control, incentivized customer opt-ins, and different tiers of cycling that attract a wider variety of participants.

Deep analytics, built into a consumer engagement portal, will help utilities track engagement with every touch of the screen. This will help utilities to measure, improve, and present offers that are proven to be persuasive.

In the future, the consumer engagement portal will also serve as the ideal medium for bundling with other types of home services and consumer offerings.


Integrating Is Easy

A programmable thermostat that enables two-way communications and can be managed from a Smartphone is often the best place to start for an energy program that is seeking to capitalize on integrated energy efficiency and demand response.

With programmable thermostats, customers get a product that they need anyway. It offers them convenience as there is an ability to engage at any level and they will now have a sense of control over a device that is inside their home.

The customer messaging for them can also reflect and reinforce a close integration between energy efficiency and demand response, offering the thermostat as a device that will help consumers save money year-round in exchange for a few hours of energy reduction.

Dynamic cycling strategies and energy efficiency measures enabled by the thermostat, keep consumer comfort levels high while delivering growing value to the utility. From there, utilities can graduate to customer engagement portals that deliver all of the benefits of integration and communication.

For utilities with existing demand response programs, there is good news in that new filings or formalized business cases are usually not needed to improve programs with the addition of two-way thermostats or even customer engagement portals. These program enhancements can be thought of as improvements to existing programs with new marketing channels, better control, and better information coming back from customers.

For example, a customer portal is a great vehicle to launch an introductory behavioural demand response programme such as peak-time rebate by leveraging the regular interaction with customers to provide event notification, as well as results, savings, and feedback for better future performance.

The bottom line on bundled energy efficiency and demand response portfolios is that utilities stand to receive efficiency and customer service benefits. There is a marked customer interest in the two-way technology that such programs are built upon. Also, Low regulatory barriers to entry make it easy to get started.