Residential Demand Response Market Gains Interest

The convergence of demand response and energy efficiency is gaining momentum in the residential market.
Published: Wed 12 Feb 2014

Energy efficiency providers and the demand response market are joining to create platforms that will offer behavioral efficiency, load shedding and numerous offers of thermostat aggregation in the residential market. This collaboration has already taken place in the commercial and industrial market.

Comverge is one such company that has recently announced its retail device aggregation platform which forms part of an updated version of its IntelliSOURCE system. The company has been selected by Fort Collins Utilities to implement the innovative residential demand response program. The system relies on customer broadband connections to enable the robust information exchange needed to deploy successful two-way demand response programs.

The technology will be used to enhance engagement between the utility and its residential and commercial customers. The system is to support an ongoing dialog with regards to energy consumption and provide a reliable and easily controlled load resource. Other companies such as AutoGrid and EnergyHub are also entering the market.

Integration will take time

Comverge has already been working with many legacy thermostat manufacturers, such as White-Rodgers and Carrier, and it is in discussions with Nest which has yet to allow its thermostat to run on another company’s demand response platform.

Nest has, however, announced that it will be offering an application programming interface in 2014.

Companies like Comverge will also need to approach third-party vendors, such as security firms or telecoms, in order to create full integration on the platform. Since everyone is at a different stage of the technology evolution, this integration process will take time.

Since utilities appear not to have the desire to build and manage sophisticated home area networks for peak reduction purposes, the market is open to those who aim to be the utility’s gateway to the home.

Competition is good

Companies are also offering services that they didn’t offer before. Demand response providers are offering energy efficiency services to utilities and energy efficiency companies like Opower want to offer demand response services. This means that companies that were once partners are now competing with eachother. This competition can only be good for the customer as the number of energy efficiency and demand response solutions develop.

Solutions will also become more sophisticated and varied. Utilities and consumers will have a wide choice of solutions to choose from depending on what their needs are at a particular time. For instance, the cost of buying and installing thermostats may offset customer churn, whereas for another utility, leveraging third-party thermostats in its territory may be enough to help with peak reduction. Other utilities may need more sophisticated options to entice large residential users them into demand response programs.

Although some utilities are on the look-out for sophisticated platforms, some simply want solutions that target energy efficiency only. Market players like Simple Energy will have access to this market.

Utility can be a challenge

Opower, which has seen significant success with its nearly 100 utility customers explains that the biggest competition is not other companies with tailored energy efficiency offerings, but rather the utility itself. Says Rod Morris, SVP of marketing and operations at Opower, “We still see utilities trying to do it themselves. Just getting risk-averse utilities to accept novel customer-centric platforms, which are the basis of interactions in nearly every other industry, is still a challenge.”