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Are You Ready for the Utility to Control Your Thermostat?

The day is coming when utility engineers will reach into homes remotely to shut off air conditioners for brief intervals during periods of peak demand. Fortunately, it will not be as frightening as it sounds.

Base Load and Peaking Plants

Most electricity is generated by base load plants. In the past, base load power plants were largely coal fired, hydroelectric, or nuclear. Utilities rely on them because the electricity produced by base load plants is cheap. The trade-off is base load plants ramp up their output slowly and/or in steps. It’s impossible to simply flip a switch and get more power from a base load plant. As demand ebbs and flows, a variable type of generation is needed to balance supply against demand. These are peaking plants.

Peaking plants supplement base load power plants. Typically peak load plants are oil or natural gas turbines. The turbines can be brought online quickly and also, throttled back quickly, giving utility engineers the ability to respond to surges in demand.

The Changing Energy Mix

To reduce particulate and greenhouse gas emissions, regulators are trying to reduce our use of fossil fuel power generation. In particular, regulators have targeted coal. This is somewhat problematic for utilities because coal is abundant and inexpensive.

The challenge is finding a replacement for coal plants. Hydroelectricity is a clean, reliable, renewable energy source, but environmentalists are resisting the construction of additional dams due to their impact of fish and other wildlife habitats. Nuclear energy is also a source of clean energy, but nuclear plant construction is unlikely in the wake of the Fukushima nuclear power plant accident in Japan.

There is growth in gas, which is the cleanest fossil fuel. Due to new extraction technology, North American natural gas supplies are surprisingly abundant. Yet, gas is still more expensive than coal and unlikely to bridge the gap of diminished coal capacity.

Environmentalists and many in the government hope to replace fossil fuel generation with renewables, particularly wind and solar. Large scale projects are in place and underway for both technologies, though environmental concerns are impeding both technologies. In scale, both carry large physical footprints, require new transmission lines, and in the case of wind, threaten endangered birds. Nevertheless, the use of wind and solar is increasing and changing our energy mix.

Utility Planning Challenges

Because wind requires the wind to blow, but not too hard, and solar requires the sun to shine, both technologies are variable. While meteorological forecasting can help utility planners anticipate periods where wind and solar will be unavailable, the forecasting is not perfect. When wind and solar are added to the base, engineers are confronted with the need to balance demand with supply, but with base load supply that might unexpectedly drop out of the mix.

Controlling Demand

Since electricity demand varies throughout the day, utilities have long employed “demand side management” (DSM) strategies to reduce demand to avoid adding supply capacity. Some DSM strategies take the form of incentives for purchasing energy efficient heating and air conditioning, installing local solar, weatherization, and so on. Others are behavioral, using “time of use” (TOU) rates to encourage businesses to shift electricity usage from periods of peak demand to off-peak hours. TOU rates offer incentives. Demand charges, based on the total demand of a commercial or industrial business represent punitive measures. TOU and incentives are the carrots. Demand charges are the sticks.

Now, utilities are exploring new residential DSM strategies, including TOU rates where homeowners can save money by using their dishwasher and laundry equipment at night instead of the day. Other incentives will be introduced for smart thermostats that the utility can control remotely. By shutting off the air conditioning across thousands of homes for brief periods of times, utility engineers can reduce peak demand. Engineers believe homeowners will not even notice. To date, field tests confirm that homeowners are unaware when utilities turn off the air conditioners for participating homeowners.

Will the utilities control your thermostat in the future? Some industry experts believe it’s only a matter of time before this becomes mandatory. Perhaps. In the interim, utilities will entice homeowners to relinquish a little control with better rates and other savings.