As Bob Dylan has sung for the past five decades, “the times they are a changin’”, and this has never been more true in the energy industry. As we respond to the challenges of climate change and the transition to a cleaner grid with a greater reliance on variable renewable energy, we also need to create a more flexible grid. More accurately, we need to make the demand-side a dispatchable resource for grid operators – able to be orchestrated in a perfect symphony by a great maestro. According to Navigant, in 2028 it is expected that 62 GW of demand response (DR) is going to be required in North America, with the residential sector set to triple by 2028. This makes the role of customers in managing supply and demand in the grid more critical than ever before.
Figure 1: The Growth of Demand Response
Meeting the growing demand response needs is no small feat for utilities. One of the main challenges is the competing priorities within utilities (perpetuated by silos of excellence). They’re trying to harness a smart home ecosystem that is evolving rapidly, the goals of individual departments lack alignment, and finding that what worked as a pilot is now not going to scale. As customers become more engaged with energy, they are also expecting a frictionless and rewarding experience that parallels not what leading utility peers are doing, but what Uber, Netflix and Airbnb are providing.
To get demand response right, you need to look beyond the short-term of participation in specific programs to focus on investing in customers as long-term stakeholders in your utility transformation journey. When you don’t, the costs are real. For example, the traditional approach to thermostat demand management programs on average results in 20% of customers opting out of events due to poor experience – which costs you in recruitment costs, costs you in reliable load shift, and makes it really hard to hit your program targets.
But it doesn’t have to be this way.
An End-to-End Approach to Program Design
Identifying that the general approach being taken by industry amounted to a lose-lose for utilities and customers, we created Orchestrated Energy– a nod toward the three steps customers and utility go through as part of a demand side management journey – engage, activate, orchestrate.
Orchestrated Energy is an end-to-end approach to program design focused on three principles for maximizing the lifetime value of customers to drive program success. These include:
- Acquire customers efficiently via Bring You Own Device (BYOD) and utility marketplace channels to make the experience frictionless and enjoyable
- This includes targeting customers with a higher propensity to enroll, and leveraging both native device apps and utility marketplaces to maximize enrollment.
- Behind the scenes, we enable seamless rebate stacking, processing and customer eligibility validation, as well as contractor management for direct install programs.
- Stack opportunities to create value now and into the future, but make it a simple experience for utility and customer alike
- This includes combining drivers – particularly DR, energy efficiency (EE), and rate optimization – within a single program to increase both cost efficiency and unlocked value.
- Through our extensive device partner ecosystem, we offer all of the leading smart thermostats, connected water heaters and electric vehicle chargers.
- Avoid churn with deeper customer experience, continuing to engage and further activate customers to maintain satisfaction and increase value over time
- Knowing that poor customer experience is the Achilles heel of traditional direct load control programs, we’ve taken our experience in behavioral science to ensure customers are engaged through personalized content and comfortable with optimization devices at an individual household basis.
And the results speak for themselves. Across the programs we’ve run in 2018 and 2019 we’ve been able to achieve. We:
- Enrolled 1,500 customers into two Midwest utility DR programs via marketplace on Memorial Day 2019
- Completely met the Consumers Energy 2019 participant target in 1 week
- Achieved an average load shift of 80% or 1.4kW per household sustained over a 4 hour event window, compared to <1kW for typical thermostat vendor DR programs across all our programs in 2018
- Achieved an average of 50-minute run time reduction per day on HVAC on top of the energy efficiency savings that smart thermostats deliver on their own
- Had less than 2% of customers opt out of events, compared to the 20% for industry norms, as a result of our personalized approach to balancing customer comfort and maximum load shift
- Avoided of any post event load snapback which is a common problematic trait of load control switches and typical thermostat vendor DR programs.
A great example of this is the work we’ve done with AEP Indiana Michigan Power on a combined residential DR and EE program. Together in 2019 we were recognized by PLMA with their converted Program Pacesetter award for dramatically shifting peak load and improving the energy efficiency of smart thermostats, all without sacrificing customer comfort.
But we aren’t resting on our laurels. As we look to the near-future we’re expanding out our device ecosystem, increasing supported use-cases, and of course rapidly growing the size and number of programs. As with everything we do though, we are being very deliberate with this expansion. We’re focusing on partnerships with the market leading smart device manufacturers that make up 90% of purchases – across water heaters and electric vehicle chargers to complement thermostats – balancing capability and economics. We’ll also soon be kicking off our first gas DR program, providing a dual fuel year-round DR program – a use case with growing interest and importance.
We Are Just Getting Started
The residential demand management space is certainly heating up, and while we’ve had some great success with our utility partners already, we are just getting started. If you are interested to learn more about Uplight’s best in class demand management solution, contact us!