thermostat competition and home efficiency

Summer is around the corner, and heat waves are known to stretch the power grid to its limits. To avoid the risk of blackouts, grid operators like to have a contingent of electricity consumers that are willing to curtail their usage at the right time … for the right price. This is the motivation behind utility demand response programs. Last year, ClearlyEnergy began tracking these programs to see how much you could earn by making your air conditioner available to the utility on hot summer days.

For households, the traditional approach to demand response has been to allow the utility to put a switch on your air conditioning unit. The utility can then remotely turn you’re a/c off during emergencies, though typically not for more than two hours at a time. For that privilege, utilities pay anywhere from $15 in Idaho to $100 in Maryland.

However, with smart meters and even smarter thermostats, the old-fashioned demand response model is being challenged.

The first new approach is championed by utilities such as BGE and PEPCO in the Mid-Atlantic with their “Peak Rewards” programs, and SDG&E in California with its “Reduce Your Use” program. In the event of an emergency, consumers are asked to nudge their thermostat up themselves by a couple degrees. The incentive is a payment tied to the amount of electricity saved, which is calculated by comparing your actual usage to what-your-use-would-have-been without that little tweak to your thermostat. The action remains entirely voluntary and you can check out this post for a hands-on experience and what it’s like to work in an 85 degree environment.

The second approach is championed by thermostat vendors (think of Nest or Honeywell) and seems to be gaining traction with utilities: Commonwealth Edison in Chicago, AEP and First Energy in Ohio. We have even noticed several competitive power providers including this approach as part of their product offerings. When a grid emergency is called, the utility will automatically bump up your thermostat setting, typically by no more than 4 degrees, less if you’re home and have a know-it-all Nest thermostat (though you can always opt-out or override it back to blissfully cool temperature from the app on your phone). The incentive is similar: payment for every unit of electricity you save or monthly summer payment depending on the program.

Which approach is more effective is yet to be determined, but both approaches allow the homeowner to control their response to the call to action. If you’re away, great, nudge that thermostat way up and earn! If you’re home, maybe just give up a couple degrees for the sake of grid reliability.

Photo Credit: Thermostat Innovation and Competition/shutterstock