Demand Response Programs Use Smart Thermostats to Manage Power

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Imagine a wide stretch of interstate with five lanes running in each direction. If you’re driving down that highway early on a Sunday morning when it’s practically empty, those five lanes might seem ridiculously oversized. But driving down that same interstate at four o’clock on a Friday afternoon, you’d find cars bumper to bumper in every lane. In fact, you might think another lane or two would be a good idea!

Supply and Demand

Our nation’s power grid isn’t that different from an interstate system. Sometimes the demand for power is low. During those times, some power plants run at less than full capacity, and others sit idle, like empty lanes on an interstate. On the other hand, sometimes the demand for power is much higher and every power plant in the area has to ramp up to full capacity, like five lanes packed with traffic.

And sometimes the demand for power gets so high that all the power plants in the area can’t keep up. Just like traffic coming to a standstill on a jammed interstate, when the demand peaks, parts of the power grid can come to a halt in the form of brownouts and blackouts.

Peaker Plants

In order to prevent brownout and blackout situations, power companies have traditionally built more power plants. These “peaker” plants are essentially extra lanes for the interstate, ones that might only be needed five to ten days out of the entire year. The rest of the time, they sit idle. As you can imagine, building a power plant is expensive and the costs get passed on to consumers, so building power plants that only run for a week or two every year isn’t great for anybody’s wallet.

But today, power companies have another option. Instead of increasing the supply of power by building “peaker” plants, they can use demand response programs to prevent the massive peaks in demand for electricity from happening in the first place. In a demand response program, utility customers agree to use less electricity during the peak times in order to keep the demand for power lower. Using our interstate analogy, it’s kind of like carpooling!

For example, consider a community that’s having a major summer heat wave. Every afternoon, demand for electricity peaks as the air conditioning in homes and businesses runs almost constantly to keep up with the heat. If the community has a “peaker” plant, this is when it would be brought online.

But with a demand response program, here’s what would happen instead.

  1. As the afternoon heats up, participants in the program would raise the set temperature on their thermostats by a few degrees.
  2. Thousands of households and businesses all making this same change together reduces the demand for power across the grid.
  3. That keeps the grid stable, prevents blackouts, and saves the community money by eliminating the need for a “peaker” plant. It’s a win for everybody!

Smart Themostat Technology

So what does this have to do with smart thermostats? Well, obviously it’s a little tricky to get everybody in a community to manually reset their thermostats at the same time. But if the homes and businesses have smart thermostats, then the change can be programmed in ahead of time or a signal can be sent across the area when it’s time for the set back to happen, causing the thermostats to change automatically.

See Also: Thermostat Settings

Smart thermostat manufacturers have begun partnering with utility companies to develop demand response programs that save customers money and protect the power grid. For instance, Nest has created the Rush Hour Rewards program. Customers of participating utility companies can purchase and install a Nest thermostat, often for free or at a reduced price, and opt-in to Rush Hour Rewards.

When the utility company predicts that they’ll experience a peak in demand or “Rush Hour,” the Nest thermostat informs the participating customer ahead of time and then automatically adjusts the temperature during the Rush Hour. By participating in this demand response program, the customer actually earns payments from the utility company for saving energy. Unfortunately, there don’t seem to be any Alabama utility companies participating in Rush Hour Rewards yet, but hopefully they’ll join the program in the future.

See Also: Ecobee vs. Nest

However, the Tennessee Valley Authority does have the TVA-EnerNOC Demand Response Program available for “commercial, institutional, and industrial customers of local power distributors in the TVA service territory.” In this program, participants voluntarily agree to reduce their use of energy during peak demand times. That includes the use of energy for HVAC as well as other things like lighting and pumps.

TVA describes the benefits of this program as having three parts.

  1. Customers earn payments for their participation.
  2. Customers reduce their overall energy use and therefore, energy costs.
  3. Participating customers help the entire community by keeping energy more affordable thanks to reducing the need for more power plants.

As you can see, demand response programs have the potential to make a big difference for individual homeowners as well as businesses and the community. And smart thermostats like the Nest help to make those programs possible.

See Also: Update Your Thermostat to Save Money and Time
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