Balancing the grid - a challenge for future electricity distribution.
An extreme hot wave hit Europe, Southwest USA and parts of Asia this summer. The records are a scorching reminder that we are really experiencing climate change nowadays. Doctors warn people about negative effects on health caused by hot weather. In the meanwhile energy experts alarm that the security of national grid is highly dependent on the changing weather. Climate change is projected to have severe impacts on the frequency and intensity of the peak electricity demand across the United States.
The U.S. Energy Information Administration (EIA) estimated that in 2016, space cooling (air conditioning) was 18% of the annual household electricity use, followed by water heating - 9%. Typically, monthly home electricity consumption peaks in July and August when temperatures and cooling demand are at its highest. These demand peaks put significant stress on the electricity grid and increase the chance of blackouts. Additionally, a new record was set in March 2017 where wind and solar power accounted for 10% of the total electricity generation in the US (wind - 8%, solar - 2%, EIA’s Electric Power Monthly).
In fact, there are two types of peaks: supply peak caused by renewable generation and demand peak caused by residential consumption. Usually, these peaks do not coincide and it is a real technological challenge for grid operators to find the balance. A possible solution is an investment in additional reserve generation capacities but this will raise electricity prices for consumers and could also cause additional negative climate effects. However, smart grid technologies could give a better solution. Advances in batteries or the use of electric vehicles or water heaters for storage would reduce fluctuations. As such, although average generation would not be directly impacted, peaks would diminish.
According to the EIA’s definition, Demand response is the opportunity for electricity consumers to intentionally shift or reduce their load either in response to price signals or in exchange for an incentive. New smart appliances and technologies are now empowering smaller consumers (or energy service providers on behalf of consumers) to manage their own electricity demand. In 2015 the U.S. House of Representatives passed the changes in Energy Policy and Conservation Act (EPCA) in order to provide additional energy conservation standards applicable to grid-enabled water heaters for use as part of an electric thermal storage or demand response program.
Demand response strategies
Water heaters are considered to be behind-the-meter “flexible load”. The authors of the report “The Hidden Battery Opportunities in Electric Water Heating” describe three possible strategies:
- Peak Shave - the water heater is managed from a distance only for a limited number of days of the year when the system peak is likely to occur.
- Thermal Storage - on a daily basis the water heater heats at night and then is curtailed during highest priced hours of the day. This strategy is used to capture energy value through energy price arbitrage.
- Fast Response - the water heater offers frequency regulation into the wholesale ancillary services market while heating water during off-peak hours, on a daily basis. The water heater responds to a signal from the system operator and in a matter of seconds can increase or decrease load depending on the need.
Grid operators can apply each of the three demand response strategies with the help of the smart water heater controller Bobbie, the device which turns any water heater into grid interactive water heater (GIWH). Bobbie has an open API and shows how much energy could be stored in the water heater. It allows ON / OFF functionality from distance.
Although demand response may still sound theoretical and regulatory proceedings have just been applied there are quite many pilot projects that prove the efficiency and economic benefits of demand response strategies.
See real use cases for demand response projects with water heaters here:
Auffhammer, Maximilian, Patrick Baylis, and Catherine Hausman. 2017. “Climate change is projected to have severe impacts on the frequency and intensity of peak electricity demand across the United States”. Proceedings of the National Academies of Sciences. 114 (8) 1886-1891. http://www.pnas.org/content/114/8/1886.full.pdf
EIA’s Residential Energy Consumption Survey (RECS) https://www.eia.gov/consumption/residential/
EIA’s Electric Power Monthly, June 2017 https://www.eia.gov/electricity/monthly/
Ryan Hledik, Judy Chang, Roger Lueken, 2016, “The Hidden Battery Opportunities in Electric Water Heating” https://www.eenews.net/assets/2016/02/10/document_gw_03.pdf
How Utility Companies Can Benefit From Smart Home Devices
Electricity demand is slowing down
DER solutions and independent communities
Energy efficiency policies help households save money on energy bills
- 82 % from interviewed customers would be more satisfied if offered an in-home system that automatically limits electricity usage at peak periods.
- 79% percent would be more satisfied if offered an in-home device providing energy usage feedback and suggesting customized products and services.
- 61 % would sign up for an app that can remotely monitor and control home elements
The “utility death spiral”
- Demand response: Smart thermostats like Nest or devices like Bobbie help utility companies to develop demand response programs and shave the peaks, as well as lower the costs for balancing the grid.
- Customer behavior tracking: through smart home devices utilities can collect ” behind -the- meter” data about their customers’ behavior at home and develop personalized tariffs and energy engagement programs.
- Sales business opportunities: already many utilities are selling third party’s smart devices and products to their customers and thus generate additional revenues, e.g Italian multi-utility Estra, San Diego Gas and Electric, Scotish utility, etc.