Arizona kept the lights on through a summer of crushing heat, thanks to widespread buy-in to smart thermostat programs that prompted customers to turn down their air conditioners when the grid was stressed.
“In July and August, Arizona’s three biggest utilities were able to call on more than 100,000 customers to reduce their electricity use by a total of 276 megawatts during afternoon and evening hours when demand for power was at its peak,” writes Canary Media.
Run by EnergyHub, Arizona’s demand response programs offer incentives and free smart thermostats to customers who agree to let utilities remotely control their home temperature settings when the grid needs relief. Households can “opt out” by manually resetting their thermostats, but this summer, many were willing to sweat a touch more for the sake of grid stability during a gruelling stretch of 43°C+ days, Canary Media says.
“A combination of attractive financial incentives, closely managed customer expectations, and tight integration with utility power grid and energy market operations have certainly helped in Arizona,” the news story states.
The programs include incentives for customers who already own smart thermostats, offering one-time credits of up to US$50 for each enrolled device. Some utilities also offer annual credits worth $25 to $40.
To further encourage customer buy-in, households are not penalized for occasionally opting out. If a customer is hosting a birthday party and wants to ensure guests are cool and comfortable, they should be allowed to do so, said Kerri Carnes, director of customer-to-grid solutions at Arizona Public Service (APS), the state’s largest utility.
This people-centred focus extends to excellent communication channels between the utilities and their customers. EnergyHub regularly emails and texts customers informing them when a request to reduce power is coming, and lets them know how much heat they’ll be asked to take on.
The companies also issue regular shout-outs in praise of their customers’ efforts. The impact of one mid-season message, confirming that turning down the air conditioning had helped keep the lights on across the state, “has been big,” said Jessie Guest, EnergyHub’s strategic client success manager.
And communication runs both ways. In 2022, EnergyHub boosted the annual participation credit from $25 to $35 in response to customer requests. This finger-on-the-pulse approach to customers, the grid, and energy markets has gone a long way towards reassuring utilities and regulators that customers can actually deliver significant load reductions, says Canary Media.
In other states like Texas, efforts are still focused on supply-side measures like highly-polluting, gas-powered peaker plants. But there is much to be gained from tapping into demand-response, Canary says. “A 2019 report from consultancy Brattle Group found that the United States could double its nearly 60 gigawatts of existing demand response capacity by 2030, yielding $15 billion per year in benefits—and largely avoiding the use and construction of additional power plants—with smart thermostats making up one of the largest new sources of capacity.”
Postponing or cancelling extra power plants will also help utilities meet their decarbonization goals. APS plans to rely heavily on distributed energy and demand response to reach its goal of 65% carbon-free energy by 2030 and 100% by 2050, Canary writes.
Those programs also help avoid the increasingly common “last resort outcome” of cutting power to entire neighbourhoods during periods of intense heat and high demand.