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How demand flexibility is about to transform electricity delivery

Automated energy efficiency, dubbed ‘flexiwatts,’ could change how we consume energy for good


Solar and battery storage are commonly noted as the biggest threats — and opportunities — for the utility business model, but a new report shows that when consumers use their electricity may matter just as much to utilities as if they produce it themselves.

The potential for utility customers to dramatically reduce their energy consumption with less than a $1,000 dollar investment in home energy management devices could put a big dent in utilities’ bottom lines unless they figure out how to leverage the new technologies in a way that benefits both consumers and themselves

“The key to changing the balance of power between utilities and their customers is the customers’ ability to control when and how they use electricity and for that demand flexibility is very important,” explained Rocky Mountain Institute (RMI) Principal James Mandel, co-author of the new report “The Economics of Demand Flexibility; How “Flexiwatts” Create Quantifiable Value for Customers and the Grid.”

Flexiwatts come from demand flexibility (DF), which is using “communication and control technology to shift electricity use across hours of the day.”

The premise is to use smart technology to move things like air conditioning, water heating, and electric vehicle charging to times when load is lower and electricity is cheaper. Devices now have the capability to control those functions and can be programmed to know when the lower price periods are.

“Demand flexibility need not complicate or compromise customer experience,” RMI reports. “Technologies and business models exist today to shift load seamlessly while maintaining or even improving the quality, simplicity, choice, and value of energy services to customers.”

This is the third paper in RMI’s series on how solar PV and batteries are can lead to load defection by electricity users and, ultimately, grid defection by customers if utilities do not adjust.

The first analysis predicted increasing load defection, which is the growing use by customers of electricity they generate with their onsite distributed generation and save in their onsite storage.

The group also forecasted the possibility by the 2020s and 2030s of increasing grid defection, which is customers moving to 100% self-supply. That could happen, the papers suggested, if utilities’ only response to falling costs for distributed energy resources [DERs] like solar PV plus batteries is increased electricity rates.

A utility business model that accurately values DERs “can potentially lower system wide costs while contributing to the foundation of a reliable, resilient, affordable, low-carbon grid of the future,” the load defection study explained. But if utilities’ plan for the future is just to build more infrastructure on both sides of the meter, their costs could be significant.

Customers are going to invest in DERs, Mandel said. If utilities don’t send the right price signals, customers will invest “in a way that serves their own best interests instead of a way that serves system-level best interests.”

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