California Discovers the Wrong Approach to Demand Response

January 18th, 2008

The California Energy Commission withdrew a proposal this week to include “programmable communicating thermostats” in California’s 2008 building code. The thermostats would have been a form of demand response technology that would allow utilities to adjust electrical consumption in buildings and homes from a central facility.

The idea there is that by turning down everyone’s air conditioners a little, electricity use can be reduced when the grid becomes strained. Peak-period electricity is expensive both because it has to be bought at “emergency” rates and because it potentially requires more power plants to create the supply.

It is not a huge surprise that the public freaked out about the proposal. It sounds awfully big-brotherish as presented, especially when the technology is reported as “remote-controlled thermostats“.

Still, companies like EnerNOC have done very well offering this kind of technology to major energy consuming businesses. The difference- assuming I understand EnerNOC’s business model correctly- is that EnerNOC pays its customers when the electricity gets cranked down. The utilities spend less on peak-load power, EnerNOC takes a fee for managing the system, and EnerNOC passes on some of that fee to its customers.

The net result: less power consumed, customers save because they are using less, and they get a rebate from EnerNOC on top of that. PG&E rolled out a test program in Stockton offering homeowners a similar deal- I wrote about it here.

California should take a lesson from the private companies using this technology already- or at least spin the idea better. Try again next year.

  • Marie

    There are many other companies in the California market that pay customers to curtail their load when called upon other than Enernoc. Companies like Energy Curtailment Specialists, Inc., Comverge, and Ancillary Services that have a larger piece of the market then Enernoc. If you are going to write about companies that are providing demand response services you should do your homework and find out what companies are out in the market and the value that they bring to the customers.

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