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.