The Home as a Virtual Power Plant: In Crunch Time Who Can Utilities Count On?

Sept. 10, 2013
Will households cut energy use when the grid is in trouble? Utilities aren’t sure. Schneider Electric and AutoGrid say that they can make it happen.

A single home as a virtual power plant isn’t impressive. But aggregate households together – especially in the right combination – and utilities have a sizeable demand response resource when real power plants fall short.

That’s the thinking behind a partnership recently announced between industry giant Schneider Electric and up-and-comer AutoGrid Systems.

Schneider brings to the collaboration its Wiser home energy management system and AutoGrid brings its utility Energy Data Platform. The technology pairing is meant to engage consumers in demand response, while giving utilities deep and immediate insight into household energy behavior. Utilities can use the information to figure out exactly what household groupings they can count on – and when – for demand response.

The deal comes as residential demand response grows in market importance. Large commercial and industrials are still the behemoths, but homes are increasingly seen as important players, especially on hot summer afternoons.

“The low hanging fruit of very, very large commercial and industrial facilities is sort of dwindling,” said Yann Kulp, Schneider Electric’s vice president of strategy & business development, in an interview. “If we want to go further into demand response and conservation, utilities and the market have to go toward smaller and smaller buildings, down to residential. That is where untapped opportunities reside.”

Schneider’s Wiser system offers the homeowner the smart grid goodies we hear so much about these days, such as in-home energy displays and remote programmable thermostats, all Zigbee-enabled. AutoGrid’s platform handles the deluge of energy usage information sent by smart homes to utilities. The software allows the utility to immediately slice and dice the data, make sense of it, and form a demand response strategy.

Utilities then get a good idea how various household groupings – geographic or other – are likely to respond in the future when the grid needs energy reduction. Utilities know who to call upon under various scenarios.

This helps overcome one of the key obstacles to voluntary residential demand response: predictability.  Utilities find households “hard to manage and hard to rely on during crunch time,” said Amit Narayan, AutoGrid’s CEO. ‘So by analyzing the behavior of individual customers at different times they can make these programs more dispatchable.”

In short, utilities can treat homes more like generators, he said, a resource to call upon when the grid needs power.

Utilities can also use the data for more targeted marketing. The information provides insight into who will respond to price incentives and who are  “freeloaders” – those who  might take the incentives but not conserve energy when asked, Narayan said.

Meanwhile, inside the home Schneider’s Wyser devices provide colorful displays and controls to charm customers and get them interested in managing their energy.

This helps overcome another obstacle to demand response: the disinterested consumer.

“We’re no longer in a mode when a utility can impose a solution and say, ‘This is the way it is going to work.’ It has to be sold to the homeowner. We really have to have something that is engaging,” Kulp said.

As part of the deal, Schneider also will resell AutoGrid’s Demand Response Optimization and Management System (DROMS), a cloud-based demand response service, to utilities and energy service providers in North America. (See this article about use of DROMs in Texas.)

The two companies are now piloting their system through a utility in the Eastern US. The utility’s name has not been made public.

This kind of technology appears to open the way for growing market innovation in the demand response arena. One intriguing model is the household aggregator, a competitive company that groups together households, sells the negawatts or peak reduction to the grid operator or utility, and then shares profits with homeowners.

It’s not clear if this model will take off or not. The business of residential demand response continues to evolve and take shape.  That’s why Schneider and AutoGrid see promise in their system. It gives utilities the flexibility to experiment. What will come of this, we will all watch with interest, as households increasingly cease to be just electricity consumers, but become virtual electricity producers as well.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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