colorado rural electric association energy innovations summit demand response: are customers ready...
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Colorado Rural Electric Association Energy Innovations Summit
Demand Response: Are Customers Ready to Change Their Ways?
Confidential
October 27, 2014Dr. Stephen George
Senior Vice President
Customer Strategy, Planning and Analysis
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Energy Software
Utilities Services
Energy & Chemical Advisory
3Confidential
Energy Expertise across the Globe
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Global Offices
Headquarters
Project Offices
Representative Offices
Planned 2014 Offices
Energy and software specialists,
many recognized as leaders in the industry 600+
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A Diverse Customer Base
UtilitiesEnergy
CompaniesTransmission &
DistributionFinancial &
Private Equity Government
And many more…
5Confidential
Utility Services
Focused Expertise
Customer Business Strategy
Customer Initiatives
StrategyPlanning
and DesignDelivery and Management
Evaluation, Measurement & Verification
(EM&V)
Nexant helps utilities embrace a
customer-centric model that
aligns demand side programs,
and strategic planning to
reduce costs, manage risk,
improve customer engagement,
and achieve superior results.
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Customer Strategy, Planning and Analysis (CSPA)
We help utilities, regulators and
others understand how markets
work and what customers want and
need
We translate that information into
successful business strategies,
policies and service offerings
Confidential
• EE, DR and behavioral
conservation planning
• Potential analysis
• Portfolio strategy
• Program design
• Pricing strategy
• Design, implementation and
evaluation of experiments and
pilots
• Assessment of new technology
and service offerings
• Impact and process evaluations
• Economic analysis
• Cost effectiveness analysis
• Reliability and resiliency improvement impacts
• Impact of distributed energy resources
• Integrated resource planning
• Validated learning (test and learn)
• Statistical and econometric
analysis
• Market research
CSPA’s Areas of Expertise Include
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Confidential
Pricing Pay for Performance Load Control• Peak time rebate (PTR) programs
pay customers for load reductions but do not charge more for load increases
• No losers, only winners
• Payments are made using estimates of reference loads based on usage in prior days
• Numerous studies show that baselines are inherently inaccurate and when average impacts are small, payment error is a very large share of total cost
• SDG&E, SCE, BGE & Pepco recently implemented default programs but SDG&E and SCE changed to an opt-in program due to high payment error
• With larger impacts from opt-in enrollment and/or enabling technology, average payment error is much less
• Been used since the 1960s
• For A/C load control, there are a growing number of options – switches, PCTs, smart thermostats
• For the right incentive, customers will agree to 100% cycling, but lower cycling is much more common
• Some utilities (PG&E) have enrolled large numbers of customers for a small, one-time incentive but most programs make annual payments
• Customer-purchased smart thermostats (e.g., Nest, EcoBee, etc.) offer the potential for lower cost options in the future
• Requires teaming with third party suppliers for device control
• Potential loss of control by utilities
• An alphabet soup of pricing options – TOU, CPP, VPP, RTP
• 4 decades of pilots and programs show that customers can and will change their usage pattern in response to time-varying price signals
• Peak period reductions of 5% to 20% are possible with no enabling technology – reductions of 15% to 30% or more are possible with technology
• SMUD’s SmartPricing Options pilot showed that
• 60% to 75% of customers on time varying rates said the rates “helped them save money” compared with 33% on the standard rate
• ~95% of customers defaulted onto time-varying rate stayed and complaints were minimal
• Aggregate load reductions were 3 times larger on default rates compared with opt-in rates
Are Customers Ready to Change Their Ways?
Customers do not “do DR” on their own – but decades of experience indicates that many customers will change their ways for the right DR program
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Dr. Stephen GeorgeSenior Vice PresidentSgeorge@nexant.com415 948-2328
Nexant, Inc.101 Montgomery St., 15th FloorSan Francisco, CA 94104
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