SGRC Demand Response 4-step plan

SGRC Demand Response 4-step planUtilities with customer engagement demand response (DR) strategies that are supported with analysis of individual programs are much more likely to achieve customer engagement targets and realize utility and customer benefits, says a new study released by the Smart Grid Research Consortium (SGRC) this week.

SGRC says its evaluation of utility customer engagement DR programs has identified new technologies and opportunities for utilities with both advanced metering infrastructure (AMI) and older automated meter reading (AMR) and electromechanical metering systems.

The consortium said this information can be applied to develop a customer engagement DR roadmap applicable to all utilities.

Dr Jerry Jackson, study author and leader of the SGRC, said: “Many customer engagement programs can significantly boost returns by revisiting objectives and revising technology and program choices to more effectively match top down requirements and bottom up capabilities.”

The report – ‘Developing a Timely, Cost-Effective Customer Engagement Demand Response Strategy: A Roadmap for Utilities with AMI and Older AMR/Electromechanical Metering Systems’ suggests a four-step approach to DR.

Step one: Develop customer engagement DR objectives

A list of customer engagement objectives identifies all important outcomes that provide customer value (eg. reduced energy bills, greater control over energy use, etc.) and utility value (reduced wholesale power cost, reduced line losses, etc.). Ascertaining utility and customer objectives is essential in designing cost-effective customer engagement programs.

Step two: Choose the right technology

The study suggests that utilities must evaluate, identify and initiate programs/technology applications that can most cost-effectively meet the objectives in step 1.

Beginning with objectives identified in step one, program developers should attempt to identify the most cost effective paths to achieving these objectives.

In many cases, technologies and resources often support more than one initiative providing significant cost savings. These synergies should be considered in evaluating individual programs. A sample of items that should be included in customer engagement DR evaluations include:

a. Identify DR end-use targets (eg. AC, water heating) based on hourly contributions to system load reductions, required incentives, program costs and avoided power costs. Each utility customer population is unique with respect to appliance holdings, building ages, income, demographics, business size, end-use load contributions and a variety of other factors that help determine costs and benefits for individual programs.

b. Design programs to recognize customer segment wants and needs and likely responses. Different customer segments respond differently to programs and provide variations in program impacts and economics. Recognizing these differences reduces program costs through target marketing, increased participation, more focused messaging, etc.

c. Select appropriate, cost effective technology enablers (hardware and software). A variety of alternative technologies are available for most customer engagement programs. For example, programmable communicating thermostats come with a variety of capabilities with a cost range from less than US$100 to more than US$400 per unit.

d. Consider both in-house and turnkey solutions. In-house, vendor-supplied or a combination of the two can be used to develop most programs. Strategies for individual programs depend on utility resources, vendor offerings and management objectives.

e. Use social media, target marketing, messaging, PR and promotional activities.

f. Consider newer, innovative technology applications, program designs and experiences at other utilities. Evaluating technologies, programs and rapidly evolving experiences at other utilities can uncover important options and benefits.

g. Carefully identify and evaluate supporting data and analytics requirements. For utilities with AMI systems, AMI data provides a wealth of information. Other relevant data is available to utilities with AMI, AMR and electromechanical metering systems including information on individual customers and customer facilities (income, square feet, etc.) through customer list providers like InfoUSA.

IT budgets can mushroom to levels that make some of these programs uneconomical by gathering and processing more customer data than is required. A careful assessment of information resources and utility needs is essential.

Step three: Keep a grip on program costs

Reconcile objectives and applications; calculate costs and benefits, gather preliminary vendor cost estimates. Consider results with various program participation and impact assumptions prioritize program/technology applications, identify applications that require pilot programs.

Steps 1 and 2 match objectives and technologies/programs while step 3 prioritizes objectives technologies/programs combinations to identify those that provide the most attractive benefits/cost relationships while meeting management views of the importance of the various objectives.

Step four: Put DR program into action

Revisit steps 1-3 with this information and adjust the customer engagement strategy as appropriate. Develop a timeline to ensure a timely program development and implementation schedule.

Timeliness is important as delays in developing and implementing programs bypass savings that can never be captured, the report concludes.

READ more: Report: FERC assesses impact of advanced meters and demand response in US