Opower, the company which brought behavioral demand response into the demand management lexicon, announced this morning it had scaled up its platform to reach 1.5 million homes this summer. And as the program expands – utilizing personalized communications and data analysis in place of direct-control technologies – utilities are increasingly viewing the the “behavioral” aspects of demand response as a cost-effective add-on to their traditional programs.

“Utilities are looking at behavioral demand response as a component of their broader demand response portfolio,” said Opower's Nick Payton. “We're starting to define a couple of different use cases, and utilities are using it to meet their particular needs.”

Opower has now expanded its behavioral demand response offering to utilities including Commonwealth Edison, Glendale Water & Power, Baltimore Gas & Electric, and Consumers Energy. And as power providers increasingly look for ways to avoid building costly new generating facilities, behavioral demand response – with or without a time-sensitive pricing component – starts to look like an affordable solution with potential benefits beyond load shifts and reductions.

“Part of the expansion we've seen is customers who want to use that data, from before and after a peak event, as a resource in their demand management portfolios going forward,” Payton explained. And because Opower's solution can be rolled out to large swaths of customers without additional infrastructure, it makes the platform quickly scalable.

BDR 1.0

Opower's announcement essentially marks the end of two years of pilot programs that tested how consumers would respond to a simple request from utilities: Please use less power.

For utilities which subscribed to Opower's platform, the company would take smart meter data and use it to develop personalized communications urging customers to curb their usage on peak days. No variable pricing was necessary, and the platform required no direct-load control technologies. All the company said was “please.”

The results were surprising, and have set up Opower's recent expansion in the United States as well as internationally. The average customer reduced usage by 3% – and the number went up to 5% on the hottest days of the year — all without price prompts. 

Last year the company estimated that if its behavioral demand response program were deployed nationally, associated peak load reduction could deliver 4,700 MW.

BDR 2.0

“What we've really spent time investing in is a real-time communications platform that can pull in a bunch of customer data, analyze it and send personalized communications to customers before and after a peak event,” Payton explained, of the company's new phase. 

Once the utility determines that a peak event has been scheduled, Opower sends out millions of communications over the span of a couple of hours. The company can send the alerts out faster, but determined spacing them out garnered a better response.

And the second communication, after the peak event, is vital. “It will provide a feedback loop that tells them when they need to save electricity and then tells them how much they saved, encouraging them to do better next time,” Payton said.

While Opower's platform is designed to be used without a time-sensitive rate, it works even better when one is in place, though just how much so is unclear. The platform was rolled out to Baltimore Gas & Electric in 2013 and saw average savings of 5%, with that number increasing in 2014 as it was deployed to about 800,000 customers with peak-time rebate rates.

Now, Opower's BDR will be used to connect with 1.1 million BGE customers, all of whom are on a variable rate, which will produce a credit for power reductions.

“We've only tested paying them for savings,” Payton said. “But we actually see a bump when we add a rate schedule.”

Though Opower is not yet making the numbers public, Payton said “it looks like we saw increased percentage savings the second summer.” BGE saw over 200 MW of demand response by engaging around peak events. 

“The value back to them is tough to quantify,” Payton said. “But they're avoiding the need for about four peaking power plants.”

Payton later clarified that the difficulty comes from from Opower not having the published results of the pilot program with BGE last summer, but that more information about the results is forthcoming. 

“With this type of scale, we are able to accurately quantify peak reduction,” he said. “Savings were significant in 2014, and more detailed results will be available in the coming months.”

The value proposition for Commonwealth Edison

Increasingly, utilities are focused on giving customers more control of their power bills. “Our objective is to put control in our customers’ hands,” said Val Jensen, senior vice president of ComEd's customer operations.

This summer the utility will launch its smart meter-enabled program called Peak Time Savings, backed by Opower's BDR platform. Under the program, customers can earn a $1 credit on their electric bills for every kWh of demand reduced during peak hours. Jensen said the utility had been hoping to enroll 30,000 customers but has seen demand quickly outstrip that.

“We're in an interesting situation,” Jensen said. “As a distribution-only utility, we don't have the same capacity concerns. We buy our capacity on the market from PJM.” So demand response “is not an immediate value to to us. It's an opportunity for customers to have more control. It's about source of value to customers trying to manage an energy budget.”

As the utility space continues to evolve, the utility role will change and may include leveraging additional partners.

“Ultimately, as a regulated utility, we depend on people's perception of the the value of our service,” Jensen said.

Variable pricing: the future of demand response

Increasingly it looks as though time-sensitive rates which reflect the higher cost to provide power during peak times. Alternative payment structures and rates are gaining traction around the country, but the concept that rates should better reflect the price of power when used may be central to utilities convincing customers to use less electricity.

“I'm confident we'll see a move toward time-variant rates,” Payton said. 

“The big difference is in the technologies,” he said. "Advanced metering infrastructure is enabling so much more in terms of sending better price signals, which are necessary to better integrate renewables, distributed generation and electric vehicles."

"If you look at those technologies," Payton continued, "they are still less than 1% penetration around the country, so I actually think the move will be an opportunity in the near-term."

Already, California is considering time-of-use rates in a proposal to reform how electricity is sold by investor-owned utilities in the state.

And a two-year pilot program testing time-of-use rates at Sacramento Municipal Utility District has led the provider to believe it will request making a variable the standard in 2018. But as Manifest Minds founder Carol Stimmel told Utility Dive, making variable rates function depends on how the pricing is set up. In areas where there is little difference between peak and off-peak power prices, the incentive can be tough to create. “Your pricing scheme really needs to reflect that,” she said. “What makes a price shift compelling?”

Opportunities for BDR

With or without a variable rate backing it, Payton said there are opportunities for behavioral demand response to expand. While average savings of 5% or more could eventually be pushed higher through better data analytics or communications, the real growth potential is in expanding the program as widely as possible.

“Our first priority is scaling,” Payton said.

While an opt-in user to a demand response program might reduce consumption dramatically more than 5%, the volume of customers involved in a behavioral demand response program more than makes up for the difference.

“We are focused on updating our platform and the ways we communicate with customers to try and drive even deeper redictions, but the primary opportunity is scale,” Payton said. “You see less than 10% of homes participate in a demand response program, so this is a resource that with a snap of the fingers can reach 100% of customers. ... it's really a way to compliment other demand response savings that are out there.”

Payton also said Opower sees a natural alignment between its product and what states are doing to encourage efficiency and demand reductions.

“Energy efficiency creates lost revenue. [Behavioral demand response] creates less lost revenue, and you're still getting the value of peak shaving for planning purposes,” he said.