Simple tech that saves you money, turns our buildings into giant thermal batteries, and drives a renewable energy future? It’s already here.

When people imagine a carbon neutral, sustainable energy future, most people immediately think of solar panels, wind turbines, and other zero-emissions generation technologies. These are, indeed, an important piece of the puzzle. However, another crucial component of a clean energy system will be found not in power plants or on rooftops, but in mundane technologies that many people use every day: thermostats and water heaters, where a revolution is brewing.

The starting point in this story is to understand that today’s power generation, transmission and distribution systems have large, built-in inefficiencies. The power companies must always be able to supply enough electricity to meet demand, so utilities must have the power plants available, often on standby, to generate enough power to satisfy “peak” demand – that is, times when many users demand electricity at the same time. 

Drax power station courtesy of Ian Britton via Flickr (CC)
Kettle courtesy of Salvatore Lovene via Flickr (CC)

Peak demand might occur on a steamy afternoon in mid-August when everyone is using air conditioning, or during the break of a prime-time TV show. To satisfy that demand, utilities build and maintain “peaker” power plants, some of which may only be used for a few days, or even hours per year. Peakers are, on the whole, rather unwholesome: they waste energy and emit a great deal of pollution. If the peak demand can be lowered, utilities would not need to build, maintain, and operate many of these inefficient and highly polluting power plants.

For some technologies that use energy, a constant flow of power is required to provide service. If the power is cut, lights turn off and escalators stop moving. However not everything has a need for power so immediately. Take the temperature in homes and offices for example: because buildings and water heaters hold so much heat energy, they have what’s called ‘thermal inertia’. If the power goes out, the water in your water heater and the air in your building doesn’t suddenly drop, the temperature can remain warm in the winter and cool in the summer for hours. 

Heating, ventilation, and air conditioning (HVAC) systems and water heaters regularly turn on and off throughout the day, coasting on their thermal inertia in between periods of activity. Today, most thermostats and water heaters are rudimentary: they turn on whenever the temperature of the air or water is higher or lower than a specific, narrow range centered on the user’s preferred temperature. 

But new, intelligent devices can receive signals from the power company indicating whether aggregate demand for electricity is high or low – and they know something about the weather and user patterns as well. The HVAC systems and water heaters can pre-heat or pre-cool on days that will have extremely high demand, then shut off during those peak periods – and these adjustments are all but invisible to occupants.

In effect, our hundreds of millions of buildings can become a thermal battery, managing their demand to balance out the electric system.

This is a very lucrative business opportunity. Companies like Honeywell, Johnson Controls, and Google’s Nest Labs have realised that utilities will pay them to install these smart control devices in many buildings and use them to help reduce peak demand. These companies provide a service called “demand response” – that is, adjusting demand in response to the utility’s needs. The utility saves money, because paying for demand response is cheaper than building or maintaining the additional power plants otherwise needed to meet peak demand.

Nest courtesy of Flickr CC_Nest photostream

And, increasingly, the demand response companies are sharing some of that money with consumers, to provide an incentive to buy and use smart appliances. Imagine if you were paid, every month, simply for having a smart thermostat or water heater that matches your home’s periods of coasting on thermal inertia with your power company’s needs. This is already a reality in some places where demand response companies have made these arrangements with utilities.

In addition to reducing the need for dirty, inefficient “peaker” plants, widespread use of smart thermostats and water heaters will have another important environmental benefit: they pave the way for more renewables to be added to the electricity grid. Renewables like solar and wind power are variable: their output changes throughout the day based on wind patterns and sunlight. Utilities can send information to inform smart appliances not just when load is high, but also when variable generation declines. This can help adjust power demand to better match the actual electricity output from variable renewables, making it easier for utilities to get a higher percentage of their electricity from renewables, rather than turning to fossil fuels. 

Intelligent thermostats and water heaters can offer an amazing deal: they save utilities money, save consumers money, and create a new market for demand response companies, all while reducing emissions. Ultimately, these technologies may mean your home and your humble water heater become the surprising heroes that are driving a future rich with renewable energy.

Solar panels on roof courtesy of Greens MPs via Flickr (CC)

- This is a guest blog by Hal Harvey and Jeffrey Rissman of Energy Innovation: Policy and Technology LLC

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