Five Percent: Conserve Energy

Climate Change Is Important: Energy Conservation is the First Step

August 14, 2010

Electricity Demand-side Management: A Better Use for Monitoring

Category: Economics,Save Electricity,Technology – Tom Harrison – 4:33 pm

Demand for electricity is highest on hot days in the summer, mainly because people, and businesses turn on their air conditioners. Increased demand is pretty easy to predict using a weather forecast.

When you turn on your AC, some generator, somewhere has to work a tiny bit harder — it happens almost instantly and automatically. All of this is entirely invisible to you.

But, in the aggregate, when lots of people turn on their AC and this happens at scale, three things can occur:

  • The generator (power plant) revs a little higher and produces more power, unless it’s at it’s capacity, then
  • The power plant operator ramps up one of the “operating reserve” plants, unless they have already put all the spares online, in which case
  • There’s a brown-out, or black-out

But actually there’s another option: consumers of power could just use less. But how do we know to use less — it’s invisible.

And, would we do anything is we know we were getting to the edge of capacity? What’s interesting is that some customers agree to unplug voluntarily. This link is to a story in the New York Times. It doesn’t surprise me that (some) people are willing to adjust their behavior without monetary incentives. What I found remarkable is how primitive the system for communicating the need is:

On the afternoon before an anticipated surge in demand, e-mails, faxes and phone calls go out alerting those who had already agreed that it is time for them to unplug.

So what if there were a way to automatically inform people of peak events? What if people that turned off appliances did get some economic benefit?

Some utilities have tiered rates based on time or day — the mechanism for tracking usage at a given time is there, at least in some places. In such a system, you pay a higher rate for power used during the day (peak) than for power used at night (off-peak). California has lead the pack on this — remember the rolling blackouts in 2002?

But There’s Efficiency Here, Too

But this turns out to be about more than just keeping the lights on. It’s about efficiency.

The electrical system needs to be highly redundant, plants are built to be able to generate more power than they usually need. The amount of power used during peak periods, whether daily or seasonally is significantly different than in off-peak periods. And more plants are built than are needed. The ones that are idle for all but peak periods are, naturally the older, or less efficient plants. Many factors make delivering all the power demanded during peak time a great deal more costly. Yet with flat rates, we just pay the average cost.

According to this article in Popular Mechanics:

Reserve plants are much more expensive to operate, resulting in large disparities in generation costs throughout the day and year. According to a 2004 report by the U.S. Government Accountability Office, it can cost up to 10 times more to generate electricity during a summer afternoon compared to at night, and the top 100 highest priced hours account for 10 to 20 percent of electricity costs for the 8766 hours in each year.


My College Economics Thesis Lives — Who Knew?

I have written a lot about electricity monitoring, both here, and on Energy Circle.

But it also happens that in college, I wrote my Economics thesis on the general subject of managing use of a shared resource through pricing feedback. In 1984, my shared resource was the computer terminals (a keyboard and screen) on a time-share computer owned by the university which we all used to write our term papers — and a few of us also used for computer programming. At the end of the semester when papers were due, you would have to wait until 3 in the morning until there was a computer terminal available to type on. As I type this blog post on my personal computer, that sure does sound quaint :-).

So my thesis idea was: increase the price (yes, we paid for “computer time” by the hour!) during peak times, and decrease for off-peak times.

The key to making this work was that users had to be aware of pricing so they could schedule accordingly. That would be pretty easy for a computer system, presumably.

And now, 25 years later, a few customers of our electrical system have time-of-day rates, but not rates that are based on anything near real-time demand — it’s night and day rates, all year long. For more “real time” information, according to the NY Times, we use faxes. Not a lot of progress with our electrical grid in the last 25 years — talk about being quaint!

An Electricity Rate Monitor

So back to the electricity monitor. I have a few in my house. They tell me how much electricity I am using. Right now, we’re at 760W. Many have argued that knowing how much you are spending or using at the moment, which current monitors can do is fine, but what do you do with this information? It’s a fair question.

On the other hand, as the NY Times article demonstrates, even primitive methods of letting people know about peak demand periods are effective at reducing consumption. And in the Times article, the utility is not even changing rates, the people turning off lights are just being good citizens.

Imagine a system where the price of electricity you paid was adjusted to reflect the true cost of generating it, at the moment. If you knew you were paying ten times more for electricity on a hot August day than your usual rate, you might take some actions — perhaps wash dishes later, or dry clothing later, or turn down or off the air conditioner, or turn off the lights.

All you need to know is that rates are a higher than normal. Or lower. (And perhaps a lot higher and a lot lower).

(And perhaps if you had solar PV panels on your roof producing electricity at peak hours — you might feel happy knowing you were not only helping the problem, but also paying for your solar panels a lot faster. Eh? What about that?)

If we all had some simple visibility to rates, and rates were adjusted, not just on the super hot days, but on regular days, I would bet that we would all easily adapt our electrical usage in a rather startling way. Sure, you might still use the AC, but you might think a little harder about it.

Getting rates is easy — you have Internet in your house (you’re reading this, right?), so it’s almost trivial to get a device that can tell you what the current rate is … if your utility simply published it. To be sure, not everyone would need to have this — it’s just one plan option. Save money — buy your electricity at market prices!

And, keep in mind that with flat rates, which is what most consumers have now, we all pay those costs one way or the other. We have no visibility to the costs driving our bills, so we just pay the average of the total costs.

Allowing prices to fluctuate according to real costs would lower costs for the whole system, all other things being the same.

A slightly harder part of this is for the electric utility to know how much power you use, and when. Dumb meters only know the “how much” part. Smarter meters are needed to get the “when” part … but they do not need to be true “Smart Meters” to get simple tiered rate — many municipalities have meters that have a built-in clock so they can track how much electricity was used at a given time. But, to get the amount of power used at any given time, eventually you need a real smart-meter. Less than 10% of the US has smart meters now. But once you’ve got that, the rest is relatively easy.

A big idea here is: if you could tell people you were going to give them a way to reduce their electricity bills, this would be a good incentive to embrace smart meters.

By adjusting prices based on demand, and giving people access to pricing information through some in-house feedback, there’s a potentially dramatic change we could make to reduce our consumption smartly.


  1. […] This post was mentioned on Twitter by Links I Won't Tweet, Fabian Brereton. Fabian Brereton said: Using energy monitoring to improve energy efficiency #greensense […]

    Pingback by Tweets that mention Electricity Demand-side Management: A Better Use for Monitoring | Five Percent: Conserve a Little Energy -- — August 14, 2010 @ 11:37 pm

  2. Apropos of this: Power companies in Ontario offer homeowners a $25 credit if they agree to attach a gadget to their central air conditioner which will automatically turn the AC off for a brief time on days when there is extremely high demand. CF:

    Comment by Glaurung_quena — August 15, 2010 @ 11:39 am

  3. Very cool — simple, sensible and automated. Thanks!

    Comment by Tom Harrison — August 15, 2010 @ 3:13 pm

  4. At some point in time after World War II, the Detroit Edison Co. offered a discounted rate to customers who installed an electric water heater that was equipped with a tiered heating system. The full tank was heated during the night, but only the top portion of the tank was heated during the daytime. In the house in which my wife and I rented the upstairs apartment, called an upper flat, in the early sixties, I saw the timer that operated that system. However, it had been disabled to meet the hot water needs of a two family house.

    Also shortly after the war, my parents, also in Detroit, installed a switch that was employed prior to heavy water usage such as Saturday night baths or to fill the washing machine on Monday morning. After such peak need, my parents turned the switch to “Off.” The switch was equipped with a red light to indicate that the switch was in the “On” position.

    Of course Detroit Edison was a more progressive public utility than most.

    Comment by Emil F. Gies — August 15, 2010 @ 9:56 pm

  5. Like Emil, I had a demand-shifting system installed on my hot water heater many years ago. It was an experimental service offered by Commonwealth Edison in MA. When I signed up for the program in the late 80’s (?), they installed a separate meter for the hot water heater and a photocell on the outside of my house so the system could tell whether it was day or night. The control circuit allowed heating of hot water only at night. In exchange for this demand shifting, I was charged a lower electricity rate for domestic hot water (hence the need for a separate meter). I don’t recall that we ever experienced a shortage of hot water even on weekend days when we did laundry on top of showers but then we had a pretty big tank. At some point the experiment was discontinued and my domestic hot water rate reverted back to normal, although the equipment was never disabled by the electric company.

    I had completely forgotten about it until I started paying attention to my electricity use again a few years ago. I discovered the photocell still installed on the side of my house although it had been been painted over the last time we had our house painted. As far as the controller was concerned it was always nighttime so we could now heat hot water around the clock. I’m sure there is a dusty report in the electricity company archives reporting the results of this early experiment in demand shifting.


    Comment by David Fay — August 16, 2010 @ 9:02 am

  6. David, thank-you for your comment.

    Perhaps our power providers should resume such experimental programs. We must find more ways to reduce our electrical consumption.

    My AC is off this morning (I should have turned it off last night.), but if the current weather forecast is correct, I will need to turn it back on later today.

    I am genuinely concerned about global warming because I fear for the environment in which my children and grandchildren will live. We have already wasted too much time. Dramatic climatic changes are occurring that we will be powerless to prevent. We need to act now to minimize further impact. Unfortunately, we humans tend to wait to act until the calamity is already upon us. Our history is replete with such examples.

    Comment by Emil F. Gies — August 16, 2010 @ 9:26 am

  7. It’s kind of sad that all of this stuff was figured out in the 80’s, and even implemented in one way or another … then just abandoned.

    I have a gas water heater now. It has no mechanism to have a setback timer. The idea of keeping 40 gallons of water hot 24 hours a day is a classic example of energy being effectively “free”, at least in our perception. The funny thing is that I have the heater set to the low temperature (115°F, I think) but what happens is that on cooler nights, the water heater goes on at 1am or 2am to reheat the water, then by the time I get up to shower it has cooled off just enough to make for a cold shower anyway — on colder days the water will have reheated before my shower.

    Why can’t we build stuff that is smarter than a stump?

    Comment by Tom Harrison — August 16, 2010 @ 9:32 am

  8. Tom,

    I’m hoping you’ve set your hot water thermostat to 120 degrees or higher. Supposedly, that’s the minimum temperature needed to kill off the bacteria that cause Legionnaire’s disease:

    Energy savings are important but not at the cost of safety.


    Comment by David Fay — August 16, 2010 @ 9:47 am

  9. […] do think the real win comes when monitoring and other actions (such as demand response monitoring) are in place — and these need to be done by the utilities.  Not only does this provide the […]

    Pingback by Energy Monitoring: It’s Not a Passive Thing | Tom Harrison Jr — August 26, 2010 @ 12:49 pm

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