Technical nitty-gritty
Technical nitty-gritty
Extra technical readings for the extra keen on the 5 incentive types and the mechanics of optimization
Utility demand response • Time of use • Wholesale participation
Carbon intensity & offset • Non-net metered solar
Optimization
Extra technical readings for the extra keen on the 5 incentive types and the mechanics of optimization
Utility demand response • Time of use • Wholesale participation •
Carbon intensity & offset • Non-net metered solar
Optimization
Extra technical readings for the extra keen on the 5 incentive types and the mechanics of optimization
Utility demand response • Time of use • Wholesale participation •
Carbon intensity & offset • Non-net metered solar
Optimization
1. Utility demand response
1. Utility demand response
Utility demand response (DR) programs have been an important component of the U.S. energy strategy since the 1970s, originally designed to balance supply and demand during periods of peak electricity usage. These programs encourage consumers to reduce their energy consumption during peak times in exchange for financial incentives.
Utility demand response (DR) programs have been an important component of the U.S. energy strategy since the 1970s, originally designed to balance supply and demand during periods of peak electricity usage. These programs encourage consumers to reduce their energy consumption during peak times in exchange for financial incentives.
Historically, DR programs relied on manual interventions, like phone calls or radio ads which asked consumers to lower their electricity use over a 3-4 hour period. These had a positive impact, but could be pretty hit-or-miss about how much energy could reliably be conserved given how clunky it was to reach households.
DR programs have evolved significantly since, leveraging smart thermostats and automated control systems. This means a household can enrol to allow their thermostats to be remotely adjusted by a few degrees during peak periods. In return, there are bill credits, gift cards, or prize pool entries up for grabs.
This is a big improvement from the perspective of the grid with higher reliability, but it’s not a great experience for customers. DR programs can be an “all or nothing” automation, you either fully opt-in or out to a 4-degree temperature increase when you receive that notification in the morning. For areas with direct bill credits this could be worth it, but for many folks the 1 in 1000 chance of a $20 gift card isn't all too compelling… This is why it's so important to understand the rules and rewards of DR programs by each utility.
Historically, DR programs relied on manual interventions, like phone calls or radio ads which asked consumers to lower their electricity use over a 3-4 hour period. These had a positive impact, but could be pretty hit-or-miss about how much energy could reliably be conserved given how clunky it was to reach households.
DR programs have evolved significantly since, leveraging smart thermostats and automated control systems. This means a household can enrol to allow their thermostats to be remotely adjusted by a few degrees during peak periods. In return, there are bill credits, gift cards, or prize pool entries up for grabs.
This is a big improvement from the perspective of the grid with higher reliability, but it’s not a great experience for customers. DR programs can be an “all or nothing” automation, you either fully opt-in or out to a 4-degree temperature increase when you receive that notification in the morning. For areas with direct bill credits this could be worth it, but for many folks the 1 in 1000 chance of a $20 gift card isn't all too compelling… This is why it's so important to understand the rules and rewards of DR programs by each utility.
2. Time of use / dynamic pricing
2. Time of use / dynamic pricing
Time of Use (TOU) programs reflect the varying costs of generating and delivering electricity throughout the day. By offering different rates for electricity based on the time of day, TOU programs incentivize consumers to shift energy usage to when electricity is cheaper. This can give flexible households more control over their energy costs.
Time of Use (TOU) programs reflect the varying costs of generating and delivering electricity throughout the day. By offering different rates for electricity based on the time of day, TOU programs incentivize consumers to shift energy usage to when electricity is cheaper. This can give flexible households more control over their energy costs.
Common structures for dynamic pricing are on/off peak period or hourly pricing - but there are many variations in the USA!
As an example: Arizona’s SRP has 6 core plans and the most expensive on-peak rates are 6x the cost of the cheapest off peak, but you could also opt into a plan where your first 2000kWh are cheaper than the next 2000kWh. Someone living in San Francisco could opt for one of 6 TOU plans offered by PG&E, or the 3 dynamic pricing plans offered by their local community choice association provider.
Knowing the ins-and-outs of your dynamic pricing is critical for appliance scheduling to cut excess costs!
Common structures for dynamic pricing are on/off peak period or hourly pricing - but there are many variations in the USA!
As an example: Arizona’s SRP has 6 core plans and the most expensive on-peak rates are 6x the cost of the cheapest off peak, but you could also opt into a plan where your first 2000kWh are cheaper than the next 2000kWh. Someone living in San Francisco could opt for one of 6 TOU plans offered by PG&E, or the 3 dynamic pricing plans offered by their local community choice association provider.
Knowing the ins-and-outs of your dynamic pricing is critical for appliance scheduling to cut excess costs!
3. Wholesale participation
3. Wholesale participation
Wholesale participation programs allow residential consumers to engage with wholesale electricity markets, these programs used to be reserved for large-scale buyers but improving technologies mean households can now join together and bid into markets as an aggregated block.
Wholesale participation programs allow residential consumers to engage with wholesale electricity markets, these programs used to be reserved for large-scale buyers but improving technologies mean households can now join together and bid into markets as an aggregated block.
Wholesale participation offers the flip side of increased supply - decreasing demand. The aggregated block bid is entered into the market, if the bid meets the market clearing price then households reduce their usage. Direct payment sent to the aggregator to disperse to participants.
These programs are widespread in some regions, like California's CAISO and Texas’ ERCOT. The legislation FERC 2222 means all utilities will have to allow wholesale participation soon, meaning millions more households across the USA will have the opportunity to save even more.
Wholesale participation offers the flip side of increased supply - decreasing demand. The aggregated block bid is entered into the market, if the bid meets the market clearing price then households reduce their usage. Direct payment sent to the aggregator to disperse to participants.
These programs are widespread in some regions, like California's CAISO and Texas’ ERCOT. The legislation FERC 2222 means all utilities will have to allow wholesale participation soon, meaning millions more households across the USA will have the opportunity to save even more.
4. Carbon intensity & offset
4. Carbon intensity & offset
Carbon intensity and offset schemes aim to reduce the carbon footprint by encouraging the use of cleaner energy sources and compensating for emissions reductions. These programs address periods when the power grid relies on high-carbon-emitting sources, such as coal or natural gas, by providing incentives to reduce electricity use or shift it to cleaner periods.
Carbon intensity and offset schemes aim to reduce the carbon footprint by encouraging the use of cleaner energy sources and compensating for emissions reductions. These programs address periods when the power grid relies on high-carbon-emitting sources, such as coal or natural gas, by providing incentives to reduce electricity use or shift it to cleaner periods.
These schemes use data on the carbon emissions associated with power generation, and utilities or third-party businesses offer incentives to reduce power use during high carbon intensity periods. The exciting thing about this type of scheme is that basic market participation is open across the USA, in addition to location-specific schemes.
These schemes use data on the carbon emissions associated with power generation, and utilities or third-party businesses offer incentives to reduce power use during high carbon intensity periods. The exciting thing about this type of scheme is that basic market participation is open across the USA, in addition to location-specific schemes.
5. Non-net metered solar
5. Non-net metered solar
Residential solar has a timing problem for most households – with solar being produced at times it’s not needed as much. An alternative or complement to battery storage is to sell that power back to the grid with net metering and receive bill credits for energy provided.
Residential solar has a timing problem for most households – with solar being produced at times it’s not needed as much. An alternative or complement to battery storage is to sell that power back to the grid with net metering and receive bill credits for energy provided.
Generally, the sell price to utilities is far below the buy price (i.e., the energy tariff) for a household, and the most economical choice is to maximize your own-site consumption. Maximizing energy use during high solar production times will directly reduce the number of kWh a household needs to purchase from their provider – and this is applicable to the majority of utilities in the USA!
Generally, the sell price to utilities is far below the buy price (i.e., the energy tariff) for a household, and the most economical choice is to maximize your own-site consumption. Maximizing energy use during high solar production times will directly reduce the number of kWh a household needs to purchase from their provider – and this is applicable to the majority of utilities in the USA!
How we optimize
How we optimize
WattShift balances millions of data points and equations on real-time and future demand/supply to find an optimal way to control devices across the 5 incentive types.
We do this through a two-stage approach: data aggregation and price optimization.
WattShift balances millions of data points and equations on real-time and future demand/supply to find an optimal way to control devices across the 5 incentive types.
We do this through a two-stage approach: data aggregation and price optimization.
Data aggregation
Our data aggregation system collects and processes vast amounts of information - as an example, here's how the process works for thermostat control:
Market prices and incentive availability: Current and forecasted energy prices, available incentives (of the 5 scheme types) in each geography
Weather conditions: Real-time and predicted weather data
Household data: Indoor temperatures, rate of temperature change and implied thermal efficiency, user preferences, non-HVAC energy consumption etc.
Solar capacity: Available and predictive solar energy production for homes with solar panels
Our data aggregation system collects and processes vast amounts of information - as an example, here's how the process works for thermostat control:
Market prices and incentive availability: Current and forecasted energy prices, available incentives (of the 5 scheme types) in each geography
Weather conditions: Real-time and predicted weather data
Household data: Indoor temperatures, rate of temperature change and implied thermal efficiency, user preferences, non-HVAC energy consumption etc.
Solar capacity: Available and predictive solar energy production for homes with solar panels
Price optimization
This aggregated data feeds into our price optimization algorithm, which distils the complexity of millions of variables to create a unified price curve over time. This price curve drives the thermostat's behavior to create the lowest cost schedule that maintains comfort.
Doing this is no easy feat – for each house this is a linear mathematics system with thousands of parameters every day!
This aggregated data feeds into our price optimization algorithm, which distils the complexity of millions of variables to create a unified price curve over time. This price curve drives the thermostat's behavior to create the lowest cost schedule that maintains comfort.
Doing this is no easy feat – for each house this is a linear mathematics system with thousands of parameters every day!
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