MOUNTAIN VIEW, Calif. — Utilities already have many commercial and industrial (C&I) customers on demand response programs, curtailing power usage during peak times to balance the load over the course of a day, and avoid brownouts and blackouts, in exchange for lower power rates. Smart thermostats offer the opportunity to get more residential customers on board with energy efficiency.

“C&I customers’ cooperation is only part of the solution, as residential users account for 20 percent of U.S. energy usage,” said Roberta Gamble, vice president, Frost & Sullivan Energy & Environment. “In recent years, utilities have been trying to make homeowners more aware of their energy usage and lower their overall usage by incentivizing lower usage during peak times.”

Frost & Sullivan notes that the Tennessee Valley Authority (TVA) is demonstrating the benefits of deploying smarter systems to all end-user tiers. It works with 155 municipalities and cooperative utilities, which resell its power to residential and C&I customers. These utilities are recognizing the value in implementing smarter energy offering solutions such as programmable thermostats that control demand-enabled appliances and save enough energy to bring rates down.

Utilities have only traditionally sold solutions to energy-intensive C&I participants, and they are now realizing that selling to residential customers is a whole new ball game. As cost savings is a huge motivation in the C&I sector, those participants do not back down in allowing utilities control over lighting or a compressor switch in exchange for significant dollar savings. However, residential users are not likely to be swayed by cost savings if it means relinquishing control over various home systems to utilities. They are more likely to be persuaded by the “coolness” of controlling their HVAC through a smartphone.

Utilities have faced several challenges in the rollout of smart meters in their bid to comply with energy mandates, says Frost & Sullivan. While smart meters greatly help manage energy by adjusting the time of use, pricing, and alerting utilities to power outages or unusual usage patterns, their installations have also invited lawsuits from private citizens over the perceived intrusiveness of utilities collecting up-to-the-minute data on their power usage.

“Smart thermostat programs can be a real boon to utility grid and power management, and utilities are creating more customer-focused messages about these programs to reveal their non-intrusiveness,” observed Gamble.

A smart thermostat offers never-before-seen convenience — it either sets itself or has easy scheduling. The homeowner can control it remotely, enabling energy and money savings. Constructing positive and powerful messages around the solution’s smartness and ease of use will go a long way in increasing its appeal among residential consumers, concludes Frost & Sullivan.

Publication date: 9/23/2013

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