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Grid-Interactive Buildings Part 3: Customer Perspectives

By September 7, 2021Energy Rant
Grid-Interactive Buildings Part 3: Customer Perspectives, Michaels Energy

The first in this series of posts on grid-interactive efficient buildings (GEBs) described the intent of GEBs. The objective is to use buildings to shift, shave, or shed load to improve grid reliability without making expensive investments like peaker plants or electricity storage. Sounds great, but there is more than enough complexity to make that happen, and that is what we skimmed last week.

The list of challenges as noted in DOE’s National Roadmap for Grid-interactive Efficient Buildings is repeated below. We’ll attack the list from the top.

  • Consumer awareness
  • Complexity (Covered 31AUG21)
  • Utility interests
  • Regulatory models
  • Policymaker ignorance

Consumer Awareness

I often use the term “normal people” to describe folks who are not engineers, but the same applies to people who aren’t in our industry. For example, I read a LinkedIn post last week that hysterically ranted about the low adoption rate of electric vehicles. Why is this the case when the choice is so obvious, the guy wrote? I’m not going there today, but people “get” EVs, but they’re not buying, even though fuel cost might be 70% less with an EV. Consumers don’t care.

The same type of challenge is likely to exist for deep GEB penetration in the residential sector. In the context of this section, “consumer” means the residential customer. We’ll cover “customers” (non-residential) later.

Time-Of-Use Rates

One way to transform homes into grid resources is to deploy time-of-use (TOU) rates or electric demand charges for normal people. This was impossible in the days of mechanical spinning meters that required manual reads, but with advanced metering infrastructure and two-way communicating meters, it becomes possible for anyone with a “smart” meter.

Normal people, including my mother, would quickly understand TOU rates and demand charges. It’s like the old TOU phone rates or supply and demand. E.g., a half-liter of bottled water from a case purchased at the grocery store might be 12 cents, while the same half-liter at a concert or theme park might be four dollars. Suck it up, Charlie. A ticket to the Baltimore Orioles (which I recently discovered enjoyed a 21-game losing streak) is one price, and a ticket to the World Series is a thousand times higher.

They’ll get it, but will they care? Would they trade their 30 cent bottles of water anytime, anywhere for six cents now and $10 in a July heatwave? Many people wouldn’t.

Now, let’s say we electrify the home heating market. Some jurisdictions are banning natural gas from new home construction, which is a god-awful idea. Assume home heating is electrified, and we’re all-in with GEBs and TOU rates. Result: Texas^2. You have coincident peak loads, the worst heating efficiency possible, and $10 per kWh electricity. Cost to heat my home on ONE (1) cold day: $2,343.98. No natural gas? Case closed. I mentioned last week that GEBs must include fuel switching in times of desperate need.

This Utility Dive article claims a 6.5% reduction for every 10% increase in the on-peak to off-peak price ratio. But demons are in the details. What is the on-peak period in such a case? Two hours? Four hours? Or 12 hours like many utility tariffs?

Meanwhile, an earlier Utility Dive article says peak savings, as determined by disinterested Ohio State University folks, was only 3% for a giant Southwest Utility that wishes to remain anonymous. Gee, I wonder who that might be – Alpha Papa Sierra? The article says, “researchers found customers who thought they understood the TOU rates, whether or not they did, were more likely to stick with the program. But those who were better-informed and who actually did understand the new rate structure were more likely to quit.” It could be poor design, poor messaging, or lack of information, such as facts that electric water heaters and air conditioners in searing heat are major loads.

Politics of Winners and Losers

Changing from flat rates to TOU or hourly rates creates winners and losers, which is easy to politically demagogue. For example, politically powerful AARP might cause a ruckus because TOU rates hit seniors, and seniors vote. So, someone needs to stand up to those forces. There will be an entire post on regulators, but the first noted Dive article above says, “regulators assume customers cannot understand them and do not have the technology to manage them.” I think that’s butt-covering because regulators don’t want to face the AARP et al.

Demand Rates

Demand rates can accomplish similar behavior as TOU rates, but for all of the above, on-peak is excessively long, whether for metering peak demand or TOU rates. For instance, I just checked one utility’s tariff that showed peak periods lasting eight or twelve hours, depending on the specific customer class. It’s damn hard to avoid something for eight or twelve hours. Why isn’t it three or four hours when it matters? Does grid demand at 10:00 AM matter? Then why is it “on-peak”? There may be a good explanation, but I don’t know what it is.

Customers that have traditionally been on demand rates (non-residential) get it, but they need rates they can work with.


Existing tariffs are no good for GEBs. Customers need stronger price signals, and they need a snowball’s chance in hell of shifting or shaving demand without melting down or freezing solid. Whoa, was that just a triple pun or cliché? You be the judge.

Jeff Ihnen

Author Jeff Ihnen

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