This past summer, something remarkable happened in Southern California.
Consumers proactively reduced their electricity usage on days when system-wide demand was high — without receiving any financial incentive. In fact, on one of the hottest days of the summer, regional power demand dropped by a whopping 5 percent in the late afternoon.
So, how did Southern Californians save energy at a time when usage was expected to peak?
Through Behavioral Demand Response.
Behavioral Demand Response (BDR) combines high-resolution AMI data, rapid-fire analytics, behavioral science, and personalized communications to drive measurable peak demand reduction, without having to rely on a price signal or device in the home. And it’s how a number of leading utilities across the country have effectively engaged their customers to save electricity during the days and hours when it matters most.
California has been a leader in implementing effective demand-side management programs since the 1970s. As its utilities increasingly incorporate behavioral approaches into their technology and customer engagement portfolio, here are a set of key lessons that can guide the deployment of BDR in the Golden State:
A key component of a successful residential demand response program is opt-out design, which helps ensure that participation is readily available to all customers by default.
Why is opt-out design so important? Because, for most demand response programs, customers simply do not enroll in high enough numbers to drive maximum program impact. To date, the rate of participation for residential demand response programs is only around 5%. As a result of this lagging participation, FERC reports that U.S. utilities are only achieving only a small fraction of the potential cost savings and reliability improvements offered by demand response.
As an antidote to this participation gap, customers can be automatically enrolled in certain programs, while being offered an easy and immediate way to opt out if they so choose. Incorporating opt-out design into programs like BDR can lay the groundwork for a significant boost in peak demand reductions across the Golden State.
While important, opt-out design alone isn’t enough to drive a successful BDR program. As California has learned in the past, success for these programs also hinges on awareness and participation.
For example, when one utility in Southern California attempted to deploy an opt-out peak time rebate program to their customer base, they suffered from extremely low awareness rates, ranging from 12-35%. The result was low program participation and no significant energy savings.
What’s the cause of low awareness rates? Often it’s a lack of well-designed, personalized communications.
One key to unlocking utility programs at scale is targeted and personalized communications that clearly explain a program and highlight the full savings opportunity. These types of communications — generated and delivered by a unified and well-designed technology architecture — are the pillars of the Behavioral Demand Response approach.
This past summer offered just a small glimpse of what’s possible for peak demand reduction using platform analytics technology, behavioral science, and personalized communications. But states like California have just begun to scratch the surface of what’s possible. California in particular holds tremendous potential for behavioral DR savings.
Through behavioral demand response, 9.6 million Californian households could help spur more than 620 megawatts of annual capacity savings for the Golden State. That equates to the capacity of about 12 peaking power plants. Avoiding the need to activate those plants represents a huge environmental and cost-savings opportunity for utilities and their customers.