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Executive Summary
Utilities are increasingly turning to smart grid-based demand response (DR) programs to reduce energy
consumption. DR programs, such as direct load control (DLC), have helped throttle back peak demand, but
many of these programs rely on legacy communications that fail to deliver the flexibility, forecast accuracy and
customer engagement needed to optimize DR programs.
With today’s smart grid, utilities can expand existing load control programs to virtually all customers, with no
changes in program structure or regulatory approval. The smart grid is fundamentally changing how utilities can
implement DR. Customers are gaining choice over their participation in load control events, while utilities are
getting granular visibility into who participated and how much load each participant shed.
Utilities can also use the smart grid to increase customer engagement, offering, for example, pricing incentives to
shift usage to off-peak times. These emerging price-based DR programs provide customers with a clear picture of
their energy usage and costs and more control over their energy bill.
Specifically, legacy DR programs are often delivered as a turnkey – and proprietary – solution from a single
vendor, including a load control switch, software, and services. These programs typically rely on one-way paging
communications to get control signals to remote switches. Because communications is only one way, utilities lack
the end-to-end visibility to have a complete and timely picture of the infrastructure from premise-side to the head
end. And without two-way connectivity for real-time usage data, customers cannot fully participate in DR programs.
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Single-vendor offerings also restrict device choice for both the utility and customer. This lack of choice is a
disincentive to many potential participants and has led to dissatisfaction among some participants who want
more device options or more control over when and how their air conditioner, water heater, or pool pump
operates. Customer dissatisfaction in turn creates churn, as utilities must continually recruit new customers to
replace those who leave the program.
A one-way communications system also limits a utility’s ability to determine whether a switch is working. The
Brattle Group estimates that as many as 40 percent of legacy switches don’t work and therefore contribute no
load reduction, draining program efficiency and reducing cost effectiveness. Likewise, older legacy systems
provide no visibility into individual customer participation patterns or the specific loads shed, making it difficult
for utilities to verify actual load reductions and predict future load-shed potential. With legacy programs’ limited
forecast accuracy, utilities lack the ability to customize and support DR programs beyond DLC.
With a standards-based smart grid network, utilities can easily expand DR programs to new customers and migrate
devices onto the new communications infrastructure as older switches are replaced. Silver Spring Networks, for
example, offers load control switches with its innovative Direct-to-Grid™ communications technology. The Direct-
to-Grid communications technology connects the switch directly to a utility’s smart grid network, ensuring that a
utility’s legacy devices have the same high level of connectivity as advanced metering devices.
As a result, utilities have fewer unreachable devices that provide no load reduction. Alternatively, utilities can
leverage ZigBee® wireless technology for communications between the meter and load control switches,
thermostats, and other in-home devices. By supporting Direct-to-Grid as well as ZigBee for communicating
with load control switches, Silver Spring gives utilities maximum flexibility to optimize coverage across their
entire territory.
»» Real-time visibility: With continuous, two-way communications end to end, a utility can easily check
individual device status and reachability, something not possible with one-way legacy communications.
With the confidence of two-way communications, utilities can quickly identify and address problems, easing
maintenance requirements, increasing reliability, and reducing costs.
»» Deeper insights with granular feedback for load control: With a smart grid solution, utilities get
immediate feedback on customer response to events; for example, Silver Spring smart meters track energy
use at the premise level, so utilities can readily see which customers participated and how much load each
customer shed. This data makes it easier to accurately verify load reductions and more precisely predict
future load shedding, which enables utilities to count the DR capacity as operating reserves.
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»» Multi-vendor energy ecosystem: Smart grid-based solutions rely on key standards, allowing a utility to
mix and match in-home devices from one vendor with infrastructure and back-end software from different
vendors, eliminating vendor lock in. By choosing best-in-class devices from different third-party vendors,
utilities can achieve greater implementation flexibility and lower costs.
»» Single unified network platform: A standards-based IPv6 smart grid platform also ensures a common
infrastructure with common program management for DR and other smart grid programs, enabling, for
example, AMI and DR to run together. With consistent and real-time measurement and verification (M&V)
implemented at the platform level, utilities also gain network-wide efficiencies with flexible load forecasting
for all DR programs for both dynamic and static groups.
»» Increased customer engagement: With two-way communications, customers become active participants
in management of their energy usage. Opting out of a load control event is as easy as pressing a button on
the thermostat. Utilities receive the information about the customer override and can adjust the customer’s
bill as appropriate.
The availability of smart grid communications standards is fostering an ecosystem of products that consumers
can use to create a smart energy home. As a result, in-home appliances will become available that automatically
respond to signals to reduce usage or shift usage to times when the price of electricity is low. While future smart
appliances will fully automate this behavior, price-based DR can also be used to reduce or shift usage for legacy
appliances. For example, a customer participating in a price-based DR program may decide to delay running the
dishwasher until evening, when prices are lower.
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Implementing price-based DR is an ideal way for utilities to more actively engage customers in load reduction
and increase program effectiveness. To further increase customer participation, utilities can use robust customer
engagement solutions, including a web portal, to inform customers how much they are spending on energy at
any given time; email or text alerts, for DLC and DR events; printed reports, reflecting usage and DR savings; and
customer service support, where service reps have the same view into a customer’s usage as the customer does.
By providing customers with dynamic and timely feedback on their energy choices, utilities empower customers to
tailor DR programs to their specific needs. For example, with Silver Spring’s CustomerIQ™ web portal, customers
immediately know the savings they are generating each month by participating in a DR program.
Customer engagement solutions combined with DLC and price-based DR programs deliver value to customers,
increasing overall program penetration and enabling utilities to achieve their demand reduction goals.
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With the right smart grid solution, utilities can cost effectively expand the reach of DR to a wide customer
base and pave the way for new and innovative price-based DR programs. Smart grid solutions give utilities
much greater insight into customer participation, enabling them to more accurately predict load shedding and
maintain grid reliability. For utilities such as OGE, successful DR programs mean a significantly reduced need for
new generation capacity.
Customers benefit from much greater understanding and control of their energy use and costs. The convenience
of “set and forget” devices such as programmable thermostats make it simple for customers to balance comfort
and savings and to get the most out of new dynamic rate plans without constant attention.
As one-way legacy programs reach end of life, smart grid-based DR programs are breathing new life into DR,
giving utilities opportunities to increase customer engagement and satisfaction. Connecting more than 16.5
million devices worldwide, Silver Spring’s proven IPv6-based smart grid platform lets utilities improve grid
reliability and efficiency through a range of innovative DR programs, all running on a single network.
silverspringnet.com
Copyright © 2013 Silver Spring Networks.
All Rights Reserved. All trademarks are the properties of their respective owners. REV. 6/19/2013
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