Demand response technologies provide an opportunity for building owners, individuals and residential consumers to play a significant role in reducing energy consumption during peak periods for the benefit of their local utility and the environment. With increasing regulations on building energy usage, these platforms will spearhead the advancement of energy efficiency tools and technologies and facilitate the reduction of carbon emissions.

Current state of utilities

Original analog metering systems require utility workers to go out and physically read meters every month. With more than five million meters in New York City alone, this creates a large burden on utilities to provide accurate energy data. Traditional meters provide less usable energy metrics than smart meters, leaving gaps for upgrades that can produce energy-saving information.

When utilities face high demand, they rely on large peaker plants powered by fossil fuels. They are also less efficient, more expensive and risk strain to the grid, leading to an increased probability of outages. Upgrades and advanced systems like demand response programs take away the need to depend on peaker plants.

Regulations and implications

Regulations like Local Law 97, part of New York City’s Climate Mobilization Act of 2019, are among the country’s boldest climate laws, with the goal to cut carbon emissions by 40% by 2030. The Climate Mobilization Act and Local Law 97 create implications for building owners and utilities to drastically reduce cumulative emissions. Starting in 2024, Local Law 97 will impose mandatory greenhouse gas limits with regulations tightening again in 2030. Emissions limits will affect all local buildings, not just residential properties, which will be based on the size and occupancy of buildings.

Buildings over 25,000 square feet will be required to reduce their emissions or face extreme penalties. Under Local Law 97, over 30,000 NYC buildings will be at risk of receiving fines for exceeding the carbon emissions cap. Most buildings will not comply with the 2030 limits without changes to emissions through building efficiency upgrades, electrification of HVAC systems and other efforts.

Additional regulations targeting carbon emissions are expected to be introduced across the U.S. in the coming years to meet net-zero commitments. Clearer standards and development in clean energy technology would dramatically reduce carbon emissions.

The necessary changes

Utility Upgrades

Infrastructure and smart meter upgrades will be necessary to meet these emission reductions. Utilities will bear the brunt of these changes, but ultimately the investments they have made will facilitate new channels for owners to see real-time energy usage and, by extension, track the building's carbon emissions. Efficiency starts with democratizing high-quality utility-grade energy data. New smart meters of any size can access electric and gas usage data. Third-party programs can use smart meter data to analyze and identify opportunities to deploy new tools at scale for all energy users. This could include smart thermostats, efficient appliances and other connected devices. Utilities investing in infrastructure upgrades can follow these initiatives by introducing rebate and incentive programs for customers that encourage installation of these products, which will increase the impact of smart meters and energy monitoring platforms.

Demand Response Platforms

Virtual Power Plants (VPPs) decentralize energy sources located behind the meter to provide a reliable power supply that can be called upon to support the grid in times of high demand. Compared to traditional power plants, VPPs draw their energy from multiple locations in order to maintain grid stability. Most traditional power plants operate at high capacity, whereas VPPs can tap into these energy sources only when energy demand spikes. One of the biggest challenges in the broader utility rollout of VPP programs has been identifying ways for grid operators to see and access available capacity in real-time and drive shifts in customer behavior to benefit the grid when needed. Demand response platforms will provide financial incentives to users who can shift energy demand during peak times to help balance strain on the grid. While demand response technologies help to comply with carbon emission standards, the added value goes beyond smart thermostats stretching into EV charging, battery storage and smart appliances. Each offers the opportunity of accumulating cost credits, additional reliability and feeding power back into the grid. The incentive for utilities lies in the preference for rewarding users to use less energy, lowering the use of peaker plants during peak hours.

Demand response technologies allow visibility of usage data to understand how and when buildings are using energy. Building operators can then take that information to adjust schedules, set points and assess the impact of energy allocation. Reducing the added work of meter readings while gaining usable data will give an advantage to comply with local and national regulations. In markets where hundreds of buildings and thousands of residents are participating in demand response programs, the data gathered also offers actionable insights into utilities that can help them make more informed decisions on where to invest in infrastructure upgrades, clean energy deployments and more. In these markets, utilities should look to play an active role in the energy transition at the customer and building level as much as they can. Collaborating on digital checklists that are tailored to every building and investing in new training for operators are other ways utilities can keep peak energy usage low.