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Achieving Customer Engagement through Smart Thermostats and Peak Load Management Controls


6/26/2013 3:00 PM

Geoff Godwin, Marketing Vice President and Brand Officer for Emerson Climate Technologies Vice President, Marketing

Smart meters are opening up a new world of possibilities when it comes to understanding energy use and thermostats are positioned to play an important and growing role in acting as the interface for consumers to access their energy usage information.

Approximately half of all U.S. homes will have smart meters by 2016. More than 40 million smart meters have already been deployed, with another 25 million under contract.

First and foremost, consumers want to understand what their utility bills look like in real time, rather than waiting to receive a bill in the mail two weeks after it’s too late for them to do anything.

A number of studies have found that when consumers are armed with real-time energy usage information they, on average, will reduce their energy consumption by up to 10 percent simply by making smarter decisions about their usage behavior when it matters most.

With Smart Meters Come Smart Rates

Most utilities today charge customers a fixed rate no matter what generation costs the utility may be exposed to at any given time. In terms of economic policy, this is incredibly inefficient as the pricing does not reflect the true cost of the commodity. As a result, the utility is forced to charge a risk premium to all consumers, even those that don’t use much electricity during peak hours when electricity is the most expensive.

Think about a cell phone plan in which the customer pays more when the network is the most bandwidth-constrained (during business hours); but when there is adequate supply (nights and weekends), the customer can make calls without fear of price penalties. The electric industry has similar time-dependent capacity constraints and now that it has a two-way communication path into homes, it will gradually shift to more logical pricing plans.

Analysis has shown that under a fixed rate pricing model, approximately 95 percent of consumers are subsidizing the costs for five percent of the consumers who use the most power during peak hours. By shifting to a variable rate pricing model, those 95 percent of consumers will save money, and that’s without changing their behavior. If consumers do decide to do things differently, such as run the dishwasher or dryer when rates are lower, they can save even more money.

Many consumers may not be aware of the potential pricing changes that are being considered by regulators today, but when they do they will seek technology that enables them to automatically reduce the largest loads in their homes during these peak pricing periods.

Companies focused on enhancing consumer engagement in the energy utility market, like Emerson, are developing products and solutions to address the needs of smart energy customers. Advanced thermostats that communicate with smart meters can provide value to consumers and utilities alike by highlighting energy usage and providing the ability to monitor and control usage against self-selected energy and cost limits.

The information age has given way to the age of the consumer, and providing intelligence when, where, and how the consumer wants it will be a winning strategy for companies of the future.

As marketing leader for White-Rodgers, a business of Emerson, Mr. Godwin is responsible for communications, advertising, product development, and market planning.