Nest Labs: Automating the demand side of the smart grid

There are many conceptions of what the smart grid is and what it should do for us, the ratepayers who will finance the necessary upgrades to California’s electrical system. I find the concept of a “smart-grid ecosystem” -- with smart customers, smart utilities and smart markets -- to be a helpful guidepost as we seek to evaluate what should be accomplished by the utilities trusted to deploy our smart grid.

Ecosystems achieve resiliency through diversity. We want a variety of clean energy resources on the supply side -- hydropower, wind, solar photovoltaic, solar thermal -- spread across a variety of locations (but never too far from customers). Similarly, on the demand -- or customer -- side, the idea is that Californians, buildings, appliances and electric vehicles create an intricate, synergetic web that can be made more efficient and flexible with customer education and empowerment, customer-focused energy pricing policies and demand-response programs (which allows customers to voluntarily reduce peak electricity use in response to a signal from their electric utilities and receive a payment for doing so).

There are other ways to contemplate diversity in the energy context: Unlike some other states, most Californians can’t choose their power providers, although they can choose among rate “plans” (which are payment schemes, not plans to help manage energy use and costs). EDF recognizes that a smart energy marketplace will thrive with a greater variety of competitors, products and services, and would like third-party energy service providers (that catch-all term includes organizations that deliver energy services and products to customers at a variety of levels throughout the smart grid ecosystem) to be able to participate.

Last month’s announcement by Nest Labs is proof that the smart-grid ecosystem is alive and well. With utility partnerships in California and Texas, among other places, Nest uses its intelligent, WiFi-connected thermostat to help customers smartly and painlessly trim energy use by learning -- and mimicking -- their temperature preferences automatically. For example, the Nest’s Seasonal Savings services will alert your thermostat when new seasonal rates apply and the device will begin making slight adjustments to its presets in order to adapt to predictable weather trends.

Even more exciting is Nest’s Rush Hour Rewards service that provides centralized, automated small reductions to heating or air conditioning at times of peak demand, when energy use is highest. The offering in particular is designed to enable customers to be good environmental stewards by enrolling in peak energy trimming programs, such as Southern California Edison’s Peak Time Rebate rate. Another benefit of participation is lower energy bills.

While customers retain the ultimate authority to override thermostat settings, the basic premise is to accept a payment to adjust settings by a couple of degrees when the electric grid is most stressed. The trouble is that involving people in energy conservation actions is less reliable and slower than communicating directly to appliances with computers. Enter the Nest, strategically located at the interface between utility and customer, with specific dominion over the biggest energy hog in your home -- the heating and cooling system.

This commentary was originally posted on EDF's California Dream 2.0 blog and is reprinted with permission. Photo courtesy of Nest Labs.

Next page: Getting energy pricing right