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DSM in the Residential Sector: Smart Heating and Mobile Applications

Updated: Feb 27, 2019

The best approach to deploy demand-side management greatly depends on the type of facility where the system will be operating; the energy storage needs and operating schedules of large industrial and commercial buildings are very different from those of households, for example.

Battery storage shows promise as a DSM measure in the residential sector, but the technology needs to achieve further cost reductions to reach a larger market. On the other hand, smart heaters with hot water storage are already a mature technology, viable for DSM applications, and the value they can deliver for the end user is enhanced when the system is complemented with a mobile application.

Why Residential Heating has a Strong DSM Potential?

Water and space heating represent a considerable portion of energy expenses in European countries, and the demand on power distribution grids can be significant when heating systems are used simultaneously in thousands of households. A simple way to mitigate peak demand is storing hot water during hours when the grid has surplus generation capacity, and then use it precisely when peak demand occurs to reduce the amount of energy that is drawn from the grid:

  • Homeowners achieve savings by shifting their heating energy consumption from hours with high electricity rates to hours with lower rates.

  • Utilities reduce their operating costs because they have to produce less energy from peaking power plants as consumption is shifted away from those hours.

If a smart heating system is deployed at a single household, the effect on the grid is negligible. However, if the concept is replicated at thousands of locations, it is possible to reduce total demand by several megawatts. For example, if 5,000 homes reduce their peak demand by 3 kW each, the total load on the grid is reduced by 15 MW.

Heating systems have a significant advantage over batteries in DSM applications: they are a necessary device, so they don’t represent an extra investment for homeowners. Deploying a DSM system that is built upon an existing home device is more cost-effective than purchasing a technology that has not yet reached the mainstream market.

Mobile Applications Can Improve Customer Engagement

If a utility company is planning to deploy a distributed DSM system based on smart heaters, it is necessary to connect thousands of individual systems to a single IT platform where data is aggregated and instructions are sent to the heaters in real time. This information can be shared with homeowners for enhanced engagement, displaying metrics such as:

  • Total savings accumulated by shifting demand away from peak hours, and instantaneous electricity rates.

  • Current System Status: Stored hot water volume, temperature, smart heater status (ON/OFF), etc.

  • Alarms

Other than providing information, the application can include control features for the homeowner to program the smart heater as needed. DSM is carried out in the background, without placing schedule restrictions in hot water usage:

  • If hot water it is required when the electricity rates are at their highest point in the day, the system can automatically send the command to supply previously heated water.

  • The opposite also applies: the smart heater activates automatically to fill up the hot water tank when electric rates are low, even if nobody is using hot water at the moment

A mobile application can provide added value for homeowners, increasing collaboration between them and their utility company. DSM is not only bringing energy savings, but also increased comfort and convenience by automating water heating.

Advantages of DSM at the Point of Consumption

While it is also possible for utility companies to develop their own large-scale facilities to store energy and manage variable demand, DSM offers additional advantages:

  • If home and business owners have their own renewable energy systems, any surplus energy output can be stored locally. On the other hand, if storage is concentrated at facilities owned by the utility, energy must be transmitted back and forth – creating losses in the process.

  • Energy savings on the consumption side translate into a larger economic benefit that those on the production side; retail prices of energy are higher than production costs.

  • When installed at the point of consumption, smart heaters with thermal storage and batteries can provide heat and electric power if there is an electric supply interruption. On the other hand, energy stored in bulk at utility-owned facilities is useless for the end consumer during a blackout.

  • A final benefit of DSM is that energy only has to travel once from the point of generation to the point of consumption. With bulk storage facilities, energy must travel back and forth through the grid several times: from power plants and distributed generation systems to storage facilities, and then from these facilities to the point of consumption.

Concentrating energy storage at a few facilities negates benefits for the end user, but the opposite does not apply – the utility company gains benefits regardless of where energy is stored. With the rise of the Internet of Things, it is possible to aggregate and manage distributed storage resources such as smart heaters as if they were a single system – a virtual power plant that can either absorb or provide energy.

The combination of smart heaters with a mobile application for the end user and a data aggregation and control system for the utility are one possible DSM system configuration that yields benefits for utilities and their customers alike. From the point of view of utilities, it makes more sense to offer incentives and an IT platform for their clients to deploy DSM measures, rather than developing all of the required storage capacity by themselves.

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