If your electric company tells you to cut back your energy use or face the possibility of a blackout, you’ll probably comply. You’ll turn off unnecessary lights and appliances and use the air conditioner less. But the moment the crisis is averted, you’ll quickly return to your old habits. That’s because in spite of what people say about wanting to protect the environment and save money, they rarely limit their energy consumption to achieve these goals. Convenience always trumps conservation.
At one time, managers at electric utilities thought they could change consumer behavior by making electricity more expensive at certain times of day. That hasn’t worked. The price premium needed to spur conservation seems to be higher than utilities will—or can—charge. That’s the bad news. But there’s also good news: Although price hikes may not work, clever tricks, it seems, will.
First, let’s talk about the problem.
These days, it’s not really about efficiency. Energy-efficient appliances have helped reduce overall electricity demand, but a big problem remains. Most people still get out of bed, leave for work, and return home at roughly the same time of day. And—no surprise—their schedules dictate their energy use, which tends to peak in the late afternoon on weekdays, from 3 to 6 p.m. or so, when offices are still open but people are also arriving home from work, turning on air conditioners, TVs, and ovens. The resulting surge in demand can double the amount of energy flowing through the power grid in a matter of minutes.
That surge means that power utilities have to keep an enormous amount of generating capacity in reserve. That’s why they need “peaker plants.” This extra generating capacity is expensive to build and maintain, so these plants are often old and inefficient ones that utilities would have otherwise shut down years ago. Peaker plants therefore cost a lot more to run than the utility’s usual generating plants—as much as triple the cost. Consumers may not realize it, but they can basically blame peaker plants when they complain about high rates. And old plants are not necessarily the most environmentally friendly, either.
So consumers’ pocketbooks and the environment would both benefit from leveling out people’s electricity use. It should be easy: Two-thirds of residential electricity use in the United States (but somewhat less in Europe) comes from air conditioners, refrigerators, washers, dryers, and other electric appliances. People—or even better, automated controls—can adjust thermostats during the day and run washers and dryers in the middle of the night. Even small reductions in air conditioner use and delays in when appliances get switched on can help control the peaks in energy demand and reduce accompanying costs.
Utilities have for years dangled financial incentives in front of consumers to try to get them to trim or defer usage during peak hours. But taking advantage of those incentives requires awareness and active planning on the part of harried consumers. And that’s just not happening. What’s needed is automation that makes conservation simple, clever tricks to fool users into saving energy, and, perhaps, more impressive financial incentives, though it’s clear that tricks and automation alone would go a long way.
Some residential consumers already let utilities shut off their air-conditioning systems when needed, in return for a credit on their bills. In California, for example, the Pacific Gas & Electric Company (PG&E) offers several such arrangements. The SmartAC program, with more than 100 000 participants, places a remote-controlled device on each home’s air conditioner, allowing PG&E to reduce usage during peak summer hours. It cycles the A/C through 15 minutes of normal operation, then 15 minutes on blower only. Consumers receive a reward check—a pittance really, enough perhaps to buy one or two lattes a month.
In Canada about a year ago, the Ontario Energy Board made a well-publicized move to time-of-use pricing, with almost a two-to-one difference between peak and off-peak rates. Many other utilities offer such inducements to try to get consumers to shift their consumption away from peak hours. But these efforts have done little to alter usage patterns. Anthony Haines, Toronto Hydro Electric System’s chief executive, believes that the savings are simply too modest. He thinks that peak electricity would have to cost 10 times as much as off-peak energy before utilities would move even 5 percent of their customers in the right direction.