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There’s a big change coming to how we power our homes — and it isn’t about solar or batteries

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Earlier this year, home energy received its biggest jolt since rooftop solar when Tesla Motors announced a home battery dubbed the Powerwall. Immediately useful for backup during power outages, the Powerwall also open a broader doorway into a world of home energy storage. When paired with rooftop panels, the availability of storage brings us closer to a future in which homes could be generating much of the energy they need during the day, and then storing some of the remainder for use overnight.

But on Wednesday the Rocky Mountain Institute, a noted energy think tank, released a new report suggesting that there’s a less noticed change under way in how we use energy at home — and pay for it — that could have similarly dramatic potential.

The institute calls it “demand flexibility” or the potentially catchier “flexiwatts.” Both terms refer to the growing ability, through the use of a variety of timers and controls, for homeowners to determine precisely when during the day (or night) their home’s energy hogs – like, say, the hot water heater or the electric car charger – draw their power.

Why does the timing matter? Because it allows you to take advantage of increasingly prevalent time-based electricity pricing schemes, in which your power company charges you more for using electricity at peak hours and less at times when there’s less demand, like the middle of the night. The Chicago-based utility ComEd, for instance, offers a program in which prices change hourly, based on demand, and customers receive alerts about what they’ll be.

So if you match up when you’re using the most power with when power costs the least…well, the result is obvious. Moreover, this trend also helps out utilities and the grid itself. If there is less electricity demand at peak times, then that obviates the need for a number of investments and costs, including as many so-called peaker plants, which kick on when demand escalates.

“In the residential sector alone, widespread implementation of demand flexibility can save 10–15% of potential grid costs, and customers can cut their electric bills 10–40% with rates and technologies that exist today,” says the Rocky Mountain Institute report. “Roughly 65 million customers already have potentially appropriate opt-in rates available, so the aggregate market is large and will only grow with further rollout of granular retail pricing.”

Key to enabling demand flexibility are in-home “smart devices” — notably smart thermostats and programmable timers for dryers, hot water heaters, electric vehicle chargers, and other large consumers of energy. Some already exist, like Google’s Nest Thermostat.

The Rocky Mountain Institute isn’t the only outlet to notice this trend — the president of the United States himself has. As President Obama said Monday, speaking at the National Clean Energy Summit in Las Vegas, “New appliances and smart devices can tell when energy prices are cheapest, and do laundry, or wash the dishes, or charge our car at those times.”

In other words, the news is not that there is some new invention; rather, it’s that we can transform domestic energy usage by getting smarter about options that already exist. “Demand flexibility need not complicate or compromise customer experience,” says the Rocky Mountain Institute Report. “Technologies and business models exist today to shift load seamlessly while maintaining or even improving the quality, simplicity, choice, and value of energy services to customers.”

Let’s take a closer look at the key enabling technologies:

Smart thermostats. This is a device that can — among other abilities — potentially modulate the home temperature based on the hour of the day and, thus, the price of electricity. This matters a great deal because home heating is the single highest residential electricity user, and home cooling (air conditioning) comes in third.

Nest, perhaps the best known smart thermostat, can already work with time-of-use pricing. As the company explains:

….a common summer peak time is from 3pm to 7pm. Since electricity is more expensive at this time, teach your Nest Thermostat to cool your house down between 1pm and 3pm, so that your home will stay cool until 6 or 7. Then resume cooling at 7pm.

Timers for major appliances. For some time, devices have been on the market that allow you to time when your electric hot water heater is running. What’s new is pairing those with time-of-use rates. As Duke Energy explains:

If you are on a “day/night” or “time of use” electric rate and you set the timer so the water heater only operates at night or during “off peak” hours, you should save money. You can do the same thing with an “on/off” switch, but the timer will do it automatically and never forget.

Similarly, there are already ways to program your clothes dryer – another energy hog — so that you don’t use it at peak times. As Rocky Mountain Power advises, to take advantage of its “time of day” power pricing option: “Do most of your laundry at nights or on the weekend. Or better yet, set your delay start on your clothes washer, dryer and/or dishwasher to start and finish anytime between 11 p.m. and 7 a.m.”

Electric vehicle charging. Charging electric vehicles can use up a heck of a lot of electricity, so doing it overnight makes a great deal of sense. California’s three major utilities, Southern California Edison, Pacific Gas and Electric, and San Diego Gas and Electric, all offer plans to allow electric vehicle owners  to have time-of-use electricity rates and thereby save  money. Some advanced charging equipment for EVs also includes timers as a feature.

There is one drawback here, though – research has suggested that charging electric vehicles overnight may mean that the electricity you are actually using to power your “green” car is more likely to come from coal, which tends to be the baseline power source in many regions.

The Rocky Mountain Institute report finds that to buy the timers above and a smart thermostat, customers might need around$ 1000 — making demand flexibility cheaper than Tesla’s battery ($ 3,000). Granted, savings depended, not surprisingly, on a particular power company and its precise rate structures, which can vary considerably across the country.

And not only can these kinds of changes can save people money, the research found that they potentially make rooftop solar more economical as well. “Demand flexibility helps customers consume more PV output on-site, leading to larger cost-effective PV arrays as well as more customer demand met by rooftop PV rather than by utility sales,” the report notes.

Granted, there are at least three outstanding problems with a shift towards demand flexibility.

First, people have to take the conscious step of opting opt in to time-of use electricity rates.  Although 65 million American households already have access to those rates, only 4 million have so far signed up, according to the report.

Second, because people are not computers, they need some help with coordinating all of this strategic timing of energy consumption. Yes, some geeks might figure out how to run an ever growing number of devices on timers that helps ensure that they save a lot of money – but most of us won’t have time to do this. We’ll also worry that making a mistake – for instance, forgetting the switch to or from daylight savings time — could lead to a very big electricity charge.

What’s needed, then, is some type of “smart controls.” “What we think needs to happen is business solutions similar to how solar is sold, where a third party is going to come in, sell technology either through a lease model, or some kind of financing, and optimize it for you,” Jamie Mandell, one of the authors of the report and a principal at the Rocky Mountain Institute, said in an interview. “I think what we haven’t seen is anyone pulling those sorts of technologies together as a business model to save customers money using these time varying rates.”

Finally, there’s the matter of convenience. Yes, people will be able to save money by timing how they use energy – but for a lot of folks, feeling immediately cool when you want to feel cool, warm when you want to feel warm, drying your clothes when you need them dry, and so on may be hard to give up. In other words, there’s a behavioral barrier here that may go considerably beyond the technical potential of technologies.

Still, the Rocky Mountain Institute researchers think more and more of a shift towards “flexiwatts” is coming, simply because it makes so much economic sense.

“It’s much cheaper to put your demand reduction on your home, than to do it with a battery,” says the Rocky Mountain Institute’s Jesse Morris, another of the report’s authors. “These smart controls are a knock out of the park from an economic perspective.”