The need to engage electricity customers to help manage grid reliability is a popular idea that at the same time is met with unspoken ridicule. Outside of dire emergencies, relying on people to take moment-by-moment actions to share in the management of our critical power resources is skeptically viewed as a fool’s errand. We are a “set-it-and-forget-it” society; only energy nerds, doubters say, will respond instantaneously to price signals and other data streams that guide actions to conserve energy and save money.
Even while ratepayers fund dozens of programs at the state level, and both public and private entities make multimillion dollar bets that they can deliver savings from different types of customers, California regulators are ambivalent. They approve funding for these programs, but when it comes to creating the regulatory framework governing electricity reliability, a deep distrust that these programs work takes over.
My response to this skepticism always begins with water. Californians have shown that they are willing and able to be co-managers of the state’s water system. During the 2016 drought, we took collective action to reduce our water use by 25% through a variety of measures. The 6% reduction in the most recent drought wasn’t as impressive but still significant, especially since we started from a lower baseline (much of the 2016 reductions were through permanent measures such as turf removal).
If we can do it with water, we can do it with electricity. This simple argument opens skeptical minds to the possibility of co-management. Imagine if we could reduce electricity demand by 6, 10 or 20 percent in one year?
But lately I’ve been wondering: Are these types of collective actions actually similar? Is the societal participation that we’ve come to expect and rely on with water translatable to the electricity system? I believe so, but as we engage with our customers, we must be clear about the differences as well.
Resource co-management in both water and electricity is enabled by both infrastructure improvements and behavioral modifications. Automatic irrigation controllers or programmable thermostats are still only effective when the customer who programs them makes the active choice to sign up for a utility program or follow the latest outdoor watering rules.
But as Clean Power Alliance develops customer programs to support shared participation in resource conservation, some of the differences between water and electricity management become apparent.
Water moves slowly and usage can be managed on a weekly or even seasonal basis to great effect. However, electricity management is a real-time endeavor requiring 24-hour vigilance. Since most people are unlikely to be on-guard at all times, this suggests that effective consumer electricity management is going to weigh more heavily on hard-wired automation technology than softer behavioral actions.
Another related difference is that water waste is often publicly visible while (with exception of leaving the lights on) electricity misuse is often invisible. Peer pressure is less likely to provide immediate benefits and sometimes has to be communicated through customer outreach campaigns that compare your energy usage to that of your neighbors. Again, this argues for the effectiveness of automation in the electricity space.
Another factor is the economic incentives of the two industries. In the United States, most water supply is publicly owned, while most electricity is generated and delivered by the private sector. Electricity companies that earn a profit from increasing generation and/or transmission capacity have less of an incentive to invest in co-management with their customers. Water agencies, though financed by the volume of water sales, don’t make money through infrastructure investments and must rely more on consumer actions.
Interestingly, all these signs pointing to more reliance on automation in the electricity sector compared to the water sector isn’t showing up – yet – in CPA customer behavior. Sign-up velocity for our recently launched Power Response Home program, which pays customers without automated devices to save electricity, is much higher than our Power Response Smart Home program, which relies on activating conservation through automated technology. It will be interesting to see the kind of energy savings per customer we get as the two programs mature along with their cost-effectiveness.
A final similarity actually obscures the difference between water and electricity. Consumer investments in overall water use reduction or hour-by-hour modification of electricity demand have an economic payback for the customer over the long term. As electricity is more expensive, so are the investments necessary to achieve long-term payback. A home battery energy storage system is an investment of greater magnitude than a low-flow showerhead. These high costs have implications not only for overall adoption, but also for the equitable distribution of benefits.
We can’t shy away from the fact that the economics of electricity investments at the customer level are challenging. And we must recognize that customer decision-making and actions are important for advancing shared management of our resources. If we recognize the differences and design around them, what we are doing with water can be done with electricity too.
Sergei Kotsan serves the Energy Risk Manager for Clean Power Alliance. He has over a decade of experience working on quantitative research and modelling of the wholesale power markets as well as hedging commercial risk and market monitoring. He led commercial operations at TexGen and fundamentals research at Talen Energy on the power supply side. He also has utility experience at Portland General Electric and Pacific Gas and Electric evaluating market risks and financial valuation on the demand side. In addition, he worked at the Market Monitoring Unit at CAISO, developing dashboards and preparing market reports. Sergei holds Ph.D. in Economics from West Virginia University.
Rachel serves as Project Manager, Settlements for Clean Power Alliance. Rachel is responsible for reviewing and identifying discrepancies with our California Independent System Operator (CASIO) and bilateral counterparty invoices, validating transactions of wholesale market products, and performing after the fact analysis on settlements and Congestion Revenue Rights (CRR) to influence resource optimization and CRR strategies. Prior to joining Clean Power Alliance, Rachel served as a Power Settlements Analyst at Utah Municipal Power Agency for two years where she developed and finalized all settlement processes. Rachel earned her Bachelor of Science degree in Computer Science and Mathematics from Lewis-Clark State College.
Riju serves as the Website Developer, Communications and Marketing at CPA. He brings over 10 years of software development experience in addition to having a strong background in information technology and server infrastructure. Riju oversees all web related functions at CPA to ensure that the organization is able to effectively sustain meeting the requirements of its rapidly growing digital presence. Prior to joining CPA, Riju worked as a digital content developer at Claremont Graduate University where he developed and launched an online learning platform for the federally funded POLARIS mentoring program for museum professionals. More recently, Riju founded and operated a web development and digital marketing agency which served government organizations, non-profits, and other multi agency partners. Riju holds a Bachelor of Science degree in Computer Information Systems & E-Business from Cal Poly Pomona. Riju supports CPA’s overall goal and mission to a cleaner, brighter future.
Jacob Adamson is an Analyst, Data and Systems, at Clean Power Alliance (CPA), where he collaborates with the Data and Systems team to develop and maintain robust data analytics frameworks. Jacob supports cross-functional departments in data enablement and business intelligence, focusing on automating reporting tasks and assisting staff with data requests. With a background in engineering, information technology, regulatory analysis, and data analytics, Jacob brings a wealth of expertise to CPA’s work in the renewable energy sector. He holds a Bachelor’s degree in Geological Engineering from the Colorado School of Mines, is a former licensed professional engineer in the state of Colorado, and is a GCP certified professional data engineer. Outside of work, Jacob is passionate about outdoor recreation, conservation, and engineering sustainable community development.
Ammad serves as the Analyst, Strategic Finance at CPA. He comes to CPA with 3 years of prior experience in financial planning and analysis. Ammad most recently served as a Financial Analyst at Georgia Power, the largest subsidiary of the Southern Company. In this role, he supported various areas in the Customer Experience division where he ensured timely and accurate financial reporting, conducted monthly expense forecasting, and created 5-year budgets with the approval of the Georgia PSC. He also sat on the 2024 Budget Committee where he contributed to developing guidelines for the company’s budgeting process and identifying areas for cost savings. Ammad earned his Bachelor’s in Finance from the University of Central Florida.