Smart Utility Rates Could Slash Grid Investment Costs and Monthly Bills
Homeowners could save up to 40 percent on their electricity bills and utilities could slash billions of costs every year in grid upgrades if demand-flexible rate plans were widely available, according to a new study from Rocky Mountain Institute.
The study looks at demand flexibility — the ability to shift energy usage across the day based on price signals. Adopting a conservative approach, RMI looked only at residential air conditioning, domestic hot water heaters, clothes dryer timers and timed electric-vehicle charging.
A new market for third parties
RMI found that the savings could be substantial if third parties stepped in to offer guaranteed bill savings by pairing available technology with dynamic utility rates. The rates included structures like real-time pricing, demand charges and avoided-cost compensation for exported PV.
In many ways, this is analogous to third-party battery storage companies that are selling their technology to commercial clients to cut down on or eliminate peak-demand charges and also potentially make money in ancillary service markets. But the utility can benefit from having distributed storage, and some states and utilities are looking at better aligning rates to take advantage of those resources and compensating the customers, or the third-party companies, that own them.