Are building codes the secret to connecting the smart consumer with the smart grid? California will test that proposition this summer, when it starts requiring every new or retrofit thermostat, HVAC system, networked lighting controller and building automation system in the state to come ready for two-way, automated utility-to-customer energy management.
Now the question is whether the state’s utilities and regulators will develop the markets that are needed to tap that new grid resource.
Starting in June, California’s latest version of its sprawling Title 24 building code kicks in, requiring that a whole host of systems come with some sort of demand response capability. Specifically, they are required to be “capable of receiving and automatically responding to at least one standards-based messaging protocol” to receive fast signals from utilities, via broadband or wireless connections.
OpenADR, the technology developed by the California Energy Commission and Berkeley Labs for automating this utility-to-building IT network, is just one such standards-based messaging protocol. Its latest version, OpenADR 2.0b, offers a fairly comprehensive set of tools to allow buildings and utilities to talk about energy: its availability, its price, and, most critically, how individual buildings can execute and confirm they’ve done something about it that’s worth getting paid for.
OpenADR isn’t the only protocol available, but it’s one among a very short list of contenders. SEP 2.0, the ZigBee-based energy protocol and messaging stack now opening to Wi-Fi and HomePlug, is another, but most utilities are still using a ZigBee-only version of the technology (SEP 1.0. 1.1, or “1.x” in ZigBee Alliance parlance).
OpenADR, by contrast, was built with public funds to create a free, open-source standard that’s now been taken up by pretty much every major controls and demand response player in the world. That list includes Honeywell, which holds the lion’s share of the OpenADR market through its purchase of server maker Akuacom as well as most of the embedded market; Alstom, the French grid giant that bought UISOL, the OpenADR source code curator and software provider; French building power and automation systems giant Schneider Electric and partner IPKeys; energy data analytics startup AutoGrid with its tech partners such as Fujitsu; and U.S. demand response leader EnerNOC, to name a few.
In the meantime, there’s no telling who’s cooking up software and business plans around OpenADR’s coming ubiquity in California buildings -- it’s an open standard, after all. But there's little doubt that Google, with its $3.2 billion purchase of Nest under its wing, will be eyeing opportunities for smart thermostats, and whatever it has coming next.
A platform for home and business innovation at the grid edge
For companies that have been locked into slow utility pilot project business cycles, Title 24 is a godsend. Take Universal Devices, the Encino, California-based maker of smart home hubs and gateways in use with utilities like Southern Co. and Pacific Gas & Electric.
“All the California utilities know about our product; they use it extensively in their labs,” CEO Michel Kohanim said in an interview last week. “But our business model does not depend on getting those pilots. What I want out of them is name recognition, plus opportunities. Hopefully when Title 24 comes out, we’re already there, and the actual customers will choose us -- not the utility.”
Universal Devices is running one project in a five-building commercial property in San Jose, and it has been able to shave about 20 percent off that complex's utility bills just by responding to the simple version of OpenADR now sent out by the state’s big three utilities, he said. At the same time, Universal Devices’s virtual end nodes (VENs) have built-in smarts, allowing them to run autonomously of any utility or grid operator virtual top node (VTN) sitting in a back-office or cloud-based set of data centers somewhere.
“Our sustenance comes from home automation and building automation,” Kohanim said. But if demand response programs blossom, Universal Devices' ISY hubs could serve as aggregators of all sorts of devices -- smart thermostats, automatic lighting controllers, rooftop chillers, smart appliances and office energy management systems -- capable of getting a price signal for what their internal energy control capabilities are worth.
Honeywell is taking on California’s OpenADR opportunity at both the whole-building and the smart-thermostat levels, Jeremy Eaton, president of the company’s Connected Home business, said in an interview last month. On the home and small commercial side, Honeywell has pledged to make all its Wi-Fi thermostats demand-response-capable this year, in part to prepare for Title 24 compliance this summer.
On the big commercial property side, the company has built a multi-protocol “site controller” that can speak the languages of lots of different building management systems. “Some of our platforms speak OpenADR natively, but you don’t turn over the building stock very often. It’s important to ask how I retrofit an existing BMS to speak ADR,” he said.
Tying multiple buildings together could allow property owners or demand response aggregators to put that demand to use in various grid markets beyond old-fashioned, peak-reduction-centric demand response, he said. “There’s a lot of investment we’re making in our product, for what I’d call state awareness: what’s dropped, what running, what’s available,” he said.
Lighting is another building system singled out for attention in Title 24, with non-residential buildings required to have daylight-matching adjustment, dimming and demand response capabilities built in. Wireless lighting controls startup Daintree Networks has been building OpenADR into its server software for some time, and is ready to start taking utility or grid operator signals into the mix, CEO Danny Yu said. It’s also ready to start connecting smart thermostats, plug loads and other often-overlooked demand reduction opportunities via the wireless networks it’s installed in the ceiling, he noted.
Utilities and regulators: The thermostats are in your court
California’s demand response markets will certainly need some adaptation to take advantage of these new opportunities, however. The California Energy Commission identified some key flaws in the state’s overall approach to demand response in its 2013 Integrated Energy Policy Report (IEPR), including its inability to reach relatively modest goals set back in 2007 to reduce peak demand by 5 percent.
One big problem is that the California ISO’s existing Participating Load and Proxy Demand Resource products are heavily centered on utilities playing a middleman role, the report noted. “The path forward should include alternatives to the utility-centric model of program delivery that can create new participation opportunities for customers who have not been interested in the utility offerings.”
Katie Papadimitriu, state and local affairs director at Schneider Electric, said that California regulators could take lessons from mid-Atlantic grid operator PJM, which has created market mechanisms, rather than utility-managed programs, to enlist demand at scale. “Having the secondary markets in PJM has allowed a lot of customer-side participation to occur,” she noted.
Beyond that is the issue of the rebates, payments and tariff structures that will actually pay the millions of potential demand response participants for their efforts. But at least with Title 24 now pushing OpenADR-capable control and automation into the field, “The policy changes to making sure the prices are right,” rather than how to pay for the thermostats, Papadimitriu said.
That’s important for state grid planning needs, she noted. For example, the California Public Utilities Commission (CPUC) has ordered Southern California Edison and San Diego Gas & Electric to find hundreds of megawatts of “preferred” grid resources, including demand response, to replace the shuttered San Onofre Nuclear Generation Station. But it also assumes that “fast-responding” demand response will come with costs and complexities that will limit their availability in years to come.
“Title 24 coming on-line over the summer should provide substantial savings” for models like these, she noted. It should also bring more certainty to the CPUC and CAISO. That’s because the code requires -- and OpenADR 2.0b provides -- the beloved measurement and verification (M&V) data that utilities and regulators use to figure out who’s owed how much money for their role in the day’s grid supply-demand balancing act.