What are incentives?
Deep-diving into what incentive schemes are and why devices should optimize for them
Remember when electricity was as simple as peak and off-peak rates? Not anymore! Welcome to the era of incentive schemes designed to shift energy consumption: improving efficiency and reducing emissions.
Utility demand response
Households enrol in programs where they reduce energy use for brief periods - typically 3-4 hours, 3-10 times per year.
Commonly this changes a thermostat temp by 3 degrees, and the household received bill credits or prize pool entries.
Dynamic pricing
Energy tariffs fluctuate based on time of day (e.g., on peak / off peak), can change hour-by-hour with the market clearing price, or be subject to demand charges for maximum usage.
These set ups give people control of their costs – running the dishwasher at 2pm instead of 5pm reduces grid strain and households can be rewarded for that! However it means if care isn't taken, bills can spike higher than expected.
Wholesale participation
Typically reserved for large-scale buyers, households can band together to bid in demand reduction during peak times (basically the same as offering extra supply to the market!)
Carbon intensity & offset
Power generation varies in its greenhouse emissions. Utilities and businesses pay others to avoid creating additional emissions, working similarly to carbon credits.
Non-net metered solar
Net metering allows homes to receive payment for solar they sell to the grid. Sell prices are typically way cheaper than residential energy tariffs, so households are better off maximizing self-consumption.
Why should devices optimize for incentives?
Having devices respond to the true, live electricity prices and emissions means cheaper operating costs and lower carbon emissions.
This can mean a lot for households: running a thermostat with WattShift can reduce heating and cooling costs by >30%!
How do these incentives work together?
It’s crucial to consider all these schemes together, as they don't coordinate with each other. Accounting for only 1 type can actually increase overall costs!
As an example, a device may use less power for a demand response event but immediately after use lots of power in a high time-of-use price period.
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