Making Grid-interactive Efficient Buildings a “Win” for Both Customers and Utilities

Buildings account for more than 70% of U.S. electricity use and at least one-third of U.S. economy-wide CO2 emissions. Changing the timing and overall amount of electricity consumption in buildings would significantly reduce energy costs to consumers and facilitate the transition to a decarbonized economy. Grid-interactive efficient buildings (GEBs) incorporate energy efficiency, smart technologies, and active use of distributed energy resources (DERs) to provide these benefits. As the link between the customer and the power system, utilities are central to widespread deployment of GEBs. Yet, despite the significant cost savings and operational benefits of GEBs for utilities, deployment has remained limited.
This paper explores emerging models for enabling utilities to facilitate GEB adoption. Building off foundational research conducted to develop the U.S. DOE’s A National Roadmap for Grid-Interactive Efficient Buildings, we describe the most novel recent examples of ways in which utilities and regulators have made demand-side innovation a win for both the customer and the utility. Emerging concepts include: (1) performance incentive mechanisms to align GEB deployment with utility financial motivations, (2) the use of subscription pricing (i.e., fixed monthly bills) to promote load flexibility and energy efficiency, (3) rate-basing utility-controlled behind-the-meter assets, and (4) coupling energy efficiency and load flexibility with electrification proposals to ensure that customer benefits are maximized. The paper concludes with a discussion about prospects for widespread GEB deployment and utilization by utilities, and how to scale efforts.