How Pairing Smart Thermostats With Demand Response Programs Boosts Grid Reliability

Residential home-automation technologies, paired with utility-level financial incentives offered through demand response programs, can help reduce load on the grid during peak demand periods.

Our utility's vision for the 21st century power system includes innovative technology that gives customers greater choice and control over their energy usage and personal comfort. SCE is partnering with industry innovators in home automation and energy management technology – including Nest,, EnergyHub, Ecobee, Filtrete,, and RadioThermostat – and integrating “smart thermostats” into its demand response programs.

Each year, an estimated 50,000 households served by SCE install Internet-connected “smart” thermostats and energy-management systems. Third-party market research predicts smart thermostat adoption will grow 43% in the next five years; by 2020, 1 out of 4 SCE customers will likely own a smart thermostat.

Greater Consumer Incentives Help Boost Overall Energy Savings

When our utility, SCE, calls a demand-response event, residential customers with smart thermostats and other qualifying enabling technologies can earn an additional incentive for every kilowatt-hour of electricity saved. Participating delivers bill credits of up to $1.25 per kilowatt-hour saved during the event.

The utility can call a demand-response event on any weekday afternoon any time of year when electricity demand is relatively high. Events run from 2 p.m. to 6 p.m. Energy savings are calculated based on the customer’s own average weekday usage.

Choice and control remain in the customer’s hands: At all times, they have the option to override the thermostats’ programming to adjust their home's temperature.

Two-Year Study Confirms Energy Savings

SCE conducted a study in 2013-2014 involving 3,200 participating residential utility customers who own smart thermostats. On a per-household basis, average energy savings were about 3 kilowatt-hours per event, translating to an average bill credit of $3.75 per customer, per event, and average annual savings of $30 for customers participating in all events.

The study results are considered a success, resulting in reliable peak load reduction capabilities. The study was converted into an ongoing program in 2015, and SCE plans to grow program enrollment and participation through multiple marketing strategies.

This is a win-win for customers and utilities. Customers are engaging in home energy management through home automation technology in increasing numbers. It would be a missed opportunity and we would be underserving our customers if we did not take a lead role in enabling this transition by merging technology, customer needs and utility programs.”

— David Kaintz, senior program manager for mass market solutions, Southern California Edison

Standardized Communications Platform is Vital to Success

The study also highlighted the importance of a standard platform for event notification. Referred to as Open Automated Demand Response, the standard platform enables SCE to communicate directly with third parties offering their own programs, in addition to customers’ devices participating in SCE’s direct load control programs.

This communication will allow the devices of customers opting into a program to affect energy usage – according to the consumer’s own preferences and settings – by adjusting lighting systems, pool pumps, electric vehicle charging, electric water heater systems, heating and air-conditioning systems – during an event. The customer’s smart meter measures the energy savings during an event, and the cycle is completed when the meter provides SCE with accurate data to credit the customers’ account.

Looking for a Letter of Support or Commitment?

Our utility, Southern California Edison, collaborates with many organizations to support innovation in the areas of renewable sources of energy, grid optimization, and energy storage. If you are working on a project of this nature and need a letter of support or commitment for a California Energy Commission EPIC proposal, DOE or other funding source proposal, we may be able to help.

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