Do you know where your electricity comes from? In most cases, the answer is probably no. Which is pretty strange if you think about it given the amount of energy we consume on a daily basis. From your morning toast and espresso to your evening Netflix binge, we use electricity virtually every minute of every day yet few of us understand the major uses of energy in our homes and businesses either. Why does this matter? When scientists and global leaders say we need to take carbon emissions out of our electricity sector, this communication becomes pretty darn important.

As compared to other commodities, electricity is the fastest moving supply chain traveling at 1,800 miles per second. Electricity, for the most part, is produced, delivered, and consumed nearly instantaneously. In order to manage energy demand during those hot summer days requires the grid to be sized to manage the highest peak usage of the year. An overbuilt grid yields system inefficiencies, under-utilization of assets, and a higher cost to ratepayers. This can be seen in the highly variable hourly electricity costs in New England. Over the past 3 years (from 2013 to 2015) the top 1% most expensive hours, during July and August, accounted for 8% of Massachusetts ratepayers’ annual spending on electricity. The top 10% of hours during these years accounted for roughly 40% of annual spending.

The inefficiencies in our current centralized electrical grid have led to both increased costs and more fossil fuel consumption. As demand goes up, less efficient generators are called on to serve excess demand. By reducing demand during these periods, the system and market could avoid using dirty electricity generation. What if there was a way for customers to take more control of their energy consumption during these times of peak demand?

Serious development and deployment of new grid technologies has the potential of mitigating greenhouse gas (GHG) emissions and increasing resiliency to extreme weather events and climate change. Climate Action Business Association has developed a new series of reports, Local Emerging Market Reports to offer a spotlight on a collection of quickly growing industries from throughout Massachusetts that are transforming the business-as-usual. From smart grids, microgrids, and electric vehicle grids to distributed generation and energy storage, Massachusetts is seeing growing investment in infrastructure that can redefine how we bring power into our businesses and homes.

It is not uncommon for the convergence of energy and communications to foster major economic change. In the 1800s, printing technology coupled with steam power created the first form of mass communications. In the 1900s, the radio and television combined with electricity and the oil-powered combustion engine created the modern consumer-based society we live in today. But where are we headed tomorrow? As the “internet of things” comes to dominate our daily lives, we are now on the verge of another major energy transition. This new paradigm shift is changing the way we think about energy efficiency. With technology advances in web-based monitoring and real-time data analytics, efficiency is becoming more tangible for the everyday consumer.

Making the grid "smart" allows for demand response, which creates two-way communication between the utility and its customers. To understand demand response, picture the electricity grid as a giant scale that needs to stay balanced. On hot summer days when air conditioning electricity load soars, generators are working at maximum capacity and often struggle to keep pace with the demand for power. Demand response, sometimes called demand management, shifts the electricity grid scale to the user. Much in the way that a smartphone consists of a phone with a computer in it, smart grid means “computerizing” the electric grid. Consumers can then play a significant role in the operation of the grid by reducing or shifting their electricity usage during peak periods. This can be done by sensing along the transmission lines, using controls, computers, automation.

Though, recent research is showing that the smart grid doesn’t just automatically reduce emissions. In many parts of the country, the off-peak, cheap electricity rates are actually when energy is coming more from dirtier sources, like coal. By switching to off-peak demand, without knowing if those times are coming from clean energy, you could actually increase emissions.

"Done carefully, timing can make a big difference for the environment without even affecting people's comfort,” said Gavin McCormick, co-founder of WattTime, makers of a smart device that trace who is selling electricity where and when. “Like, you want your fridge to stay cold, but do you care if its cooling cycling occasionally happens 5 minutes early? And yet sometimes, that's all it takes to make the difference between that fridge drawing power from fossil fuels, or from clean energy sources such as wind power." When configured properly, smart devices can reduce emissions. Smart devices with an internet connection have the potential to turn off dirty power plants and replace them with clean ones.

Demand response also allows customers to save money and help keep the grid stable and balanced. Reducing power at peak times is more or less transparent to the end user, but they will see the end result on their energy bill. Keeping auxiliary power plants idle helps keep the price of power down. Instead of having to call upon very expensive and inefficient power generators to meet high demand, grid operators can reduce load and avoid higher prices. Customers and investors can play a significant role in the electricity grid if they pay attention to the “next big things”.

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About The Author

Kate Galbo

Kate Galbo is the Policy Coordinator of href="">Climate Action Business Association, a Boston-based organization that works to solve the climate crisis by organizing local businesses to be more effective advocates for climate change action. Kate received a degree in Environmental Policy and Analysis from Boston University. Previously, she has conducted research for the Policy Studies Institute to help bridge the gap between sustainable development research and society.