You Should Be Getting Paid to Prevent Heat Wave Power Outages

AUSTIN, Texas — A record-setting heat dome is smothering Texas and neighboring states with no sign of letting up any time soon. Heat like this burns bare feet on sidewalks and pool decks, and sears hands on steering wheels. Trees and power lines are sagging as branches weaken and metal wires expand.

Demand for electricity in the state reached an all-time high on Tuesday as people cranked their cooling systems into overdrive. Concerned about the possibility of power outages, ERCOT, the manager of the Texas grid, asked consumers to voluntarily cut back on their power consumption for four hours on June 20. This week, ERCOT has been able to manage electricity supply and demand by drawing from a mix of gas, wind, solar, coal and nuclear energy. But a new peak in demand could soon put the grid at risk. And with temperatures as high as 110 degrees Fahrenheit in some cities in the state this week, a power outage would most likely be deadly for some.

In situations like these, which will become more frequent as climate change makes heat waves longer and more intense, voluntary energy conservation isn’t likely to cut it.

What if instead of appealing to good will, utilities just paid people to reduce their power use during peak hours? It would be cheaper, faster and more effective than building new power plants.

Many utilities around the country already take this approach with their most power-hungry customers. Manufacturers, big-box stores, water treatment plants and even Bitcoin miners get rebates up to millions of dollars for turning off their facilities when power supplies are scarce. It’s time to extend that program to homeowners and renters.

Here’s how it could work. In the event of a heat wave, by using a smart meter, power providers could reduce electrical consumption in households during the peak hours between 4 p.m. and 8 p.m. — when people come home from work or summer camp, turn on a few lights, cook dinner, watch TV and use computers.

Some electrical loads, such as hot water heaters, clothes dryers and swimming pool pumps, can be controlled to help shave peak demand significantly. But cooling systems present the biggest opportunity. Shutting off air-conditioners for just 15 minutes an hour during those four peak hours would, according to my estimates, reduce demand by 10 percent or more, taking significant pressure off the grid. And for their small inconvenience, I estimate that customers would deserve a credit of $1 up to $15 per afternoon, depending on wholesale electricity prices and how long the air-conditioner is out of commission. That money — and the promise of fewer power outages — would be enough to motivate a lot of people. I know people who drive across town to save 10 cents a gallon on gasoline.

Electricity suppliers in countries including China, Britain and Japan are reportedly turning to “demand response” programs for commercial users, and some are exploring programs that pay different kinds of users to help relieve pressure on the grid. Having a more flexible grid is good for the climate, too, since it’s a way to avoid burning more fossil fuels. That’s why the International Energy Agency in 2022 applauded these initiatives and called on countries to expand them.

Cities are beginning to experiment, too, offering incentives of their own. In New York City, ConEdison, the primary utility, has a program that allows customers to save $50 on a smart thermostat and an $85 rebate for enrolling the device with the company.

My hometown Austin, Texas, began a similar program in 2013 giving homeowners an $85 rebate in exchange for installing a smart thermostat, which allows the utility to cycle off air-conditioners in the summer on a rotating basis during the peak. As of 2021, that program included about 43,000 controllable thermostats that help make a small dent in peak demand. Because of its success, the city’s municipal utility expanded the program on June 1 with an ongoing $25 annual credit for each thermostat that remains enrolled in the program.

That’s a nice start, but there are about 400,000 households in Austin. This program should be scaled up and we should be paid much more for the benefits we provide on very hot afternoons. And participating is no great hardship. You can run your air-conditioners in the morning — when there is plenty of power available — to get your home nice and cool. When they’re switched off in the afternoon, you’re still comfortable.

Utilities have a lot to gain from these programs, including more control over the grid and avoiding the costs and many years involved with building new power plants. And we all benefit from the emissions and fuel costs we avoid by not having to fire up backup power plants in a heat wave. But so far, participation in the United States has been largely voluntary and limited.

For demand-response systems to tap their full potential, smart controls would need to be installed in every home. That means new building codes that require “energy optimized” homes. Though the idea would be for everyone to participate, it should of course be possible to opt out if someone in the household requires a steady temperature for health or other reasons.

So, why aren’t we already doing it on a large scale? We have designed our system to ramp power plants up and down to deal with peak demand. But we need to flip our thinking — we need to adjust demand to the capacity of the power plants. And we need to develop a system that pays homeowners and renters appropriately. With the right combination of technologies and policies, we can get there quickly and breathe a little more easily the next time a heat wave comes around.