Do Home Buyers Really Care About Home Energy Management?

Do Home Buyers Really Care About Home Energy Management?

The short answer is no… but they soon will.  Most people now take electricity for granted—until there is an outage.  And most home buyers are currently unlikely to understand (or even care about) what a kilowatt-hour or a British thermal unit is.  Some may want to conserve energy, but are at a loss to really know which ones are having the most beneficial effect.  Nearly all people do, however, care about saving money, and a growing number also care about saving the planet.

There is a significant change coming, however, that will make home energy management an important aspect of buying or remodeling a home.  Most people, including architects and builders, currently know very little about the Smart Grid and how it will change the way they consume, conserve and even generate electricity.  This article will describe what Green Builder readers need to know about the Smart Grid and offer suggestions to address the effects it will have on homes.

“Smart Grid 101” for Architects and Home Builders

The electric grid, having undergone only minor changes over the past century, is about to experience a dramatic transformation to avoid a crisis.  There is a lot to the Smart Grid, but the important thing to know in the residential construction industry is the cause and effect of the potential crisis: the growing imbalance between supply and demand, and how homes will soon be asked to participate in reducing peak demand.

At some point within the next decade, peak demand will exceed total generating capacity, forcing electric utilities to face two equally undesirable choices: build new power plants (very difficult these days with safety concerns over nuclear facilities and greenhouse gas emissions from coal- and gas-fired power plants); or impose rolling brownouts or blackouts to match supply with demand during the peaks.

But there is a third alternative: postpone or even avert the crisis with Demand Response.  The U.S. Federal Energy Regulatory Commission ( defines Demand Response (DR) as “changes in electric use by demand-side resources from their normal consumption patterns in response to changes in the price of electricity, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.”  The ability of Demand Response to mitigate the crisis is so promising that one FERC commissioner identified DR as a “killer application” for the Smart Grid.

Figure 1 shows the projection by the U.S. Energy Information Administration of the growing gap between the static supply (about 4 billion gigawatt-hours) and rising demand, which is expected to approach 6 billion gigawatt-hours by 2030, with homes and small commercial building consuming about 30% of that total.  Making up the difference will require a mix of Demand Response, energy efficiency and renewable sources of energy, and the home construction industry will have a role to play in all three.


Figure 1: Shown here is the growing gap between billions of gigawatt-hours being generated and consumed, and architects and homebuilders can help with all three priority alternatives involved in closing the gap. 

To work effectively, Demand Response needs two elements.  The first is an “incentive” that will increase rates during periods of peak demand, which normally occur in the late afternoon and early evening when the need for air conditioning or heating in summer or winter, respectively, is highest.  Depending on regulations in the local market, such dynamic pricing could come in the form of Time of Use (TOU) rates, Critical Peak Pricing (CPP) and/or Real-Time Pricing (RTP).  The second is some means for homeowners to reduce consumption while these higher rates are in effect, and this will require a more intelligent home energy management system.

Preparing the Home of the Future for the Smart Grid

The home of the (not-too-distant) future is depicted in Figure 2.  The Smart Grid will interface with the home via the Advanced Metering Infrastructure (the AMI Network shown to the left), and the various home energy management devices will communicate with one another either via the home’s wiring or, more likely, via a wireless network like ZigBee (shown here) or Wi-Fi.


Figure 2: The home of the future will have a home energy management system controlling all major electrical loads.  Because HVAC represents the largest load in most homes, the smart thermostat will serve as the primary means of home energy management.

There are three roles—all depicted in Figure 1—that architects and homebuilders will have in the home of the future.  The first is energy efficiency, and the industry is already doing a good job here with the use of efficient electrical appliances (especially for HVAC), solar water heating, high R-value insulation, LED lighting, and more.  Utilities sometimes refer to these savings as “negawatts” (or negative Watts) to describe the electricity that is not needed compared to the typical home.

The second role involves the home energy management system (HEMS) that will minimize consumption during periods of peak demand when rates are at their peak.  Manufacturers of HEMS solutions normally work with utilities, so check with the local utility to see if it offers any programs or special incentives for new or existing homes.  Because Demand Response programs must work in existing homes, most HEMS equipment can be added easily; for example by replacing the “dumb” thermostat with a smart one.

In new construction, however, home energy management should now be considered an integral capability that requires no retrofit later.  That means installing a load switch on the water heater, pool pump and other major loads.  It also means installing a “future-proof” technology like the home energy gateway—the latest generation of smart thermostats as shown in Figure 3.  The best gateways even have provisions for controlling newer smart appliances with built-in energy management features, as well as for intelligent charging of electrical vehicles (EVs), which will likely be parked in the garage of the future when the price at the pump is certain to exceed $5 per gallon.


Figure 3: The latest generation home energy gateway shown here integrates a smart thermostat with an in-home display, and is capable of controlling virtually any electrical load in the home based on dynamic pricing schedules or events.

A capable HEMS is also important in the third role architects and homebuilders have in helping homeowners save money: generating electricity, which will become commonplace in the home of the future.  Utilities call this Distributed Generation (DG), and most already support “net metering” where any electricity returned to the grid causes the meter to “spin backwards” reducing the total kilowatt-hours consumed.  (Technically, modern Smart Meters no longer “spin” but the effect is the same.)

Sources of DG include solar panels and windmills, and the home of the future may not even need solar panels because it will be constructed with building-integrated photovoltaic (BIPV) materials.  The roof, the walls and maybe even the windows will generate electricity whenever the sun shines, and the recycled EV batteries (no longer suitable in a vehicle but still functional) will produce power at night.  With sufficient generating capacity and the ability to offset a home’s loads through net metering, some consumers will pay nothing for electricity.  And who wouldn’t want to buy a home with “free” electricity?!

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About the Author

Jorge Deligiannis is a world-renowned expert in in-home technology, control algorithms, embedded design and communications.  After a number of patents developed as a telecom engineer, Jorge joined Enerstat where he became its CTO, leading its team to develop award winning advanced thermostats that were deployed in five continents through leading corporate partners.  Jorge continued his development of advanced IP, praised by the top smart grid companies, as he co-founded Energate and inspired a team of very capable developers in software, hardware, firmware, communications, and their effective integration.


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