Accelerating the shift to renewable energy: The power of Consumer action (Case study: Hot water generation)

When we speak of the power sector there is a significant emphasis on topics like the role of renewable energy, how we generate power, what is the current generation mix etc. However, a crucial aspect that is often overlooked is the consumer. They are the driving force behind the sector and the reason for the existence of generation, distribution, and transmission companies. To truly understand and improve the power sector, it is essential to consider the consumer perspective.

The Indian power sector has undergone a significant transformation since the implementation of the Electricity Act of 2003, which has promoted intense competition in the generation sector and provided opportunities for the transmission sector to strengthen itself. While the focus is often on generation activities and reforms, it is crucial to also examine how consumers perceive electricity.

Electricity is a vital commodity that is fundamental to economic development and social progress. Therefore, it should be available at a reasonable price and in abundance to consumers, whether they are in the agriculture, domestic, industrial, or commercial sectors. To achieve this, it is important to understand how to match the changing patterns of electricity generation with the changing patterns of consumption. The power sector is expected to see a significant increase in demand, and it is essential to understand how to match this demand with renewable energy.

In the case of solar power where maximum generation is between 11 am to 4 pm, what can be done to match the consumption pattern to the generation pattern? Consider today's post-Covid era where people are working from home across multiple apartments of multi-storeyed buildings in metropolitan areas like Noida, Gurgaon, Chandigarh, Chennai, Bangalore, Mumbai and more. In these buildings, the air-conditioners are on for a long time and the water heaters are used at the same time in the morning creating a huge demand for electricity in a concentrated period of time. Now let’s look at the technologies and opportunities where we see the induced consumption such as water pumping and water heating drawing electricity from the grid when the electricity is available in abundance, which is from 11 am to 4 pm. In this case, the generation companies, distribution companies and consumers can work together to consume more electricity during the afternoon when it's available in abundance.

How is this possible technologically?

Technologically, this can be achieved through the implementation of common hot water generation systems and hot water distribution systems in multi-apartment buildings or societies. By centralizing the generation and distribution of hot water, it is possible to transfer the hot water from a common tank to individual apartment blocks. This can be easily implemented during the construction of new buildings by setting up a separate plumbing network. One key technology that can help reduce the water heating load of an apartment block is “Heat Pumps” which can replace the water heating units in the individual bathrooms. Additionally, the use of advanced technologies such as IoT and smart control systems can be used to optimize the hot water generation and distribution process, allowing for more efficient and cost-effective operation. Such a centralized hot water generation and distribution system will need an innovative collection of fees by the housing society for the hot water used in the individual apartment blocks.

How does this actually help the grid?

Implementing a common hot water generation and distribution system as described above can help the grid in several ways. Firstly, during times when more solar or wind energy is being generated, the excess energy can be utilized to heat water in the common hot water tank. This would certainly help reduce the curtailment of renewable energy when the demand for energy is less and generation is more.

The conventional wisdom of increasing generation whenever there is more consumption needs to change towards “generation-following-loads” - in short increasing the consumption whenever you have more (renewable) energy produced at the utility-scale or behind-the-meter. The use of ICT techniques and technologies, such as IoT and smart control systems, enables the triggering of such an operation remotely, allowing for greater flexibility and control over the hot water generation process. The IoT and smart control systems can also provide an opportunity to reduce the consumption at the consumers’ end when renewable energy generation is low. Such an effort is termed as a “demand-response” or “demand-flexibility” initiative where the consumers and the distribution company can work together - also creating a simpler incentives structure involving payments made to the consumers.

This approach also helps to reduce the peak demand on the grid, by shifting the consumption of electricity to the times when it's generated in abundance, this could ease the pressure on the grid and avoid the need of investing in new infrastructures to handle peak demand, reducing costs and improving the overall performance of the grid.

How does the consumer pay?

For this system to work effectively, consumers must agree to pay for the energy they use. The most common way to measure and bill the energy consumption is by using kWh as a unit for hot water. The consumers will be billed based on the amount of BTU (or simply litres of water) consumed from the common hot water pool of the society, per day. Metering systems can also be installed to measure the consumption per household, which allows for more accurate billing and ensures that each consumer pays for the energy they have used, making the process more efficient and transparent.

What is in it for the consumers?

One of the main benefits is the potential for cost savings. By shifting their consumption patterns to align with the supply of electricity, consumers can take advantage of low-cost power, which can result in substantial savings. For example, a middle-class family with 4-5 members can save up to 2/3rd of the cost of electricity, which can make a significant difference in their energy bills. Additionally, by reducing peak demand, this approach could also help to keep energy prices low for all consumers and can result in some rebates too.

What is the benefit to the developers?

By providing incentives such as reduced first costs, developers may be more willing to implement such a system. The first cost of laying cables, electrical connections, and connected load can be substantially reduced, resulting in cost savings for the developer.

Furthermore, many utilities and state electric regulatory commissions have regulations that allow for discounts and incentives for initiatives that can prove to be beneficial for the grid and the consumers. By implementing this system, developers can demonstrate that the total resource cost and system benefits outweigh the expenditure incurred by the distribution companies to set up the system. This can lead to discounts and incentives that can further reduce costs for the developer.

In conclusion, by considering the consumer perspective, we can create solutions that align the interests of all the stakeholders and benefit the society as a whole.  Overall, this approach can lead to a more stable and reliable energy supply, which is essential for economic development and social progress

- MPEnsystems Team