Threads of Equity - Demand Response
Aaiysha Khursheed, Associate Director: Hello, my name is Aaiysha Khursheed. I’m a Principal Consultant with Opinion Dynamics. Today we are kicking off the first in a series of podcasts we’re calling Threads of Equity. We plan to use these podcasts to discuss how equity plays a role in our evaluation and research of energy reduction, decarbonization, and transportation electrification programs. Equity is a deep-rooted part of the energy-related research, we conduct at Opinion Dynamics. Our industry has a long history of evaluating energy efficiency programs, including those that focus on the energy needs of low-income or disadvantaged communities. Utilities provide their services at lower rates for some of these population segments. I’ve been in the field of energy efficiency for about 15 years. And over this time, I’ve had an opportunity to study how utilities design electric rates to improve accessibility of energy, particularly for low-income customers. I’ve focused on certain non-energy impacts from low-income weatherization programs such as reduction in sick days and increased comfort. And, like so many in our industry, have conducted numerous evaluations of programs that offer free energy assessments and direct installation of a variety of measures, particularly to customers who can’t afford to pay the full price for energy-saving equipment. So, ensuring the inclusion of equity in energy efficiency programs has been a large focus of research and evaluation for some time now. But what has been less commonly addressed is how Demand Response programs address equity, and our resident expert is Kessie, who really has expertise in the design and performance of Demand Response programs. She has been building this knowledge over a great deal of time and I wanted to ask her a few questions to see if she could provide her insights. So, what do you see is the big difference between energy efficiency and demand response programs, and who they’re targeting?
Kessie Avseikova, Vice President: Hi, Aaiysha, first of all, and it’s such a pleasure to connect with you and be a part of the series, but also talk on such an important topic that’s been really present throughout the almost 13 years that I’ve been in this space, and I’m sure for a lot longer even, even before me, and it certainly will continue to be quite as important topic of conversations here. Just like you, Aaiysha, I kind of initially approached the world of DR with kind of similar preconceptions kind of equity, just like you, right, so I started my journey in the clean energy space with evaluation of energy efficiency programs, right, very similar to the ones that you mentioned that you’ve tackled out over the course of your career. And so, to me, equity was always good, it’s, and it continues to be good but when you think about energy efficiency programs, right, more traditional ones, right as such as offering incentives for energy-efficient HVAC upgrades, or improvements, or for shell and installation upgrades, and kind of making homes kind of better positioned for customer comfort and energy savings, right? Just getting vulnerable populations to participate in those programs to actually receive those upgrades and become program participants right to be touched by the programs is a good thing, right? Because just by virtue of getting those energy efficiency upgrades, participants get that benefit of not only reductions in energy bills, energy savings, but also all of the things that that you’ve so thoroughly researched in your past, which is the comfort, the health benefits, the better air quality, noise reduction benefits, all of those things combined to kind of better lives, right. And research shows time and time again, that for vulnerable populations, such as low-income populations, right, who already reside in housing that generally suffers from lack of insulation, lack of good shell upgrades, or older energy efficiency systems such as HVAC systems and things like that, right? Those benefits kind of are so much higher when you think about what they get from that. And so, when I entered the world of DR, about six years ago here, kind of had the same preconceptions just hey, if we could only make people participants in these DR Programs that would equal good and it took a little bit of thinking and this is kind of what I was hoping to think through with you here, vulnerable populations in the world of DR, and I would submit that it means something… something different than it did in the world of older energy efficiency when you think about more traditional DR Programs and I guess for simplicity sake and taking it to a little bit of a bare-bones kind of thinking about our more common demand response programs such as, you know, smart thermostat program for instance, right wherein customers with smart thermostats can enroll in a program have their temperature set back during times of high peak. Those temperature setbacks in the summer mean increased indoor temperature. So hotter air and those… those setbacks also mean then lower load, lower load translates into flatter load shapes, more resilient grid benefits to the system, right? Further upstream, it means procurement of energy from different sources, right? It means different types of energy mix, right, coal versus renewables versus other mixes, right, that contribute to get that energy. But from the customer perspective, when you think about that participant with these thermostat setbacks in the summer, customers are hot. And with that setback in the winter, right, customers are cool.
AK: First thing I was thinking of when you’re started to talk about smart thermostat programs is, is well there is a benefit, they get a free thermostat, you know, it’s like they’ve improved their technology, you know, the widget got installed for free or sort of set. And what happens after,
KA: Exactly and the widget can be good, right? Smart thermostats are proving to deliver energy reductions in certain load shaping benefits, right. Especially when there is a time-of-use rate that’s in play in certain jurisdictions. There are a lot of benefits to what thermostats can actually empower customers to do. But when we think about kind of this more traditional time-focused demand response type of intervention with smart thermostat technology is an example of it right? What we do is we make customers feel uncomfortable for a period of time. And then what is more, our research shows that customers don’t always get energy savings, right. So, because of how smart thermostat technology works, right, customers generally get some preconditioning before that event starts. So, there is increased load in the times of preceding the event, which then kind of are somewhat offset by that, you know, setback. And then following the dispatch of an event, there’s usually this phenomenon that’s called snapback. Wherein as your system kind of tries to catch up to now reduce temperatures, what you see is, again, increased load. And what we’ve been finding across the board here is that not all customers, because they’re participating in this DR program, are experiencing reduction in energy, and in fact some customers… and much of that it can be these more vulnerable populations- so low-income customers, customers residing in housing that perhaps has less than adequate insulation, or, you know, weatherization upgrades – those are the customers who actually experience increase in energy consumption because of the dispatch of these DR events. So in total, they really, because of the setback techniques, their energy consumption go up their bills go up. What we’ve also found in our research, and this is where things get really interesting when we think about equity is that we’ve been finding that customers for more vulnerable segments, such as low-income customers, older customers, they actually tend to deliver a deeper impact, they tend to be more open to not overriding their thermostats they tend to be more prone to actually really trying hard to bring load reductions. But what that comes at is an increase discomfort, especially considering, you know, research studies show time and time again – ours included – that those types of populations tend to reside in slightly different housing scenarios, right. So, homes that again, lack a thermal shell to hold the heat to hold the cool air for longer. Right. So, so they get hotter, quicker, and then by the virtue of who those populations are older customers, for example, right, they also exposing themselves to potential health compromises.
AK: And they’re actually more at risk and, you know, negative health incidents through participating in a program.
AK: You know, affects their usage of electricity, or generally, I’m thinking of summer programs where you’re using air conditioning, but even on the other end, when there is, you know, a need for heat, and they keep their temperatures as low as they can. And that is not necessarily the best for older people or people who whose homes can’t retain heat that they use.
KA: Yeah, yeah, exactly. And so getting back to the question of equity here. I can’t help but notice some of the fallacies that that kind of occur in the space where just like myself in the past, right, I hear folks when thinking about designing DR Programs, right and talking about equity as ensuring equal access and opportunity to participate in these programs to… to all customers, and in fact making sure that DR participant composition is representative of a broader customer base, right. In other words, that there are just as many low-income folks or older folks or college students, for instance, or families with children right as there are In a broader population, right. Defining equity in that way, gives me pause and the question that I kind of, given this discussion, and I just had a using the example of a very common smart thermostat DR program, right. But the question that I can’t help but ask is whether in search of this kind of ensuring equity and kind of following this fallacy of equity transferred from the energy efficiency programs by ensuring equity in the DR programs and DR access in participation, we actually maybe perpetuating certain inequities even further right. And by not pausing and thinking about what would make a DR program equitable, providing equitable service providing equitable benefits, we may be falling, and we may be actually increasing kind of existing inequities.
AK: Feel that there are demand response programs that are taking those considerations in when they are designing these types of programs. Is there any evidence that treatment of equity in demand response exists? Or is this still just very uncharted territory?
KA: Yeah, that’s a good question. There is quite a bit of effort to try and understand that from what I’m noticing. Our clients that we… that we work with in the DR space, are really actively thinking about some of these questions and trying to better understand and kind of measure this equity. Though, Aaiysha, I have to say it gets pretty complex pretty quickly, right? We’re, as an industry, are entering in this multi-DR daze, right? Where there are multiple interventions targeting customers of all kinds of colors and sizes and shapes, right? We have these overlaid interventions, right? We talked about the smart thermostat program, that’s just the one right? That same customer may be also exposed to a program that targets load shaping through rate design, right? There could be additional program that tries to reap the benefits of the solar panels on that customer’s roof and kind of try to try to benefit that with electric vehicles coming into play more and more and more, there is the managed charging component to it right? And all of those things, they are meant to target the various aspects of flexible grid. And so, thinking about what each one of them means in terms of equity can get pretty complex, but it’s a necessary thing for us to think about as an industry as consultants and evaluators, right. Those of us in the space who work in designing and implementing and arranging these programs, to… to think from designing conceptual perspective is, “what is it that I’m trying to achieve through the deployment of these interventions?” “Because what kinds of resource benefits I’m trying to deliver?” And how would customers be a party to that and what would be customers experiencing? Right, these DR programs, they’re really targeting the benefits of the grid. And those grid benefits, right, may translate back to benefits to customers, both in terms of cleaner air sources of power consumed, right rates that are going up and down, right, depending on how energy is procured how flat the load shapes are. So there is no denying that even though programs target grid benefits those translate back to customer benefits, the question is ‘how’ and ‘what do we actually ask of customers’ and the equitable kind of distribution of that burden that we’re asking for them to go through? And from my perspective, we have clients who are asking these questions or thinking about these questions. And I think from my perspective, there’s really the first step to it is understanding, “Well, what is your demand response program?” Right, what would equity look like and a demand response program? Right? In the energy efficiency space, we talked about it, it’s removing barriers to participation, right, by providing enhanced incentives by doing direct install, by mitigating health and safety barriers before conducting energy efficient improvements. In the DR space… well, that may be actually not removing… it like it’s not necessarily instilling barriers, but it may be actually thinking carefully about who to engage a little bit more who to target with the demand response interventions. And also, to what extent right.
AK: The question I asked when thinking about a demand response program is what are we asking the participants to do? What is the impact on that participant? It’s going to be different for different people. We’ll eventually get that end result of perhaps, you know, less burden on the grid, or cleaner air, lower greenhouse gas emissions… but who does this affect within our society who participates? Like societal benefits and who we’re asking? So, you know, I studied as an economist. So that’s, of course, my first instinct is to look at what are we asking the few to do to benefit the many?
KA: Exactly, exactly. And what can programs do to support that? Going back to our smart thermostat example – not to pick on smart thermostats, I ultimately think they’re a great enabling technology, right, that enables quite a bit of load flexibility here and it has a lot of power, right. So, when thinking about, “Okay, well, what are we asking customers with for shelling an installation to do” right, and how could it adversely impact? And what can we ask them to do? Right? Like, can we adjust interventions, temperature setbacks, to be a little bit more aligned with what customers could be able to stomach right? While not putting them in front of health concern, or anything that could… that could really kind of jeopardize their health and safety, right. And how to adapt those technologies, those interventions to be differentially treating different customers, right.
AK: I think what has to be done in the kind of as a first step is to really pick your program tracking data and figure out demographically who is participating. And then from there, figure out the design that can be tweaked, depending on the customer type. You know, we talked a little bit, I think, before this podcast about the difference between equity and equality, where equality is making sure everybody has equal access, but equity is focusing on the outcomes so that we bring everybody to a certain level where they’re all kind of on an equal playing field.
KA: Yeah, for DR Programs, right? It’s the equal playing field, like you said, I should, what is it that we’re asking people to do. And you’re absolutely right, I think understanding your customer base hypothesizing on what type of load reductions can these customers deliver. And at what cost to customer comfort? What types of interventions can we ask customers to do? What kinds of differentiated treatment can we afford as part of the program? Right, and to whom? And then also, there’s a lot to be said about ongoing research in an effort to understand whether it’s primary data collection service conversations with customers, right and understanding, well, you just participated in this event, how was it for you? What did you do? You know, and how did it go? Does it need to be changed a little bit, right? So… so understanding what it is that customers go through when they actually are a part of those events and thinking about how to tailor future interventions toward that. There’s also a lot to be said about the ‘silos of excellence’. Mark Martin has his famous quote, “they are programs operating in their own silos of excellence”, and then breaking those silos can actually further help enhance equity. And in the DR space, I think a lot about that, because, well, hey, if you’re really looking to deliver meaningful, continuous, sustained load benefits to the grids, right? What matters to you is the homes that customers live in, right, the load that they that those homes call for, whether it’s cooling load or heating load, and then also the behaviors that customers can afford to perform to change it, whether those are automated, or their customer initiated. And so, there’s a lot to be said about, well, is there anything that we can do in this space to kind of break those silos and blend demand response programs with energy efficiency programs? Is there a way for us to locate customers who are active DR participants who perhaps due to the state of their homes are achieving deeper deep load impact, but are achieving at the cost of really heightened discomfort? And is there a way for us to actually bring in energy efficiency solutions to those people’s homes? Whether it’s a more efficient HVAC system, or insulation and air sealing, you know,
AK: That might impact what’s the demand responses on that event, but overall, when you think of the energy-efficient outcomes, you know, lower load overall. And so you’re right, yeah, tearing down those silos are really important. And I think, you know, conducting a post-DR events survey is like, “Oh, give us that information.” Because then we can take it and learn and figure out what’s working for these customers and what’s not in the how much of an effort customers are going to… to really participate.
KA: Yeah, exactly. And there’s something else to be said about, about marketing and outreach, right, and communication and inequity that we can ensure through how we approach talking to customers about DR. What we ask customers and whether any customer segments, whether it’s vulnerable populations or perhaps linguistically isolated populations, right, to making sure that communications that come from DR programs because hey, you know, you talk about DR this is really talking to customers and saying, we are going to be dispatching an event and here’s what you can do or what you shouldn’t do or what you should avoid doing. Right. Not all of those messages necessarily resonate equally with every subset of the population. And so I think there’s also something to be said as program designs are underway to maximize DR benefits, right, ensuring equity also starts with, well continues actually with, with how communication is structured with the dialogue with the customers, right, which is continuous within a DR program framework, right? That’s another interesting distinction between demand response and energy efficiency programs right in energy efficiency in my PLMA trainings that refer to energy efficiency is this like, hey, this is like a one-night stand, right? You go when you install an energy efficiency upgrade, right? You have this great relationship with your customers while the project is undergoing but then when you’re done – you’re out in your like, you’re gone right? And the system continues to perform for that customer, right? Demand Response is like a relationship – is like a marriage, right? You engage customers in a program, but then you want for them to show up and you want for them to be there for you when you dispatch these events, month after month, season after season, year after year, right. And so that type of relationship and marriage kind of also involves quite a bit of communication, quite a bit of dialogue between customers and program administrators, or aggregators across the country. And so, so to me, it’s also important to think about, well, how is that communication structured? Right? Are program administrators tailoring their messaging their communication strategies to the conditions and environments and spheres where those customers live, is that actually equitable? Or is that communication tailored to ‘the most’ at the sake of kind of really not resonating with certain subsets of the population? So… important thing to think about as well, I think.
AK: Yeah. So, yeah, in fact, as you were talking about this, I think DR programs and the communication, how do you keep the communication fresh? How do you, you know, consistently engage the group of customers who have been participants to continue to deliver, but also at the same time, making sure that you’re addressing them equitably? And making sure that the burden isn’t just placed on a few. One area that I wanted to think through with you was, how can we work to capture or measure DR programs and whether they’re capturing equity? Are we able to quantify you know, as evaluators, we think about measuring savings, and obviously, impacts of energy savings or reduction of demand? Those are things that we have quantified for years and years. But something that we’ve started to do more is in energy efficiency programs, you know, looking at non-energy impacts, and looking at what segments of the population are being affected by a program and who are we targeting? Have you come across any sorts of metrics for DR programs that are addressing equity? And if not, what kinds could we think about our design?
KA: Yeah, such a good question. I’m pausing here, because I think there’s a lot of work underway in this space to think through those metrics, right? A lot of utilities are working to understand energy burden as an equity metric, right? Focus on geographic areas to better assess whether their programs and interventions are equitable. In the space of DR I think all of it counts. And our clients are also working on thinking through those things. I think a lot of the work is still very much in progress. And the jury’s out there on what exact metrics are to me at this stage, it comes to… to really understanding first and foremost, what equity actually means, within a specific program design. Aaiysha, you and I talked about, it gets very complicated very soon. And thinking about standardized set of metrics to measure equity and DR can result in the same fallacies as we talked about, like resulting from direct transfer of equity in energy efficiency space to equity in a DR space. I would submit to you that equity in the context of a smart thermostat program that automatically adjusts customer set points can be looking slightly different than from a voluntary Demand Response program, right? Where customers are in charge of the reductions in their load during event hours, you know, so those things are important to think about. And from my perspective, that actually, the cornerstone of thinking about equity is that it is different. It depends on the program; it depends on the design. Some of the things that we’ve been thinking about here within our DR team and at Opinion Dynamics, some of the metrics that could be helpful in helping design kind of the framework of equity measurement could be differentiated load impacts by various customer segments, right. Understanding load impacts, not only during the hours, when the events are dispatched but also in the surrounding hours right painting a bigger picture of the burden that customers experience as a result of that. Paired with that there’s certainly something to be said about metrics collected through primary data raid, both in terms of discomfort experienced during DR event, noticeability of those of and again, breaking it by… by subpopulations of interest, whether it’s geographically, whether it’s across income lines, whether it’s across, you know, housing characteristics or HVAC systems could be good starting points in order to build kind of this more appropriate measurement of equity kind of paradigm within our space.
AK: Yeah. And it would really give us you know, right, just an understanding of who’s participating, and what characteristics are of those who participate. And then from there, you know, kind of more holistically looking and figuring out how can we adapt the design of the program to be more affordable?
AK: So, what is the difference between equity and equality? And do you feel that demand response programs do one better than the other?
KA: So, when we think about equality, right, and you talked about that Aayisha, equality is ensuring that everybody has equal ability, while equal access to participate. So that’s really defined better as in terms of eligibility criteria, right? For demand response programs, that might be, hey, everybody with a central air conditioning system is eligible to participate, right? That would be kind of a metric, or like a predictor of equality. Equity, on the other hand, is whether people are able to actually participate. And I think, again, thinking in DR space, and thinking about these things just a little bit differently, right. I’m thinking, equality is, “well, can I get an incentive for being a part of something for being offered the option to reduce energy?” And I think that’s something that we should think about as an industry. Should that be something that.. that should be limited or not? If a low-income customer or an older customer or a customer with perhaps not perfect English language proficiency, wants to get 50 bucks for enrolling in the DR program, and then kind of 25 bucks in addition on their bill for, you know, participating in a few events in the summer? Is it a good idea to limit that ability? Maybe, maybe not. Ultimately, it’s a benefit to the grid if the customer is in right? What’s the cost of getting that customer to continuously engage? Perhaps it’s slow. So hey, maybe it is a good idea? Or maybe it isn’t. But then when we think about equity, right, is, what are we… what’s the burden and the benefit that we’re placing on customers? And there I think, again, with DR programs, the equation is quite a bit different, right? We’re asking people to shed load during certain hours, which ultimately means that they might be… are likely increasing load during other hours, ultimately, increasing load overall, which is not a good thing, right. And if the populations that are more vulnerable are increasing that load disproportionately to a higher amount, already increasing their burden in terms of energy bills, while decreasing their comfort during the days when the events are dispatched, I would submit that’s not very equitable.
AK: Very true. We’re trying to be kind, I guess, is the way to think of it, when we’re not fully engaging the infirm those with poor building envelope, you know. But it is taking the decision out of the hands of that customer. So that’s kind of the balance I think that VR programs have to make, we can engage everybody, you know, but it’s going to be a lot harder on certain people, but we shouldn’t necessarily take that decision out of their hands.
KA: Yeah. And there’s a lot to be said about the economics of it, right? Ultimately, the goal of DR programs, right is to reshape the load curve, right, making it a little bit more flexible during the times of peak demand. And what matters here is volume just as much as the cost paid to achieve that volume, right? From a pure cost-benefit perspective, right. So, you can engage 100,000 customers, and cumulatively those customers deliver a ton of load, right, and you pay those customers the same amount for that load that they bring to the table right as flexible resource. But now, it could be that 20% of those customers deliver 80% of the load reductions, and they’re being paid the same as the 80 remaining percent of customers who cumulatively deliver 20% of load reductions. The question of equity to me starts with, well, what are those 20% who deliver most of the load reductions looking like when they get the same amount of payment? Right? Again, these payments, structures, program designs, they vary across demand response programs, right. Some customers are being paid on the actual calculated load reductions, others are being paid a flat amount, it just really depends. But I think those are exactly the things to think about when we think about equitable demand response programs, right? It may not… and inequality actually comes into play here just as much as equity, right? Like, do we open these programs to everyone and pay everyone the same flat amount, though we know all too well, that not everybody is going to be able to deliver that ‘like amount’? Are we going to be okay with paying a flat amount if, for example, certain customers are not going to be able to bring this load to the table every time? Who are those customers? Is it equitable, what burden we’re putting in customers we’re actually delivering and are showing up every time. So, I think those cornerstone concepts and things for us to think about as these programs increase in presence and as we start to engage more and more customers.
AK: Kessie, I want to thank you for having this discussion with me today about equitable demand response. I think that we all learn a lot about how we can’t just straight apply what we do with energy efficiency programs and equity to demand response programs and that we do have to think about it a little further.
KA: Well, Aaiysha, you’re so welcome. And it was my pleasure to connect with you on such a lovely day here both on the West Coast and on the East Coast.
KA: …And talk about this. I’m excited to track these series. I think we are tackling a lot of really important questions. And those questions are only going to increase in urgency for us to answer and.. and find good solutions to. So, I appreciate the opportunity to contribute my voice to the dialog and discussion. I certainly look forward to hearing other podcasts in the series – it’s such a complex and intricate topic. One voice in one head is certainly not gonna solve it.
AK: It’s definitely an area that is near and dear to our hearts at Opinion Dynamics. So, I think that in each podcast we’ll be able to explore different topic areas.
KA: Indeed. I really look forward to listening to all of the podcasts – it’s exciting. On my end, I also wanted to thank you for moving our Diversity, Equity, and Inclusion efforts at Opinion Dynamics further. For spurring these conversations, for bringing these Threads of Equity discussions to future listeners of this and other podcasts but also to our internal staff. Helping us think about these topics more and more.
AK: Oh, well thank you. It’s been my pleasure and I fully enjoy the work.