February 9, 2022
By: Isaac Maze-Rothstein, Partner Success Manager
As we re-imagine our power systems to reduce greenhouse gas emissions, a crucial step is preparing the electric grid for an influx of intermittent renewable energy sources, like solar and wind. Creating a more flexible grid is essential in order to manage a cleaner, but more variable, power supply. In order to better quantify the potential of demand-side flexibility to reduce the grid’s carbon emissions, Leap is developing new tools to calculate the decarbonization impact of various types of energy assets across different geographies.
The carbon intensity of the electric grid varies throughout the day, depending on the energy sources supplying electricity at any given time. Today, when the supply of renewable energy can’t meet peaks in demand for electricity, we typically rely on gas-powered “peaker plants” to supply the additional power needed because they can ramp up their energy production very quickly. Peaker plants are expensive to operate and emit more pollutants per unit of electricity than baseload power plants. Using peaker plants to keep the grid in balance means when the renewable energy isn’t producing enough electricity, CO₂ emissions spike.
Mitigating the dirtiest hours of the day
Leveraging demand-side resources for grid flexibility services is an increasingly attractive approach to sustainably manage peak energy demand. Grid services programs incentivize energy customers to reduce or shift their energy consumption when demand is peaking, avoiding the need to turn on peaker plants when renewable energy supply can’t meet demand. The explosive growth of distributed energy resources (DERs) in households and businesses has created an opportunity to expand the use of demand-side resources to support grid stability.
Leap has embedded CO₂ emissions analysis into our calculator tool to explore the decarbonization capabilities of grid flexibility programs.¹ In collaboration with WattTime, we’ve modeled the CO₂ emissions we can offset by replacing peaker plant production with different types of flexible capacity. As a result, we can better understand the potential of individual load types to curtail emissions by participating in these programs.
Assessing the flexibility potential of fast-growing DERs
Smart thermostats and electric vehicle (EV) chargers are two types of residential assets on Leap’s platform that are rapidly expanding. The number of residential smart thermostats has grown from 7.8 million in 2017 to nearly 15 million homes in the US by the end of 2021. 2 million hybrid and plug-in electric vehicles were on the road by the end of 2021, growing from just 16,000 in 2011. Using our calculator tool, we looked at the emissions impact these DERs can have today by participating in grid services in California’s IOUs — as well as how that impact could scale in just the next three years.
According to the California Public Utilities Commission report on Smart Thermostats, there were 325,000 smart thermostats installed in homes across these territories from 2018 to 2019. These smart thermostats can respond to signals from the grid to adjust the temperature of the house to reduce energy demand. If all of these thermostats participated in grid services, they would offset 53,000 tons of CO₂ while generating over $16 million in grid services revenue annually for device owners and operators. To put this in context, 53,000 tons of CO₂ is equivalent to the CO₂ emissions from 6,000 homes’ electricity consumption for a year.²
Looking out to 2025, S&P Global forecasts an 11.4% growth rate for smart thermostat deployment in the US. Assuming demand in California tracks along the national average through 2025, an additional 1.2 million smart thermostats will be installed in California. Using only the smart thermostats installed between 2018 through 2025, there will be 1.2 GW of flexible load available to participate in grid services. These thermostats could offset CO₂ emissions equivalent to 30,000 homes’ electricity consumption for a year.
Like smart thermostats, EV chargers enrolled in flexibility programs can respond to signals from the grid to dispatch energy stored in EV batteries back to the grid, or shift their charging to times of the day when more renewable energy is available. According to the US Department of Energy, there are currently approximately 425,300 electric vehicles on the road in California.
However, today only a fraction of these EVs are connected to chargers well-suited to respond to signals from the grid. Level 2 chargers are in a sweet spot for grid services: they are more powerful than normal wall outlets, but not often relied on for rapid EV charging purposes. According to the California Energy Commission, there are currently 56,643 Level 2 chargers across California. Using Leap’s calculator tool, we estimate if these chargers participated in grid services, they would offset 3,400 tons of CO₂ — this is the equivalent of offsetting 400 homes’ electricity consumption for one year.
By most projections EV sales are set to skyrocket in the next few years. The California Energy Commission estimates that by 2025, California will need 240,000 Level 2 chargers to enable widespread EV adoption. Using Leap’s calculator tool, we estimate that active participation in grid services by all these Level two EV chargers in 2025 would result in offsetting 1,700 homes’ electricity consumption for one year.
Scaling impact In 2025, California’s smart thermostats and Level 2 EV chargers alone could offset CO₂ emissions equivalent to 32,000 homes’ electricity consumption for a year by participating in grid services. Harnessing the potential of other energy assets — such as battery storage, building management systems, pumping systems, cold storage, and other grid-connected resources — will greatly amplify this impact.
The growth of DERs, as well as financial incentives to participate in grid services, is accelerating the potential of demand-side flexibility to phase out the dirtiest hours of the grid. Leap is enabling more homes and businesses to access grid services opportunities by making it easier to connect their flexible loads to wholesale energy markets. By scaling up the role of demand-side resources in balancing the grid, we can empower energy users to become active participants in reducing the carbon intensity of our power systems.
¹ This analysis focuses on grid services programs in territories of California’s investor owned utilities (IOUs). ² Determined using the EPA’s Greenhouse Gas Equivalencies Calculator