IoT and Demand Response for Residential Consumers – Part I

Over the past few years, I’ve been working on software and devices which use the OpenADR and CTA2045 demand response protocols. The software and hardware are being used in research projects in the ESIF lab at NREL, and are part of a new wave of devices which will offer automated demand response capabilities to consumers.

This is the first article in a two part series. In this first post, we’ll cover demand response from a high level and discuss how consumers can benefit from IoT devices that support demand response. In the second, part we’ll dig a little deeper into how the OpenADR and CTA2045 protocols can be used to implement demand response.


For those that don’t know, an IoT device is an Internet connected device. As an undergrad in computer science, I recall professors saying things like, with IPv6, your toaster will have an IP address, and computers will fit in your pocket, both of which seemed like strange concepts at the time. While my toaster is not connected to the Internet, I do have a computer in my pocket and have the ability to remotely monitor and control my home’s temperature through a connected thermostat. Suddenly, the usefulness of connected devices (IoT) is taking shape.

Demand Response

Demand response is the act of reducing energy use when the cost of energy is high. The cost of energy fluctuates in response to the amount of energy available. Many consumers pay a flat rate for energy and aren’t affected by fluctuating costs, but more utilities are offering variable rates which take into account these fluctuating costs. Variable rates encourage consumers to shift energy use to times when less energy is being consumed. For example, consumers on a variable rate might run the dryer on nights or weekends instead of during the day. Programmable thermostats can also help shift energy use.

Another aspect of demand response involves sudden changes in the power grid which further reduces the amount of energy available. Since the demand for power remains the same during such an event but the amount of power available goes down, the cost goes up. Given these types of events are unforeseen, shifting energy use doesn’t solve the problem. Instead, devices receive a signal in realtime when such an event occurs, and the device responds automatically by reducing energy use. This is called Automated Demand Response and IoT device makers are exploring options to implement it.

Automated Demand Response

To be viable, a combined automated demand response/IoT system needs to be flexible: the device must be compatible with any utility. Put another way, changing rates or utilities must not require changing devices. Open protocols are one path towards this needed flexibility.

A demand response protocol called OpenADR – Open Automated Demand Response – aims to fill this need. OpenADR is an open protocol which means it is unencumbered by patents and can be implemented by anyone. OpenADR products are certified by a third party which helps ensure interoperability among vendors. The OpenADR website has a list of certified products.

IoT and Automated Demand Response for Consumers

Utilities across the US are running pilots which utilize IoT devices and OpenADR. California in particular is a proponent of OpenADR in a big way, requiring the use of OpenADR in many new utility pilots and programs. Many types of devices are being tested, including thermostats, water heaters, car chargers, and pool pumps.

It’s clear consumers are welcoming IoT devices, but will they welcome utilities or other third parties to control their devices in the name of automated demand response? This is a new interaction which raises additional security issues.

IoT and automated demand response combined will give consumers more control over their energy footprint and help manage energy costs for both the utility and consumer. Unsure if your IoT device supports demand response? Be assured that companies selling IoT devices today are exploring options for automated demand response for tomorrow.

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