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Internet of Things June 2021 Viewpoints

Technology Analyst: David Strachan-Olson

Expanding Demand-Response Networks for Grid Balancing

OhmConnect has received financing from Sidewalk Infrastructure Partners to increase the number of households in California that can participate in aggregate demand response for the state's electricity grid. Demand-response resources are demonstrably and inexpensively helping to balance supply and demand for electricity during peak periods.


OhmConnect is a start-up that aggregates small demand reductions in energy use across many households to sell into California's wholesale electric market. Users who reduce their energy consumption on request receive a portion of the sale. At first, the program relied on behavior-based reductions in electricity demand (turning off air conditioning units and other energy-intensive appliances) among OhmConnect users, but over time, the company has added support for Internet of Things (IoT) devices. The system now supports automatically adjusting certain smart thermostats and turning off smart switches on command from OhmConnect.

OhmConnect recently received $100 million in funding from Sidewalk Infrastructure Partners, a firm with funding from Alphabet, to expand its network of smart switches and thermostats in California. OhmConnect will receive $20 million in funding, and $80 million will go to providing smart plugs and smart thermostats for California residents. The project—Resi‑Station—builds on OhmConnect's existing network of 150,000 customers in California, which amounts to approximately 100 megawatts (MW) of dispatchable demand-response capacity. OhmConnect hopes the funding will help it expand to 550 MW during the next three years.


As counties look to decrease carbon emissions from electrical grids and incorporate intermittent renewable energy, grid operators will need to add new ways to match supply and demand on the grid. Significant attention is on energy-storage technologies, but energy storage has significant up‑front costs. In comparison, demand response has low up‑front costs but can still help reduce the need for peaker generators, which are expensive and often heavily polluting.

Aggregating and selling demand-response capacity to electric markets is still a new concept, and only a few regions currently provide the necessary regulatory environment. Efforts to continue expanding aggregated demand response in California is a strong sign that other markets may adopt similar rules in the coming decade. Demand-response capacity can also act as another distributed energy resource for operators of virtual power plants.

The availability of low-cost IoT technology could help enable more devices and appliances to respond automatically to demand-response signals, which creates a more reliable response. Ideally, such systems would not operate a binary on‑off switch but instead offer various modes that let users determine how their devices should respond to demand-response signals. Although the Resi‑Station project focuses on residential buildings, the same demand-response approach can work in commercial and industrial facilities, which are large energy users. However, potential impacts to business operations complicate implementation of demand response in such environments.

Relevant Areas to Monitor

  • Smart Grids

    The increased use of intermittent renewables and energy storage will require a significant modernization of electric grids. Smart grids, which offer advanced mechanisms for monitoring and controlling the flow of electricity, could also make grids more efficient and reliable and decrease energy costs.

  • Cybersecurity

    Cyberattacks are increasing in frequency and severity. Networked cyber-physical systems require extensive security measures, because attacks against such systems could cause significant damage. Hackers constantly find new vulnerabilities; therefore, organizations must continually monitor and improve their systems.

Impact Scale

On a scale of low, medium, or high, the anticipated level of impact for this topic is: Medium.

Impact Timing

On a scale of now, 5, 10, or 15 years, the anticipated impact timing for this topic is: Now to 5 years.

Opportunities in the Following Industry Areas

  • AI/Automation/Software
  • Cybersecurity
  • Energy
  • Infrastructure/Utility
  • Internet of Things