For $300, would you give National Grid control over your thermostat?

Gov. Kathy Hochul wants your household to become part of a “virtual power plant” to help ease strain on the electric grid.

The details haven’t been settled, but here’s the general idea proposed by the governor: Your utility company would reduce your electric bill by $25 a month for a full year, a total of $300. In return, you would allow the utility to adjust your smart thermostat by a couple degrees on days when electricity usage is soaring – typically, the hottest days of the year – to throttle back your air conditioning and save energy.

Grid operators call this “demand response,” and it’s a well-established practice among large commercial and industrial companies.

During a stifling three-day heat wave last June, for example, large utility customers dialed back their usage by 1,000 megawatts – enough for roughly 800,000 homes and about 3% of the state’s total demand that day. That helped keep the grid stable even though several aging gas-fired power plants failed to come online, according to the New York Independent System Operator.

Now state energy officials want to tap into the potential for residential demand response.

The state Public Service Commission will develop the rules for Hochul’s program, which she calls Excelsior Power. PSC officials said they could not provide any details until the proceeding gets under way.

But several utility companies already have modest demand response programs that offer a preview.

National Grid, for example, has about 28,000 residential customers in Upstate New York enrolled in its ConnectedSolutions program, which allows the utility to turn down their air conditioning during periods of high summer demand. Participating customers get $50 for enrolling, plus $20 a year after two years if they continue to participate.

Remember that June heat wave?

While commercial and industrial customers cut back statewide demand by 1,000 megawatts, National Grid’s 28,000 residential customers cut back another 30 MW, roughly the equivalent of 24,000 households at full power.

Although residential demand response has a marginal impact at this point, the data show its potential to cut costs for everyone, according to the utility.

National Grid adjusted customer thermostats on a total of 16 occasions last year, from June to August. Each occasion lasted three hours. All told, that saved an estimated 1.47 million kilowatt-hours, utility officials said.

National Grid said those reductions could potentially yield $4.7 million in benefits if they led to a corresponding reduction in the amount power plant capacity and transmission infrastructure required to serve customers during peak events.

Those benefits would outweigh the $1.5 million cost of the program, utility officials said. The program is funded by ratepayers.

But grid experts caution that integrating demand response into the system is a complex challenge. There’s an uncertainty factor, because the programs are voluntary. If participants decide to override the utility and adjust their thermostats manually, they can.

Kevin Lanahan, a vice president of the NYISO, said it’s not clear how much generating and transmission capacity can be eliminated by demand response, especially when it involves households and small commercial customers.

“If for some reason … participants choose not to mitigate their load in real time, but we’ve counted on that … we just created a real risk for ourselves,” Lanahan said.

On average, about 20% of the participants in National Grid’s program opted out during the 16 electric events last year. They overrode the utility and set their thermostats manually.

New York faces a stiff challenge to provide more electricity in the future, as demand surges from chip fabs, data centers, electric vehicles and others. All the options – nuclear power, fossil fuel power, renewable power, transmission lines – are expensive and time-consuming to build.

Demand response, on the other hand, is a software challenge. And it’s something that can be pursued aggressively now to avoid over-building capacity in the future, advocates say.

While building more power plants is likely in our medium-term future, honing the technology for a strong demand response program is a “near-term” opportunity, said industry expert Audrey Zibelman, a former chair of the PSC.

“Rather than spending a lot of money on a new substation or a new generator, you’re using smarts and software and much better, faster modeling and analytics to take advantage of the flexibility you now have,” Zibelman said.

Demand response is part of a wider trend that aims to offset the need to build more power plants. Other initiatives would draw power onto the grid during peak demand periods from lots of small sources, including solar-fed household batteries and electric vehicles.

Altogether, these efforts are known as “virtual power plants,” because they reduce the need for traditional generating facilities.

One limitation on household demand response programs is the need for special equipment. To enroll in Excelsior Power, homeowners will have to install a WiFi-enabled smart thermostat so that their utility has access to it.

National Grid’s existing program, ConnectedSolutions, also requires participants to have either a heat pump or central air conditioning. Only 29% of New York households have such central cooling systems, limiting the pool, said Jared Paventi, a National Grid spokesman.

ConnectedSolutions also has a natural gas program, with 63,550 households enrolled. About 60% of New York households heat with gas, Paventi said.

Including other New York utilities, there are about 110,000 residential customers statewide enrolled in demand response programs, the PSC reports. According to National Grid’s data, each household represents about 1 kilowatt of capacity. If that’s true statewide, the current enrollment represents about 110 megawatts, or about the capacity of a modest-sized power plant.

Hochul proposes to spend $33 million on Excelsior Power, which would be enough to add about 100,000 more households, said James Denn, speaking for the PSC. Typically, costs like that are passed on in rates to all utility customers.

Demand response chips away at the most expensive electricity. The power plants that are called into service when the system is strained by excess demand are typically the oldest, most expensive and often the most polluting sources of energy in the state.

The less those plants run, the better off consumers are, said Elizabeth Stein, state policy director at the Institute for Policy Integrity at New York University.

“We have, at any given point, a certain number of antiquated, inefficient plants sitting around waiting to be called for those hours,’’ Stein said. “And demand response can help you call them less often and potentially, someday, not at all. And that certainly helps contain costs.”

Staff writer Tim Knauss can be reached by email or at 315-470-3023.