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For the past three years, the cost of electricity has surged at a rate surpassing inflation, burdening American households with rising energy bills at a time when many can least afford it. This unsettling trend has been highlighted by NEADA, an organization that advocates for state directors of energy assistance programs aimed at low-income families. They report that electricity prices have climbed by 11% since January, though this increase is not uniform across the nation. In Missouri, for example, costs have soared by 37%, whereas some states have experienced a decrease of up to 13%.
Amidst these escalating expenses, there is a glimmer of hope. Emerging solutions are being implemented to not only stabilize the nation’s aging power grid but also to potentially reduce costs for consumers. These interventions are crucial as they align with the public’s mounting demands for energy, especially driven by the proliferation of mobile devices and AI-powered technologies, which place significant demands on energy resources, particularly data centers.
This increased competition for energy is contributing to the affordability crisis faced by many homeowners. At a recent event hosted by Schneider Electric, a leading energy technology company, Mark Christie, former Chairman of the U.S. Federal Energy Regulatory Commission, addressed these challenges. “We are facing two crises in America today—the first is in reliability and the second is in affordability,” Christie noted. “From a reliability standpoint, the crisis we face comes down to supply and demand for power. Demand is growing and has been growing much faster than the new generating resources that we are bringing online. That leaves a gap that means reliability issues.”
The launch of ChatGPT in 2023 has further amplified the need for energy, as investment in data center construction has skyrocketed from $15 billion to over $41 billion, according to an analysis by the National Association of Home Builders (NAHB). This rapid expansion underscores the intense energy consumption demands of modern technological advancements.
Home Energy Price Levers
While consumers are feeling the mounting cost pressures for home energy, they also are demanding more from mobile devices, and from AI-powered innovations that require a large energy pull from data centers. All of the increased demand is causing competition for energy, so homeowners are exacerbating the affordability issue.
“We are facing two crises in America today—the first is in reliability and the second is in affordability,” said Mark Christie, former U.S. Chairman Federal Energy Regulatory Commission at a recent event hosted by energy technology company Schneider Electric. “From a reliability standpoint, the crisis we face comes down to supply and demand for power. Demand is growing and has been growing much faster than the new generating resources that we are bringing online. That leaves a gap that means reliability issues.”
When ChatGPT launched in 2023, investment in building data centers was $15 billion and now it is above $41 billion according to homebuilder association NAHB’s analysis.
Grid Interactive Home Energy
Utilities are starting to understand that homes can be a resource, yet recognizing that there is a significant amount of complexity to manage all of the energy draw in the home.
Marta Asack is the senior vice president of power products in North America for Schneider Electric and recognizes the importance of new energy sources.
The energy transmits first from the grid’s connection to the home, then the meter is the entry point to the home, next the panel is the distribution system in the home, and the breakers manage the load for each item in the home. All of that is orchestrated through a home energy management system, which today is only a single information flow, but in the future can be bi-directional.
“As we get more smart home technology and want to orchestrate the grid with the home, we need to add a software layer that can make choices to prioritize energy use,” Asack said. “From a cost perspective, we need to first make products very efficient, then we need to work with different providers to have the systems be interoperable.”
This is where the work of her colleagues comes into play.
“The utility industry now sees the opportunity to operate the home and the elements in the home in the same way we operate a microgrid,” said Scott Harden, the senior vice president and CTO at Schneider Electric, who oversees the company’s connected home platforms. “They are seeing that grid-interactive homes can help solve the AI and data center power crunch, and how they can achieve more resilient housing.”
As homes become more intelligent, it opens the opportunity to also be grid interactive. Next year, Schneider Electric will be capturing that opportunity by launching a digital backbone that connects home technologies, such as appliances, batteries and converters, to the grid. The software would provide better visibility on energy use, monitoring the loads in the home as a system of systems to then be coordinated for better energy use.
“We believe we are at an interesting inflection point in home energy technology,” Harden added. “There are now a high degree of systems in the home that are not only energy related, but connected and intelligent and in many cases interactive. These systems would benefit from some level of orchestration.”
Advancing Home Energy Policies and Programs
To create an efficient interactive home in its diverse ecosystem, standards and protocols are critical. There are three that dictate this environment. Matter is for device to device in the home, OCPP connects chargers and Modbus talks inverters.
“Five years ago this wasn’t a thing, now most are starting to adopt the same protocols,” Harden said.
IEEE 2030.5 is a communication standard to manage distributed energy resources in a smart grid, not a microgrid itself, but it is critical for microgrid-like functionality where energy resources like solar panels, batteries, and EVs work together. It provides a standardized, secure, and interoperable way for the devices to communicate with each other and with the grid to facilitate smart charging, demand response, and grid support.
Bridging technology is connecting that community level to the three home protocols, so the standardization is important.
Harden envisions more benefits for homeowners, such as subsidies from the utilities to participate in the programs along with programs for revenue generation.
Future Home Energy Supply
Schneider Electric is bringing a digital backbone into distributed energy market to support the grid’s aging infrastructure and to offer lower energy costs to homeowners.
Schneider Electric
Schneider Electric’s digital backbone will be able to monitor energy use in the home, providing access to usage data that can then inform the system with the ways to optimize performance.
The vendor agnostic platform will be a goldmine of data that will be available to the homeowner and to others that are building products and services around the segment.
The learning will inform future direction and strategy as well, including the performance and reliability of renewables as they become available. James Lee, partner at Blackrock Global Infrastructure Partners says that energy demands from data centers will push us into nuclear and geothermal.
“Small nuclear reactors are growing fast,” he said. “Storage and batteries and cleantech didn’t get killed in the One Big Beautiful Bill.”
Asack also talks about the importance of investing in skilled labor to support a more electrified world.
“We need more efficient systems along with more electricians,” she said. “We need to train them and get them to scale up. As we move into more AI and more connected systems and move away from more mechanical solutions, we have to upscale, and now it’s about software-based systems.”
The electricians have to work at multiple levels and will now need to understand increasingly sophisticated protocols, technology and where it’s all headed. In the future, Asack believes there will be advanced partnerships with data enters, buildings, offices, homes, and across different industries sand segments.
In the Energy & Environmental Building Alliance session, Transforming our communities into grid assets, Matt Brost, vice president of new home sales at Sunrun discussed the ways to design communities that can store and share energy with rooftop solar, batteries and flexible load management to help stabilize local power systems. His company is developing solar and storage as a service by enrolling communities into virtual power plant programs and already has more than 106,000 customers with an output of 416,200 megawatts in the past year, comparable to a medium-sized gas power plant. Through this program, homeowners have lower utility costs, better resilience, and reliable power during outages.
He shares that entire communities could be retrofitted, depending on the integrity of the existing utility infrastructure. His focus on new construction is delivering cost benefits from coupling solar and storage in the form of a power purchase agreement that is priced less than what the utility would charge, and by providing an additional revenue stream to the customer for participating in a virtual power plant.
“What’s even better is that these customers also end up with resilient homes that provide power to essential loads during outages,” he added. “It’s a trifecta for the homeowner–lower energy costs, locked in rates, and the ability to keep the lights on in an outage.”
Sunrun is seeing more demand for virtual power plants as demand continues to increase on the country’s aging grid.
Tomorrow’s Home Energy Formula
Harden did quick math on the homeowner upgrades that provide this grid reciprocity, which adds up to about $30,000 with solar, storage, EV charging, along with a smart thermostat. Utilities may offer some sort of rebate because it will give them access to the infrastructure provided by the homeowner.
The future holds a lot of possibility, but will take careful preparation and collaboration. With the future promise of a software-based program, it would not be bound by geography.
“The control point is software so homes can be connected digitally and managing end points that can be distributed,” Harden said. “Think of the home as the end point, preferences on the systems can be part of a capacity agreement with the homeowner such that they can pull five KwH at any time and could pull it from a temperature adjustment or taking from the battery and the end point in the home could help orchestrate that.”
This all means growing complexity because aggregating 500 batteries across a territory, would mean running multiple programs across all those homes.
It’s easy to see the possibilities and the opportunities, but also the multi-layered complexity. But there is promise for a big pay off where home energy becomes more affordable.
