Minneapolis-based start-up applies advanced technologies to power-demand peaks

On the nation's power grid, people use the most electricity when everyone else does — and that's a challenge to utilities.

In Minnesota, demand typically hits a peak on hot summer days, often late in the afternoon when people arrive home from work, turn on appliances and crank up air conditioners. The rest of the time demand is lower.

To avoid firing up extra power plants during the peaks, some utilities actively work to cut energy use at such times. It's called peak shaving or demand response, and takes various forms, including radio-controlled switches to cycle residential air conditioners on and off.

Now, a year-old Minneapolis start-up, Power Over Time Inc., is applying advanced technology to this task. By combining wireless communication, cloud computing and smart controls, the company hopes to flatten utilities' demand curves.

This approach doesn't have the cachet of green technologies like the Tesla Powerwall home battery or sun-tracking solar panels. For example, one focus of Power Over Time's technology is a mundane device sitting in home basements: the electric water heater.

"They are just not sexy — or so we thought," said Power Over Time co-founder Matthew Blackler.

More than 50 million electric water heaters are installed in U.S. homes, representing 9 percent of residential electricity use. A new study by the Brattle Group concluded that electric hot water heaters' ability to store thermal energy for a few hours represents a significant, low-cost opportunity to even out the peaks and valleys of electric demand.

"It's huge, it's absolutely enormous," Blackler added. "If you can control the amount of power flexed into them, and you can do it in a way that guarantees people still have hot water when they need it, then you are on to something. It's a big battery."

Power Over Time has just six employees, but they have technology depth.

Blackler also founded and is chief executive of Zef Energy, which owns, operates and sells fast charging stations for electric vehicles. Another co-founder, Nick Wormley, invented adaptive bit rate digital video technology for Internet streaming. Power Over Time Chief Executive Eric LeBow, Chief Technology Officer Ralph Jenson and Chief Financial Officer Charles Shannon all have tech backgrounds.

They are rolling out a two-way technology platform for utilities to offer peak-shaving services to customers for a range of equipment including irrigation pumps, electric vehicle chargers, electric heating and air conditioning. Power Over Time is not the first company in this market, but most of the current technology relies on one-way communication — and utility officials say they can't even monitor whether it's working.

"The idea of using two-way communication is becoming more mainstream," said Stuart Schare, managing director for energy at Navigant Research, a clean tech market analysis firm in Boulder, Colo. "It represents a trend toward more precise demand-response."

Navigant estimates that revenue from demand-response programs could reach nearly $10 billion by 2023. Industrial applications are a big share. But residential peak shaving is getting more attention thanks to the popularity of Wi-Fi enabled thermostats and other customer-controlled technologies, Schare said.

Minnesota is an important market because many utilities in the state, especially cooperatives, have done residential peak shaving for decades. Co-ops serve rural areas where electric water heaters are more common than in urban areas served by natural gas lines.

Power Over Time recently completed its first pilot deployment with Connexus Energy, the state's largest retail power cooperative based in Ramsey, Minn. It tested a Wi-Fi version of the technology to control 11 hot water heaters and 10 home electric vehicle chargers to shave peak loads.

In March, the company is launching a trial with Runestone Electric Association, in the Alexandria, Minn., region. Using a cellular version of the technology, the co-op will control a small number of water heaters, irrigation pumps and small generators.

About half of Runestone's 14,000 customers already participate in peak shaving for hot water, mostly by heating it overnight when electric rates are lower, said Ryan Rooney, the co-op's energy services manager. Coops will be looking at whether the technology can be used to improve existing services and offer new options, including energy storage for intermittent wind energy, he said.

"The beauty of what Power Over Time has presented is that as we look at more storage, their platform is scalable," Rooney said.

One feature of Power Over Time's water-heater controller is that it senses the temperature of each participating customer's water and can add a well-timed "comfort bump" of electricity to keep it hot. Co-op officials said this could help reduce the number of participants dropping out of hot-water peak-shaving programs after a being forced to take cold showers.

"We are intrigued with the technology, but we will have to see what the business case is," said Bruce Sayler, manager of regulatory and government affairs at Connexus Energy. " We are excited to be looking at a next-generation type of controller."

David Shaffer • 612-673-7090 • @ShafferStrib