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The Economics of OhmConnect

How we make money, so you can too

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Cisco DeVries
June 8, 2021

OhmConnect recently relaunched our program (along with a brand new look and feel!) and it feels like a good time to revisit the economics of our business and pull back the curtain so you, our valued customers, can know what it is we’re trying to accomplish, how the business works and how you can earn maximum rewards. In particular, we want to explain how some of the State’s regulatory changes have impacted how we reward customers. Let’s dive in!

Where does OhmConnect’s money come from?

In short, OhmConnect acts as what we call a ‘virtual power plant’ because the most efficient power is the power we don’t use.

When there’s extreme demand on the energy grid (like when temps soar and everyone has their air conditioners on blast), the state of California can either:

  1. Burn a ton of dirty, expensive fossil fuel to meet the demand
  2. Hope that Californians use less power by asking nicely on Twitter and the radio
  3. Use blackouts to turn off the power for a large number of customers when options A and B don’t work

OhmConnect offers an alternative (and we think better) option: pay everyday Californians to use less power when it matters most. Instead of paying for that dirty power plant, the state pays you, our hundreds of thousands of community members who conserve energy at critical times.

How does OhmConnect make money and how much of that do we pass along to our customers?

First, some context: OhmConnect is still a startup, the energy markets don’t yet fully value the energy we reduce, and the rules we operate in keep changing.

However, it is already clear that we are helping California (and the world) get to a cleaner  electricity grid and the virtual power plant we are building will be increasingly valuable. The process of how we get paid changes a bit from year-to-year, but it generally boils down to two parts.  

  • We get paid by utilities and other load serving entities an amount for every reliable kilowatt of energy reduction we can promise for the whole year.  
  • OhmConnect also gets paid in the energy markets for every kilowatt of energy reduction during our events. The value of that kilowatt varies from about 4 cents to $1, but we try not to have events unless the value is higher than $0.25.  

So what does this mean for you as a customer?

In short, we pay many of our top performing customers (hello Diamond and Platinum folk!) more than we get actually paid for their energy reductions. How can we afford this?

Every year so far, our customers have become better at saving energy. We are giving you some of the benefit of that improvement even before we get paid for it. In short, we are investing in our customers. We are counting on our customers to keep improving, and for the energy markets to more accurately value your energy reductions. We are willing to pay our best customers more than we get paid today because we are confident that in the near future we can make up the difference as we all get better at consistently reducing energy during events.

We are also working to provide different ways to redeem your Watts - smart home devices, prizes, donations and the new Wheel. These new reward options will be fun, help you get better at saving energy in the future and give you lots of new ways to be rewarded.  

Pro tip: Some of the best “value” for your Watts will be in the Wheel, devices and prizes. For example, many of our partners are making their products available through our store at heavy discounts you can’t find anywhere else.  

Been with OhmConnect a long time? You may remember that we’ve made lots of changes over the years. These changes are mostly made because of changes in the State’s rules and regulations. For example, the State recently changed the rules so that single big reductions in energy use (we see you, circuit breaker flippers!) became less valuable than consistent reductions across all events which is most likely for someone with a smart thermostat and smart plugs to accomplish. You might remember our $5 flat payment for flipping off your circuit breaker a couple years ago? Now, we offer free and reduced price plugs and thermostats so everyone can automate their savings day in and day out. These changes are directly in response to changes in the way OhmConnect is paid.

power plant

How can I earn maximum rewards in the new OhmConnect?

While things may have changed, it’s still very possible (and pretty easy!) to earn great rewards with OhmConnect and we want to share the tips far and wide. Here’s how:

  1. Keep your eyes open for Surge Bonuses! We will let you know if an OhmHour coming up is especially important to the grid and that’s when you should Go. All. In. Not only will you be doing your fellow Californians a solid by helping to keep the lights on during these critical times, you’ll also be able to earn pretty amazing rewards! (We’re talking 2x, 3x, even 10x multipliers on the amount of Watts you can earn during a single event.) If there’s ever a time to power down completely and head out for a walk around the block, this is it! Most Watt multipliers come during the summer months, but they can happen any time, all year round.
  1. For the events that are still important but perhaps not as lucrative, automate! As you may already know, some appliances in your home are bigger energy hogs than others. By connecting a smart thermostat to your HVAC and a smart plug to your refrigerator, you’re able to participate in OhmHours and AutoOhms automatically without lifting a finger. No need to sit in the dark. Automating your biggest energy hogs means you can maintain a high status and keeps you eligible for the best payouts throughout the year.
  1. Get strategic in the Rewards Marketplace.
  • Try your luck and opt in for the prize you want. In the past, for nine months of the year the energy events our customers received were ‘Prize OhmHours’ in which the reward was simply an entry to win a prize. Now every single OhmHour rewards you with Watts that you can redeem as you wish. And epic prizes are still on the line! You can save up your Watts to enter a draw (with as many entries as you want!) for something you really want. (Like Seth D from Richmond, CA who won his energy bill paid for a full year! Seth saved up his Watts and went all in with 268 entries out of a total of ~26,000 entries giving him a 1 in 100 chance of winning. Those are some good odds if you ask us!)
  • Our new feature, the Wheel, guarantees you’re a winner every time. Take it for a spin for the chance to win prize entries, a higher referral bonus, free and discounted devices, and cash prizes!
  • Score a deal on even more tech to automate your home. The more automated your home is with smart thermostats and smart plugs connected to OhmConnect, the more reliable you can be when the grid needs us most and the more you can earn in the program. Because of this, we try to make it as easy and affordable as possible for you to get those connected in your home. Your Watts pack a serious punch when applied as a discount on smart home tech.
  1. Thank your thermostat for all the savings on your energy bill!

Installing a smart thermostat is a proven money maker. In fact, the average California utility customer will save more than $250 per year on their energy bill once they install a Google Nest thermostat! That’s why we now offer free and heavily subsidized thermostats and smart plugs in our store and the Rewards Marketplace. Automating your events maximizes your rewards with OhmConnect and can greatly reduce your energy bills.

And that’s it. By participating in OhmConnect either actively (we see you folks playing chess with a head lamp!) or passively (with your smart home devices adjusting ever so slightly in the background) you’re a critical part of the growing community of Californians dedicated to keeping the lights on for each other.

Have a great tip for other OhmConnect’ers on how you maximize your earnings? Share it on our Facebook page or hit us up on Twitter!

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