Topics like “Smart Grid” and “smart meters” have practically become cocktail party conversation, but “demand response” can evoke spirited debate as well.
“Demand response” is a topic that piques my interest. As a national business development manager for Siemens Energy, I work closely with utilities all over the United States facilitating the movement toward automated demand response (a.k.a., auto-DR). Demand response, itself, is not a new tool used to support the electricity grid. Utilities have long called on their large industrial and commercial customers to volunteer load reductions to support grid stability, in some territories morphing into the use of “interruptible rates” (i.e., providing customers a lower utility rate with right to interrupt service), a prologue to demand response.
Demand response technology hasn’t changed that much over the years. Demand response resources are usually deployed using notification systems that require phones calls and emails from curtailment service providers or aggregators to end-use consumers with the hope that many of these consumer loads will be manually curtailed. This manual process, prevents utilities and grid operators from realizing the full benefit of demand response, which is currently prohibitively slow and hinders response times.
As a result of the recent FERC ruling 745, the barriers to market for the demand response industry as a whole have been lowered. FERC’s ruling directs wholesale electricity marketers to pay for demand response “negawatts” (negative power generation) at the same price that electricity generators are paid for megawatts. This ruling will empower utilities to strengthen their existing demand response offerings in order to maximize the value of demand response programs. Increasingly, demand response will become a function of the utility rather than the curtailment service provider. Utilities will increasingly require resource optimization and dispatch technology to determine when demand response resources are the most cost effective alternative available, and to automatically (and quickly) call on these resources when needed.
Automated demand response technology will greatly improve a consumer’s capability to immediately shed load on command, and a utility’s ability to automatically send the right load shedding signal when needed. In most cases load shedding events will occur within seconds to minutes as opposed to minutes and hours – the only limitation is the communication pathway. As a result, utilities will be able to leverage demand response for activities such as load balancing and frequency regulation, and in many cases will be able to potentially sell excess power back to the grid.
Advanced demand response technology will not only benefit utilities but will also empower energy consumers to optimize their energy use. Consumers will be empowered to make decisions with respect to their energy consumption by accessing a variety of information, including:
- Real-time access to their personal energy consumption
- Rate and tariff information on the energy they are buying
- Real-time rate-change information sent directly to their mobile phones
- Remote access and control over their premise devices, such as air conditioners or electric vehicle charging infrastructure.
For widespread adoption of advanced demand response, it will be necessary for consumers to understand that they are not giving up control of their facilities or homes to a utility, rather they will be expressing their usage preference and having their own usage optimized to their benefit. In many cases, the load sheds that do occur will rarely be noticed, and in any case consumers will be able to override load shed commands if they choose to do so. With the right mix of incentives and value-add services, customers’ concerns can be eased, and they can become adopters of advanced demand response technology.
Next-generation demand response technology is certainly making strides. There is a substantial increase in attention to the topic over the last few years, and there has been strong growth in the development of alliances that help to guide policy and set open standards and protocols. OpenADR Alliance and Demand Response and Smart Grid Coalition are two such alliances that have formed with these goals in mind.
Finally, ever more events are focusing on the subject of demand response. In fact, I will be participating in a webinar here at The Energy Collective in early May with some wonderful industry experts. Events like these keep the conversation and the technological progress around auto-DR headed in the right direction: forward.
Photo by evobrained.