Energize Weekly, November 28, 2018
The demand response programs of the major U.S. utilities, designed to reduce peak demand, tallied 18.3 gigawatts (GW) of capacity in 2017, with more than half of it dispatchable, according to an industry survey.
The 2018 Utility Demand Response Market Snapshot, which covers 155 utilities, with about 62 percent of the country’s utility customers, was done for the Smart Electric Power Alliance (SEPA), a nonprofit working with industry stakeholders on energy transition.
While a demand response (DR) program can be as simple as promoting the replacement of incandescent bulbs with LED lights, increasingly programs involve utility-customer two-way communication, grid sensors with computer management and programs designed to change energy consumption behavior.
DR is even being bid as a resource into regional grid capacity markets. The Midcontinent Independent System Operator (MISO) cleared 6 GW of DR programs in its 2017-2018 planning resource auction. In the PJM Interconnection, the nation’s largest grid manager, 8.1 GW was committed to the market for the 2017-2018 delivery year.
“Such developments are as profound as the achievement of cost-competitive wind and solar power generation, or the sustained decoupling of economic growth from electricity demand,” Tanuj Deora, said the power alliance’s chief strategy officer.
The survey looked at mass market programs, largely aimed at consumers, and commercial and industrial programs.
More than half of enrolled DR capacity in SEPA’s survey—12 GW—came from the commercial and industrial market segment. Customer-initiated programs, such as deferring loads from lighting, heating and cooling (HVAC) and pumps, accounted for two-thirds of the capacity.
The remaining third came from automated programs where pumps, HVAC and energy storage are leveraged to manage demand.
In the mass market, air conditioning (AC) switch programs, which enable a utility to reduce individual unit operation during peak electricity demand periods, were the largest program with 3.4 GW of capacity. More than 4 million customers were enrolled in AC switch programs.
Sixty-four utilities that have AC switch programs indicated that they used the program an average of eight times a year for a duration of 2.8 hours an event.
“While traditional DR programs (e.g., air conditioning switches and water heaters) continue to be available today, a handful of utilities are updating air conditioners with two-way switches and exploring grid-interactive water heater (GIWH) capabilities,” the survey said.
The AC switch program was followed by thermostat, behavioral and water heater programs.
The enrolled thermostat capacity was 1.2 GW and 47 utilities reported on using thermostats during a peak demand periods. “Some utilities are offering a combination of switch-based and connected (oftentimes referred to as “smart” WiFi) thermostats to satisfy different customer preferences,” the report said.
Behavioral programs, which give customers cues to reduce their energy consumption, accounted for nearly 735 megawatts (MW) of capacity. About 2.8 million customers were participating in behavioral programs. Enrolled water heater capacity was just 280 MW.
“Electric water heaters with switches constitute a widespread and low-cost storage opportunity,” the survey said. “However, participants in SEPA’s Utility Survey indicated that electric water heater DR programs only account for a small portion of total reported enrolled DR capacity (1.5 percent), with total enrolled capacity across over 150 utilities.”
Maryland with 1.6 GW of capacity led the states in DR programs, followed by California with 1.4 GW, North Carolina with 1.18 GW, and Florida with 1.14 GW. Minnesota, Illinois and Indiana each had about 1 GW of DR capacity.
Among the key trends the survey identified were:
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- Utilities are increasingly using online marketplaces to enable customers to buy energy efficient products and appliances for their homes. Such online platforms also help utilities engage and educate customers, introduce and promote additional programs, and tap into potential new revenue streams, for example, advertising and referral fees from third-party vendors.
- Increased confidence in behavioral demand side management is leading more utilities to roll out behavioral programs, as well as more vendors offering such solutions.
- Smart energy technologies, such as smart thermostats and appliances, are creating the means for both customers and utilities to exercise greater control within DR programs and for general grid management.
- Customers also want more control over their use of energy through mobile access to data (e.g., apps, text message alerts). They value alerts that provide information about high energy use or DR events.
