Demand Response is Coming Your Way

If you haven’t received your letter yet, it is probably on its way… Demand Response (DR) is coming to residential energy users. If you have commercial properties as well, you likely have worked with DR, but it is quickly moving to residential, even single family residential.

So, what is Demand? On your electrical bill, there is a monthly fee called the demand charge, and this is the cost of maintaining the electrical utility providers infrastructure to make sure you have electrical power for your highest point of use. This charge is based on the peak energy use that is measured at a given point in time, on a given day in the billing period. Sometimes you may also see this called Peak Demand, or On-Peak Demand Load, among other terms. (See this link for other names for Demand: https://energystar-mesa.force.com/PortfolioManager/s/article/I-don-t-see-anything-on-my-bill-that-says-Demand-could-it-be-called-something-else-1600088546601)

Once we understand what Demand is, you can imagine, a Demand “Response” is the electrical utility provider’s program to incentivize its customer to reduce Demand. These programs vary, but often provide some incentive that is provided to the customer in return for the customer reducing their electrical usage during a “demand event.” An example of this might be found through your smart thermostat. In this program, if you opt in, you provide the electrical utility provider permission to reduce your HVAC consumption for a period of time on a particular day in which they expect high electrical consumption. Through the smart thermostat, they can pre-cool or pre-heat the space covered by the thermostat and then turn the conditioning to a setting that will be minimally required during the actual hours of the demand event. In return, you receive a credit against your future electrical expense, or even cash.

So why is this important? There are really two issues addressed by a DR program. The first is the ability of the electrical utility provider to provide a consistent and reliable power. When you turn on the light switch, you expect it to turn on. However, if the demand exceeds the capacity of the grid or the supply of the provider – you may experience a brownout, or even blackout. As a last resort, utilities may have to preemptively reduce power in certain parts of the grid to prevent full grid power loss; these are called rolling brownouts or rolling blackouts.

The other issue is more of an environmental impact issue. When electrical utility companies meet their supply capacity, they have a backup power resource they turn to called Peaker plants (Peaking power plants, or sometimes just called “Peakers”). While these plants are not used regularly, when used they often account for a large percentage of the greenhouse gas emissions of the power system. For comparison’s sake, even compared to a natural gas power generation plant, the Peaker plant often uses up to 50% more natural gas for the same amount of power production. Not only do they tend to use carbon intensity power sources, but they are expensive, generating some of the most expensive electricity on the grid. Billions are spent every year, paying standby fees just in case they are needed.

So, what are we doing about it?

Demand Response Program providers are increasingly emerging in markets that launch DR programs. These vendors provide solutions ranging from communication tools, such as light switches that can change colors during a DR Event, to active engagement, managing maintenance and other energy intensive activities during Demand periods, and leveraging battery technology and even solar to offset grid-supplied power during Demand periods.

The key to this is knowing the amount of energy you are using, which means collecting and measuring that energy. Through analysis of the consumption of kW’s, we can identify when high usage periods exist and then evaluate what mitigation measures can be implemented to reduce consumption during those time periods. It all starts with awareness and data.