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Outlining the Utility Opportunity in Demand Response Programs

Advances in smart metering technology are creating opportunities for utilities to roll out more demand response initiatives, and perhaps combine them with existing energy efficiency programs.

Energy efficiency programs have been around for some time, and they are effective in getting customers to reduce energy consumption. But they are essentially a one-time transaction. Maybe a utility gets a customer to install an energy efficient water heater or replace some incandescent light bulbs with more efficient alternatives. Then that’s about it for months or years until the consumer may want to replace some other appliance or needs some more bulbs.

Demand response programs, on the other hand, require a constant back and forth communication between the utility and the consumer, says Jenny Roehm, Senior Manager, Utility Residential Solutions for Schneider Electric, who I spoke with at the recent TechAdvantage event in Orlando. From the utility’s perspective, that’s a good thing because it creates an ongoing relationship with the customer.

“Demand response is much more relationship oriented. It happens multiple times during a season, sometimes during more than one season,” Roehm says.

It also gives utilities another service, combined with energy efficiency programs, to offer customers. But it does create some challenges because energy efficiency and demand response programs are quite different from each other and may not even be handled by the same group within the utility.

“It takes a lot more effort and coordination and thoughtfulness in the utility in how they design their program,” Roehm says. “It takes a lot of internal coordination to make the two work together. But there’s a lot of value that a utility can get out of putting them together.”

For one, they target different elements. An energy efficiency program will save energy all the time, or at least whenever the customer uses the energy efficient element in question. Demand response programs, on the other hand, target certain periods of time when it benefits the utility to have customers limit energy consumption, mainly during periods of peak demand.

Those peak periods will vary by season. In the summer, peak periods are likely late afternoon and early evening, when customers need to cool their homes. In winter, it’s more likely early morning for heat and hot showers and later in the evening when everyone is home again.

These variations make smart metering technology all the more important. “Having better metering allows us to do a lot more time of use [monitoring] and doing demand response during specific times,” she says.

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