Demand Response Moves to the Mainstream

Monday, July 13, 2015

Excerpted from EnergyBiz magazine, Summer 2015
by Ed Thomas

EnergyBiz

The idea of energy efficiency and demand reduction as a “fifth fuel” after coal, natural gas, nuclear and renewables is nothing new. A watt saved is a watt earned. But despite this status, efficiency and curtailment measures are typically incorporated into an energy plan as an afterthought or as a response to regulatory pressure. One such measure, demand response (DR), has historically been a second string player, only deployed when there’s an emergency. And despite DR’s contributions to maintaining grid stability, averting blackouts and brownouts, and reducing the impact of extreme summer and winter weather events, the industry has been slow to adopt it as a meaningful solution to managing the electric grid.

But, according to the Peak Load Management Alliance—the entity that brings demand response practitioners together for brass tacks thought leadership and problem solving within the DR deployment industry—things are about to change. In fact, that change is already underway. Within the next five years, says PLMA, the role of demand response is going to shift from that of understudy to key player. PLMA leadership sees 2015 as a transformative year for DR—one in which it heads out of the shadows of emergency management and into its own as a legitimate market force.

According to PLMA Executive Committee member Stuart Schare of Navigant, there are a number of reasons why a more full-scale adoption of DR has been so slow in coming—and why its time has finally arrived. One of these reasons is that, historically, there has been a visualization-disconnect between understanding DR’s capacity to deliver reductions and its value as a grid resource.

The ability of the control room to utilize DR during normal supply and demand fluctuations is critical for reliability of the distribution system. More and more utilities and other system operators are looking for options other than supply to maintain the grid.

“DR doesn’t look like a generator,” said Schare, “And this has been a block to implementation, because within the industry it doesn’t get treated like a resource, it’s treated like a stepchild whose value is only recognized when there’s a problem. But this is changing. As an industry we are adjusting our perception of what it means to be a resource.”

This shift in perception is due in part to front-end technology finally catching up with behind the scenes capabilities. With the advent of the Internet of Things (IoT), automated adjustments can be made instantly and in response to the smallest fluctuations. The value of automated demand response technology increases with its capacity to become more flexible and more reliable in delivering targeted, surgeon like congestion relief and support. “It used to be,” said PLMA Chair Paul Tyno of Buffalo Energy Advisors, “that demand response was a ‘plan-ahead’ resource. You analyzed historical demand data, weather patterns, anticipated an increase in grid load and deployed DR as an offset strategy.” “We should think more in terms of all customers playing an active role on some level in addressing system needs (their own and the grids) on a 24/7/365 basis not just in times of emergency”. Its dynamic load/demand management versus traditional capacity centric DR. Integrating communication and command/control capabilities with the transmission and distribution grid infrastructure linking customer to utility allows this resource to serve as a true smart grid asset.

And the automated technology which makes demand response a more attractive resource for utilities and independent system operators, is also making participation more attractive to energy end users.

To be able to see into the functionality of an HVAC system, for instance, and identify in real time the fluctuations in load, provides invaluable data regarding the general health of the system; meanwhile, the addition of fault detection capabilities—another side benefit, can result in long-term savings for building owners.

In addition to the operational insight for home and business owners, the technology enhancements are making participation in DR programs easier because results are more reliable and verifiable in terms of load provided (kW) in return for savings and/or incentives earned.

The ability to deploy DR events automatically and more frequently not only can shave the peak during periods of grid strain, but it can also lower demand in response to minor system impact events throughout the day—such as a cloud passing over a photovoltaic station. And with distributed energy use becoming more and more widespread, the need for dynamic system balancing will only increase.

Taking DR out of the realm of the extreme and implementing it as a standard energy management tool also makes the impingement to both commercial and residential occupant comfort minimal if not wholly imperceptible. Florida utilities have already implemented automated DR in which ten to twenty minute long events occur more than a hundred times in a year. These shorter more frequent events deliver a consistent reduction in usage that occupants barely notice.

For utilities, as more commercial entities deploy demand response as part of their energy management strategy, there may be a greater opportunity for bundling loads within portfolios in order to produce necessary curtailment numbers. This idea of DR bundling is also contributing to new and innovative energy storage methods. For example, PLMA is home to a special interest group focusing on the potential of grid interactive electric water heating. In Minnesota, there are currently 100,000 homes storing the equivalent of one gigawatt of electricity within residential water heaters. The water is heated at night when there is a surplus of energy generated by renewable resources, and then the heaters can be taken off line and off load during the day, when there is potential for a deficit, when grid load is heavy or any other time there is a need to balance supply and demand at a granular level. This rethinking of DR bundling as an implement for energy storage is opening new avenues of thought and contributing to the general shift in perception that Schare perceives as a catalyst to DR growth within the next five years. But growth often comes with resistance.

Anyone paying attention to what’s been going on with FERC Order 745 can see that innovations within the DR industry are already disrupting the status quo. But as ground level practitioners, the PLMA executive leadership is unified in its opinion that the backlash is not a roadblock; rather, it is a market signal pointing toward DR’s movement further into the mainstream of resource management.

“FERC Order 745 will cause market adjustments, but the sky is not falling, that’s for sure,” said PLMA Vice Chair Richard Philip of Duke Energy, “As we move toward a more web-enabled world, DR and its related topics and programs will only increase in scope and scale. We are, very much, in a changing marketplace—when you fold in solar and wind power and smarter controls, this is not the same industry it was thirty years ago and the pace of change is not going to slow down.”

Is 2015 the year of DR? Only time will tell, but at the practitioner level this prediction is looking more and more likely. 

Ed Thomas is executive director of Peak Load Management Association. Reach him at [email protected] or, for more information about PLMA, visit www.peakload.org.