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Efficiency and Demand Response: Twins, Siblings, or Cousins?

Analyzing the conservation effects of demand response programs.

Fortnightly Magazine - March 2005

the facility). These data suggest an overall conservation effect of approximately 0.16 percent, since the programs operate for 1 percent of the hours, the typical load reduction is 20 percent during those hours, and about 20 percent of the load reduction is offset by increased usage before or after the event.

Studies of residential direct load control of air conditioning and water heating also have found that the payback is less than 100 percent of the amount of reduction during the peak period. 6 A recent example reported for Public Service Electric & Gas of New Jersey estimated payback at approximately 40 percent of the amount reduced during the peak. 7

Conservation Effects of Customer Feedback Programs

The process of giving feedback on consumption motivates consumers to save energy through reduced waste, yet the body of evidence testifying to this is rarely acted upon in any systematic way. As with dynamic pricing, there is ample literature on the effectiveness of two basic types of feedback to electricity users: direct feedback in the home or business via a device or the Internet or indirect feedback via billing and periodic usage reports. Clear, immediate, and user-specific information is most effective in lowering energy usage. The literature shows that feedback has a significant role to play in raising energy awareness and in bringing about reduced consumption on the order of 10 percent.

Feedback Methods

Direct feedback methods include the following:

  • In-home/in-building display devices that can show current rate of consumption, current cost of consumption per hour, etc.;
  • Internet usage displays that show detailed energy usage information typically on a next-day basis;
  • Smart meters operated by smart cards and two-way communications systems that, in conjunction with another device, can show consumption and cost information;
  • Prepayment meters that provide direct feedback to use in electricity bill management; and
  • Device monitors that are inserted between the plug and wall socket on appliances and show information such as current rate of consumption and current cost of consumption per hour.

Indirect feedback consists of data processed by the utility, then sent to customers. Such feedback includes the following:

  • Actual bills based on metered usage rather than estimates, and possibly measured in intervals;
  • More frequent bills, , monthly rather than quarterly basis;
  • Comparison data on a year-to-year basis or normalized for weather; and
  • Usage disaggregation, where use is estimated at the appliance level based on analysis of meter reads in association with customer-provided data such as appliance and housing stock.


Conservation Effect Direct and Indirect Feedback Programs Sarah Darby of Oxford University conducted a review of 38 feedback studies in 2001, going back to 1975. Of these, 21 studies were from 1987 to 2000. The results show a clear conservation effect of feedback.

Darby discusses these results:



Conservation Effects of Frequent Feedback Monthly feedback on electric usage is generally insufficient to enable customers to manage usage effectively. In 14 utility and government programs carried out in the United States, residential customers provided with daily feedback on electricity usage reduced total consumption by an average of 11 percent. 9