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

Analyzing the conservation effects of demand response programs.

Fortnightly Magazine - March 2005

single facility (such as July 2002 vs. July 2003) or two different facilities in the same time frame.

Figure 2 shows a retail customer with significant night-time load, representing perhaps an opportunity for conserving energy. Figure 3 shows a customer whose usage remains high on weekends, in contrast with a typical business of the same type. Figure 4 shows a customer who has reduced usage in the latter part of the peak period.

Southern California Edison (SCE) reported on customer usage of the system in October 2003. 11 At SCE, the system is known to customers as SCE Energy Manager. Following the meter installation and confirmation that the Web site is reliably receiving data, the customer is sent a user ID and password along with sign-on instructions and fact sheets of the various energy rates and load-management programs available from the utility. One of the main objectives of the implementation was to make it easy for the customer to use the system with little or no training. However, for customers to maximize the use of the system, SCE conducted hands-on training sessions throughout its service territory. In addition, SCE staffs a program management office during business hours to assist customers with the Web site.

Surveys determined customer use of Energy Manager. The California Energy Commission reports that 39 percent of Energy Manager users reduced total consumption as a result of using the system. 12 The survey also found that 48 percent of users were able to reduce their energy costs, and 39 percent reduced peak load. With respect to accessing the data, 44 percent reported access at least once a week, with 54 percent reporting monthly or as needed access. SCE asked customers why they used the system, and they received the responses shown in Table 4. SCE reports that customers who use the system are satisfied with it, with three-fourths of users saying the software is easy to understand and use.

Our review shows that demand response programs usually result in a small reduction in total electricity consumption in addition to a much larger reduction in electricity use during peak hours. The average reduction ranges from about 4 percent for dynamic pricing programs, to a fraction of a percent for reliability programs, to around 10 percent for effective information/feedback programs. These averages mask important variations, namely that some dynamic-pricing programs result in no observed reduction in consumption (and in one case apparently led to an increase). With respect to the different types of programs, the conservation effect appears to be largely additive.

We submit that efficiency/conservation and demand response are two similar but different tools in a demand-side management tool box. Each has its own attributes and each complements the other. Efficiency and conservation can result in load reductions on peak, but likely cannot be dynamically controlled. Demand response offers dynamic control and "dispatch" but, while likely not resulting in increased usage, may not always result in a large conservation effect.


  1. Our review included, either directly or indirectly, more than 200 pilot or large-scale programs carried out by government or