FERC’s new rule on compensation for demand resources tips the market balance toward negawatts. Arguably the commission’s economic analysis is flawed, and the rule represents a covert policy...
Demand Response: The Green Effect
How demand response programs contribute to energy efficiency and environmental quality.
by both DR and efficiency: More action is needed by utility commissions and industry groups to take steps on DR as a key element toward bringing about a modern, and more reliable, grid.
• Ensure that air-quality rules and programs, such as state implementation plans, fully recognize efficiency and DR’s value in reducing emissions. Often overlooked is DR’s potential contribution to slowing climate change. In part this is understandable because its contribution is smaller than efficiency’s very important role, but in part DR is underappreciated, in this country at least, as a climate strategy. By contrast, it is valued in Europe to lessen CO 2 emissions; for example, the U.K. government-sponsored Energy Savings Trust considers advanced meters to be an energy efficiency technology and attributes significant savings to their use.
• Appreciate that consumers rarely are interested in the distinctions among demand-side measures discussed in this article but rather in bottom-line results—lower power bills, rebates on new equipment, lessened risk and better environmental performance. Energy efficiency and DR advocates may well find that working together to promote overall demand-side management may yield political results that could not be achieved by either side alone.
In the famous parable of the blind men feeling different parts of an elephant, each one envisions a different animal. In the same way, some view DR as a way to ensure reliability, some see it as a way to avoid costs and reduce peak prices, some see it as a way to mitigate market power, and some see it as a way to get a new modern grid infrastructure in place. All of these observers are correct—DR can do all of those things. But other parties also must grab the elephant. DR and its enabling technologies are also a way to help customers reduce their overall energy use and move to a new era of energy efficiency—both at the individual customer level and overall. Moreover, DR can make an important contribution to broader environmental issues like global warming, air emissions and renewable energy. DR offers much—and offers different things to different parties. It is important as national and state energy policy and utility practices develop in the coming years that Demand Response be viewed comprehensively and robustly and be given a full seat at the table.
1. Chris King and Dan Delurey “ Twins, Siblings or Cousins? Analyzing the conservation effects of demand response programs ,” Public Utilities Fortnightly , March 2005.
2. “Are Smart Homes More Efficient? Energy Impact of California’s Residential Automated Demand Response Program,” Katherine Wang and Joel Swisher, Rocky Mountain Institute, August 2006.
3. “Changing How People Think About Energy,” Marjorie Isaacson, Larry Kotewa, and Anthony Star, Community Energy Cooperative and Michael Ozog, Summit Blue Consulting, August 2006.
4. Quantum Consulting, “Working Group 2 Demand Response Program Evaluation – Program Year 2004 Final Report,” December 2004
5. “Direct Energy Feedback Technology Assessment for Southern California Edison Company,” prepared by Lynn Fryer Stein and Nadav Enbar, EPRI Solutions, March 2006. It should also be noted that there is a risk of self-selection bias