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...
Integrated demand offerings could be the next generation of energy management.
discussions with the industry (see Figure 1) . “Ease of use” was ranked the most important characteristic by more than 50 percent of the respondents. This was followed by the immediate benefits customers receive from the IDO product or offering. It’s noteworthy that respondents ranked “technical support,” along with “experience of friends with provider,” and “reduction in carbon” at the bottom of the list. The low ranking of these characteristics shows the emphasis on personal impacts and pocket-book issues, which are critical to future IDO designs.
The poll results support the idea of one-stop shopping, and industry interviews indicate customers want user-friendly and rules-based solutions—that is, products and services that they can set and forget. The desire for immediate benefits reflects both the need for quick feedback (to see the results of their actions to confirm that changes are occurring), as well as the economic environment at the time of the poll.
The industry interviews highlighted that integrating EE, DR and DE will bring changes to the energy market. These changes are enabled by new technologies and will be driven by the increasing cost of energy and changing customer expectations that’s transforming energy and demand management into a viable business. The entrance of non-traditional providers such as Google, GE, Microsoft and Telcos into the energy management market is a sign that already the transformation might have started.
Results from industry interviews indicate this transformation will be an evolution. Industry executives expect the market to evolve from today’s end-use focus toward a community focus (see Figure 2) . As the market evolves, it will be necessary to integrate the offerings to provide premise and community-based services that are personalized. Personalized services will require providers to understand a multitude of energy issues related to a premise or community and provide an integrated solution that meets those needs. This will require flexibility in program design and regulation. While today’s end-use solutions achieve scale through standard offerings, achieving scale with personalized offerings will be a challenge.
IDOs can be delivered in a variety of ways: utility programs, competitive retailer offerings, contractors and government agencies. These delivery options become particularly important as such companies as Google and Microsoft enter the market, and as the customer experience, government policies and incentives play an increasing role in the customer’s decision to participate. The IDO survey asked respondents to rank seven delivery choices (see Figure 3) . Respondents expressed a preference for delivery by energy service companies (ESCO) and other specialized service providers and utilities, followed by competitive retailers and public-private and not-for-profit agencies. ESCOs and specialized services and utilities were the most preferred probably because of customers’ experiences and greater familiarity with such providers.
The least preferred was a government agency. Government’s low ranking probably reflects concern about the technical nature of the services provided, privacy issues and efficiency.
For IDOs to be successful there must be increased savings in energy usage. A key issue is how much more an IDO can reduce energy consumption as compared to the individual programs offered today. Price elasticity also impacts