(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Active Demand Management
A system approach to managing demand.
and forget it, and change their preferences and settings in response to special or changed circumstances. This level of control is a valuable element in obtaining a higher level of engagement with customers. With a larger number of end users, the approach can be just as reliable in aggregate as direct load control with less impact on any given consumer. Striving for near-universal participation as a long-term objective ultimately requires developing this sense of partnership between the customer and the utility.
Other barriers include a lack of standardization of products, discount rate, and transaction costs. Demand management will need to deliver a predictable reduction in both base and peak energy consumption. It will need to provide a thorough mechanism that enrolls, sustains, and rewards customer involvement in demand reduction. Lastly, demand management must have the ability to use the same signals to dispatch other newer sources of energy like storage, renewable and distributed generation.
Regulatory concerns also will be a major factor when attempting to implement demand management. There are some regulatory environments that don’t reward operational efficiency of utility facilities. Conservation legislation might shy away from technologies that don’t directly promote conservation and renewable energy. Standards will need to be established for the measurement and verification of demand management resources. Wholesale demand management programs will need to be developed to operate within standards, along with any other new initiatives that will be developed in the future.
Utilities will also need to consider their employees when instituting the new technologies involved in demand management. Employees will need to be fully educated in all aspects of installation and maintenance of the new technologies. This education will incur both time and monetary costs for utilities and their employees.
Although demand management might not be a complete solution to all of the problems presented by the increasing global demand for energy, it’s a necessary step in the right direction. Giving individual energy customers more control over their own power usage and the costs they incur is another positive outcome of the demand-management process. The integration of demand management, along with other energy efficiency, conservation, and smart-grid technologies, will set the electric power industry on the path to a sustainable, profitable, and more controllable future.