[BETA] Fortnightly

The benefits of DR remain difficult to quantify. Building a comprehensive business case requires a shift in how policy makers think about DR in order to understand its real possibilities.

In light of your prescient Frontlines column, “PURPA Redirected” (February 2008), I am curious of your insight. Is there a nexus between §571 of EISA and the demand response (DR) text in the pending FERC NOPR, RM07-19-000, “Wholesale Competition in Regions with Organized Electric Markets,” issued Feb. 22, 2008?

When the California Energy Commission (CEC) proposed to include programmable communicating thermostats in the state’s new building codes, it expected some push-back from home builders. It didn’t expect what it got: a major public outcry.

California hopes to reap $3 billion in benefits from demand response over the next 20 years. Maximizing the potential may require the California Energy Commission to exert its statutory authority. CEC’s chair co-authors.

About four months ago, at a conference at Stanford University’s Center for International Development, the economist and utility industry expert Frank Wolak turned heads with a not-so-new but very outrageous idea.

We recently conducted research to evaluate whether innovative solutions for meeting future energy needs such as demand response (DR), energy efficiency (EE), and alternative distributed generation (DG) (e.g., photovoltaic cells, wind, energy storage) could become a sustainable and viable part of the future energy infrastructure.

When summer heat waves cause electric demand to peak, they also often cause wholesale electricity prices to rise substantially above their average levels. However, since most electricity customers face retail rates that do not reflect this movement in wholesale market prices, they do not modify their consumption patterns, causing a significant drop in economic efficiency. The Energy Policy Act of 2005 calls upon states and utilities to evaluate and implement DR programs to mitigate this problem.

Despite overwhelming theoretical and empirical evidence, we aren’t seeing more DR when it is needed most—during emergency periods. The reasons boil down to two obstacles, both of which must be addressed before widespread DR implementation can move forward.

In the minds of many policy-makers, DR has become associated with rate shocks, rate volatility, unpredictability, and loss of control over energy costs—the very things DR was designed to overcome. What can be done to change this?

Demand response reduces overall energy usage, but the magnitude of the reduction depends on whether the technologies are developed and deployed with efficiency in mind.