Increasing Demand for Demand Response
Demand response will likely play a growing role in reducing peak power demand, balancing intermittent renewable energy, managing power price spikes, supporting grid reliability, and managing transmission congestion. To meet these challenges, demand response programs must find a way to grow and sustain customer participation. “Increasing Opportunities for Demand Response,” a report from the Institute for Building Efficiency, identifies four customer segments with significant demand response potential and the three program attributes that should be used to design and implement programs that are attractive to demand response participating customers. Potential demand response customer groups analyzed in the paper are the large and small energy users from the industrial and commercial sectors. The three attributes of demand response programs that participating customers look for are:
Attractive payments and incentives. Payment must both be large enough to make participation worthwhile and simple and certain enough so that users can accurately forecast the benefits.
Appropriate level of complexity. The level of operational complexity must fit users’ levels of sophistication. They must understand the size of the expected energy reduction, the incentive structure, the penalties and the contract length.
Ability to supply the resource requested. User’s ability to deliver depends on the degree of control they have over curtailment, the amount of notice they are given, the length of curtailment periods, and how often they are called upon.
In a similar vein, another paper was recently published exploring ways to expand the demand response market. The paper by the Advanced Energy Economy (AEE), titled "Advancing Grid Modernization and Smart Grid Policy: A Discussion Paper," identifies the most relevant barriers to broader smart grid adoption, as well as corresponding policy options that may help overcome those barriers.
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