News Article
August 29, 2010

Commercial Buildings: The Next Wave of Opportunity for Demand Response

Demand response (energy users adjusting consumption in response to signals from grid operators) has been employed in the electricity industry for decades. Common techniques include contracting with the owners of large industrial sites to require curtailment during emergency conditions in exchange for a lower electric rate, and installing switches that automatically cycle off residential air conditioners when the utility calls for reductions.

North American market administrators, utilities and policy-makers are increasingly focused on expanding the scope of demand response, a key component of the electric system of the future.  The potential benefits of demand response include:

  • Reducing cost by substituting low-cost, temporary load reductions for expensive peak power and avoiding new generation, transmission and distribution capacity investments

  • Increasing reliability by engaging both sides of the electric meter to balance supply and demand

  • Mitigating environmental impact by displacing the oldest and least efficient generators (e.g. peaker plants) in the grid through reductions in customer demand

  • Balancing intermittent renewable energy sources to improve grid stability

As the electric power industry looks forward to capturing these benefits through a scaling up of demand response, commercial buildings become an important piece of the puzzle. Today in the United States, 4.8 million commercial buildings use 37% of the electricity and account for nearly half of peak demand.1,2,3 These buildings are a vast potential resource for demand response, but will require programs that meet the criteria of today’s owners and operators. Demand response must be cost-effective, convenient, and provide the building with autonomous control of its operations.

Drawing from the Johnson Controls’ business experience selling energy services and products, as well as the perspectives of multiple external collaborators, the Institute for Building Efficiency has laid out a vision for demand response in the commercial sector. First presented at the National Town Meeting on Demand Response in June 2010, this paper is intended to stimulate discussion about how technology can enable more demand response, and how markets can evolve to establish demand response as an attractive opportunity for commercial buildings.

Both the paper and the presentation can be downloaded in the “Resources” section above.

August 2010



1 U.S. Energy Information Administration, 2003 CBECS Detailed Tables [] .

2 See EIA [].  

3 The Brattle Group, The Power of Five Percent: How Dynamic Pricing Can Save $35 Billionin Electricity Costs [].  


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