Demand Response: Turning Electricity Demand into a Grid Asset
- 24 hours ago
- 2 min read
Demand Response (DR) programs are critical mechanisms that allow utility companies to meet electricity demand especially during peak demand windows. At these critical moments, a DR event occurs and the utility will pay participants to shift or stop using electricity. DR assists with both the economic function of the electricity system and supports reliability. Participants can include industrial users that curtail manufacturing processes, commercial users that reduce HVAC and lighting loads, and residences that alter thermostats, skip EV charging, or reduce power needed for water heaters.
Payments to DR participants can be organized a few different ways. Price-based mechanisms allow users to respond as an event occurs, but participation is less predictable without automated response functions in place. Incentive-based programs can allow utilities to directly control demand sources like thermostats, and allow users to commit to reductions ahead of time. These arrangements can be more effective because they give utilities better projections of supply and demand, but they require pre-organized contracts. The modern standard is automated DR shifts that enables touchless adjustments on the user side.
Digitization of countless electricity consumption points has created an abundance of opportunity. Aggregating smaller loads like batteries, EVs and thermostats into a larger responsive system can create a firm dispatchable capacity source, not just emergency relief. DR programs that occur in 5–10 minute intervals can make granular adjustments and force the demand side to act synergistically with the electricity generation wholesale markets. Localizing DR programs to certain feeders or substations is another way to meet demand in peak scenarios. EV charging DR can become more than demand reduction with vehicle-to-grid integration, which allows charged EV batteries to supply power back to the grid. Compensating users for certainty, in combination with realized electricity reductions, can firm grid effectiveness and clarify projections for utilities.
Taking advantage of the full potential of DR is possible in the era of connected devices, and necessary given the constraints of adding generation. Variable market systems in the US make it challenging to implement broad changes, however, variety in market types enables concurrent testing and optimization across a variety of contexts, driving innovation. These new successes can be sequentially implemented across separated grids. Overall DR is an under-optimized mechanism to reach the needs of all electricity users, and a ripe opportunity for improvement.
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