Demand Management: The Invisible Energy Resource
Posted by Big Gav in demand management, smart grids
Next100 has a post on "demand response" - managing customer demand in peak periods to reduce the need for costly, rarely used generation capacity and to allow greater penetration of renewable energy sources - The Invisible Energy Resource.
The media rush to highlight every major new renewable power project, but another clean energy resource gets far less attention, even though it's flexible, abundant, relatively inexpensive and valued overall at billions of dollars.
According to a recent report by the North American Electric Reliability Council (NERC), this unheralded resource is equal to 29,000 megawatts of capacity during periods of peak summer demand--as much as all U.S. wind, solar, geothermal, and biomass power combined.
The report calls it "an effective and efficient capacity resource, on equal footing with generation" and says it "will become a critical resource for maintaining system reliability over the next ten years."
What's not to like? Only the name: "demand response." You've gotta love the way the utility industry chose such a dull term to hide one of its hottest products.
Simply put, according to Wikipedia, "demand response (DR) refers to mechanisms to manage the demand from customers in response to supply conditions, for example, having electricity customers reduce their consumption at critical times or in response to market prices."
In most markets, matching supply and demand is no big deal. If supply exceeds demand, sellers build up inventory and sooner or later cut their prices, prompting additional demand. Sellers also regularly adjust prices based on predictable changes in customer demand--think movie matinees or off-season travel discounts.
But until recently, electric utilities had no comparable way to change prices for most customers or to store inventory (excess electricity). Utilities could mainly affect the supply side, for example by ramping up or down infrequently used gas-fired "peaking" plants.
Demand response programs now give utilities a powerful new tool for balancing supply and demand. By encouraging customers to curb demand during periods of extreme peak loads, utilities--and ultimately customers themselves--can save the considerable cost of backup generation capacity that may be needed only a few dozen hours a year.
elec_demand_graph.gif
There are other benefits of demand response. System reliability benefits because generation and transmission capacity aren't stretched to the limit. The environment benefits from fewer power plant emissions. And, last but not least, demand response programs can help utilities manage renewable resources like wind power. When the wind dies down, getting customers to reduce their load can rebalance supply and demand efficiently.