You are here

Demand Response: Lessons Learned with an Eye to the Future

July 11, 2013 - 11:56am

Addthis

In today’s world of limited resources and rising costs, everyone is looking for ways to use what they have more effectively while, at the same time, controlling – and ideally – reducing expenses. The electricity industry is no exception. Through demand response programs such as time-based rates in which customers are offered financial incentives to reduce or shift their consumption during peak periods, utilities are reducing demand and better managing their assets while also giving consumers more options and lowering the cost of electricity. For example, in a region known for severe weather, Oklahoma Gas & Electric Company (OG&E) is using demand response to better manage reliability, control costs, and defer construction of about 170 MW of new power plant capacity.

Under the Recovery Act, the Energy Department awarded $3.5 billion in funds to the electricity industry, including OG&E, to help catalyze the adoption of smart grid tools, technologies and techniques such as demand response that are designed to increase the electric grid’s flexibility, reliability, efficiency, affordability, and resiliency. Understanding lessons learned from these projects is vital.

During this week’s National Town Meeting on Demand Response and the Smart Grid, the Department released the first in a series of reports on studies that examine consumers’ preferences. The studies are being conducted by Recovery Act-funded recipients in an effort to understand how to better tailor services offered to their customers. In this first report’s analysis of enrollment patterns in dynamic pricing programs, one key finding was that more consumers (78% to 87%) enrolled in programs with opt-out offers than those in which they were asked to opt-in (5% to 28%). A consistent theme throughout the report is the importance of making consumers more aware of the potential benefits of participating. Gaining a better understanding of what kinds of time-based rate programs appeal to consumers will help utilities make more informed decisions when assessing the cost-effectiveness of demand response for use in planning and operating their electric power systems. At the same National Town Meeting, the Department also today released the Voices of Experience | Insights on Smart Grid Customer Engagement guide which provides utilities’ insights on engaging with smart grid customers.

Demand response and consumer behavior are important elements of the ongoing dialogue about grid modernization. In the coming months, we will release additional reports that examine the progress, impacts and benefits of the Recovery Act-funded Smart Grid Investment Grant program. Reports published to date, including the “Economic Impacts of Recovery Act Investments in Smart Grid” are available on smartgrid.gov.

To learn more about DOE’s efforts to modernize the nation’s electric grid, visit the Office of Electricity Delivery and Energy Reliability’s website.

Patricia Hoffman is Assistant Secretary of the Office of Electricity Delivery and Energy Reliability.

Addthis