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Energy Efficiency, Demand Response Help Utilities Trim Peak Power Demand

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Energy efficiency and demand response programs can shave 10% off the peak electricity demand that power utilities must supply at the busiest moments on the 24-hour clock, and the saving could reach 20% by 2020, according to analysis by the American Council for an Energy-Efficient Economy (ACEEE).

The finding is a game-changer for utilities that would otherwise have to build expensive, often environmentally devastating new power plants to meet higher-than-necessary peak demand—or see their new infrastructure investments drown in a sea of red ink if efficiency and demand response measures reduce demand farther and faster than they thought possible.

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ACEEE calculates that utility-sector energy efficiency programs in the United States saved 200 billion kilowatt-hours, about 5% of retail sales, in 2015.

These energy efficiency savings also substantially reduce peak energy demand—the time of the day and year when the demand for electricity is highest,” explains ACEEE Executive Director Steven Nadel. In a review of the 25 utility programs with the highest energy savings, “we found that for each 1% reduction in electric sales for a utility, on a median basis, peak demand reductions from efficiency programs are 0.66% of peak demand for that utility. If these trends hold for additional utilities and future years, it would mean that for a utility that reduces retail sales by 15%, the peak demand savings will be around 10%.

For regions that still have problems with peak demand, Nadel points to demand response as an option for shifting loads to periods when more of a system’s generating capacity is available. “Demand response includes a wide variety of strategies including interruptible rates, air conditioner and water heater cycling programs, and pricing programs such as peak time rebates,” he writes. “ACEEE has estimated that demand response programs can be used to reduce peak demand by 10% or more,” on top of the savings from standard energy efficiency measures.

With data now available from a decade or more of demand response programs, a U.S. Energy Efficiency Administration review of 28 key utilities showed savings of 2% to 27%, with nearly six in 10 showing peak demand savings of 10% or more.