Demand response strategies that encourage consumers to adjust their electricity use during peak demand can enhance grid reliability and stabilize prices—but a new report finds that participation rates in the United States remain low.
“Despite studies that show high potential for demand response given technological advances and growing grid needs, demand response capacity is below 7% of peak load across U.S. wholesale markets,” writes the Virginia-based Energy Systems Integration Group (ESIG).
“These low levels stand in stark contrast to the rapid growth of other clean energy resources like wind, solar, and battery storage that have attracted significant investment in recent years.”
Demand response (DR) is a strategy for managing grid load that adjusts electricity consumption by prompting end users to balance supply and demand. Originally focused on reducing demand during peak periods, DR has evolved with the help of technologies like price-responsive demand, behind-the-meter generation, and smart thermostats, all of which have helped DR become a nimbler, more effective contributor to grid efficiency.
When used well, DR can improve grid reliability and is cheaper than maintaining expensive infrastructure that only comes into play to meet peak demand. Rising electricity consumption will make DR essential, but its overall potential is also growing as adoption of electric vehicles, heat pumps, and behind-the-meter battery storage build out the ability to manage demand among end users. In a recent report, researchers from the Nicholas Institute for Energy, Environment & Sustainability at Duke University said DR would be a key component of a larger strategy to accommodate substantial load growth with existing resources—by making the current grid system more flexible.
But DR participation remains low, with many U.S. states even seeing declines in DR capacity. This is partly because DR expansion was stalled by depressed capacity prices and restrictive regulations in the mid-2010s.
The Nicholas Center suggests projected load growth, increasing capacity prices, and ongoing advances in distributed energy resources “appear likely to reverse this trend.” And ESIG has its own list of suggestions for increasing DR participation. Knowledge and experience about DR technologies and programs needs to be cultivated among operators, state regulators, and consumers, and there must be clear rules and transparent communication to reduce fragmentation across DR markets. System operators also need to conduct detailed information on DR performance during emergency events and share those reports with the public to gain trust and confidence.
Price incentives and rate structures can also boost participation. And system operators can cut down on “onerous” metering rules by using embedded measurement devices and statistical sampling for aggregated resources. ESIG writes that existing requirements were originally designed for large generation resources like industrial customers, but “they now inhibit the participation of residential and small commercial customers, where much of the untapped potential lies.”
