Adapting demand may be the key to managing grid instability and demand spikes,especially in the face of increasing renewable energy penetration. However, effective regulation is needed to make this a workable, long term option.
The European energy system is facing critical challenges as a significant part of its old peak generation capacity is coming offline, demand spikes are rising and the penetration of intermittent renewables on a physically timeworn grid infrastructure is increasing. One option to alleviate these problems and keep the grid in balance is demand response: adapting demand instead of generation.
Traditionally, demand response programmes have used incentives to encourage electricity customers to modify their electricity consumption when system reliability was threatened or market opportunities arose. Time-based programmes, on the other hand, send price signals to electricity customers who voluntarily choose to modify their electricity consumption in response to these signals.
Demand response programmes are consumer centred. They offer a direct source of revenue to households and businesses as well as unique benefits to the markets. In 2013 in the USA, businesses and homeowners earned over $2.2 billion1in revenues from demand response, over and above avoided investment in grid infrastructure and power plants. This source of direct revenue can also be made available in Europe and would release money into the local economies. In practical terms, this means…
(Pic credit: SEDC 2014)