Demand response offers decisive breakthrough for Europe


Paris, France — (METERING.COM) — June 6, 2008 – Demand response in Europe has the potential to achieve between quarter and half of the region’s energy saving and carbon dioxide emission reduction targets by 2020, a new study by Capgemini, VaasaETT and Enerdata has found.

Under a dynamic scenario, demand response could save 202 TWh of energy annually – equivalent to the combined annual residential consumption in Germany and Spain combined – and euros 25 billion in the annual electricity bills of customers – equivalent to the cost of the annual residential electricity consumption of Finland’s 5 million inhabitants.

In addition 100 million tons of CO2 emission reductions annually could be achieved, along with euros 50 billion in avoided investment in peak generation capacity and transmission and distribution.

The price for electricity in Europe is expected to continue rising rapidly as member states commit to replacing cheap and CO2 intensive fossil fuel generation with low emission or renewable alternatives and as fuel prices continue to increase. To invest in more capacity would be an expensive solution, both for utilities and consumers. Demand response on the other hand, with its ability to curb peak load requirements and overall load consumption, presents a more proactive and constructive solution.

The dynamic scenario proposed by Capgemini, VaasaETT and Enerdata is based on the full implementation by 2020 of smart meters or smart energy boxes, increased implementation of demand response programs, the full implementation and adoption of EU energy conservation policies and regulations, and full energy saving equipment. It is also assumed that the quantity, quality and effect of marketing and demand response adoption would be great enough to create mass market and cultural momentum.

In the event of only partial implementation of smart meters and the other initiatives, however, the benefits of demand response would shrink substantially to around a third of those under the dynamic scenario.

The report says the fulfilment of the demand response potential in Europe will depend on the extent of committed partnership between informed utilities, government and consumers, as well as the developers of supporting technological and system infrastructure, such as telecom operators and technology vendors.

The cost-benefit ratios of demand response concepts must be improved. The authorities must play with macro market penetration determinants and the right psychological environment for demand response adoption must be created. There is also a need to trigger a long term behavior change in customers, and customers’ perception of utility companies must be changed. Demand response programs should be holistic and should include market innovations, such as exciting new tariff offerings, in order to build trust and gain respect, and visions and strategies should be broad and long term. Finally the jump should be made and it is likely that project momentum will follow.

Capgemini is a leading provider of consulting, technology and outsourcing services. VaasaETT is a think tank to the global energy and utilities industry. Enerdata is an information and consulting company dedicated to the global energy market and greenhouse gases emissions.