Demand response in U.S. barely scratching the surface of potential

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Washington, DC, U.S.A. — (METERING.COM) — December 18, 2008 – Current energy efficiency and demand response/load management programs are barely scratching the surface of what is achievable, according to the U.S. Electricity Advisory Committee (EAC) in a new draft report on the nation’s electricity supply adequacy to the Department of Energy (DOE).

The report says utilities in many states have been implementing energy efficiency and demand response/load management programs, some for more than two decades. According to one source, U.S. electric utilities spent $14.7 billion on these programs from 1989-1999 – an average of $1.3 billion per year. Since the year 2000, investments in demand side resources have steadily increased as states that have traditionally offered programs have expanded their programs and other states have begun implementing their programs. For example, in 2007 and 2008, 10 states enacted legislation or regulations setting binding energy savings goals for utilities.

As spending on demand side resources has grown, so have the energy savings. Cumulative annual savings from electric energy efficiency programs were nearly 90 TWh in 2006, which is 2.4 percent of the total electricity sales to end users in the same year. Some states have saved 7-8 percent or more of total electricity sales, making energy efficiency programs a significant utility resource. Demand response/load management programs also vary from region to region, with demand response capability in 2008 ranging from a low of about 1.7 percent of peak demand in the Electric Reliability Council of Texas (ERCOT) and Southwest Power Pool (SPP), to a high of more than 6 percent in the Florida Reliability Coordinating Council (FRCC) and Midwest Reliability Organization (MRO).

However, while much has been done to promote energy efficiency and demand response/load management programs, savings to date are only a small fraction of the available resource. For example, a review of 21 different national, regional, and state-level studies found that the median achievable efficiency potential (i.e., cost effective and possible to achieve as a result of policies and programs) calculated in these studies is 18 percent energy savings over about a 13-year period. The average achievable potential per year of program implementation from these studies is about 1.5 percent energy savings – in line with the most aggressive programs that utilities are now implementing and much greater than the approximately 0.2 percent per year of savings that utilities are achieving on average nationwide. Similarly, recent studies have found that demand response/load management programs can reduce peak demand by 4-22 percent, depending on geographic area and key assumptions.

“In other words, current energy efficiency and demand response/load management programs are barely scratching the surface of what is achievable,” says the report, adding that a national policy that promotes sustainable and economically viable energy efficiency and demand response/load management programs will be necessary to achieve the full potential of these resources. Policy should guide these programs to maximize cost effective energy savings, reduce the environmental impact of electric delivery infrastructure utilization including end-use infrastructure, reduce energy use during peak periods, coordinate with smart grid initiatives, and enhance the overall reliability of the electric grid.

Recommendations to the DOE are to develop national measurement and verification protocols/standards that will better measure the savings that are being achieved and to place priority on expanding existing DOE programs that capture energy efficiency savings (e.g. updating federal appliance/equipment standards and national model building codes) and that help develop new energy-saving technologies that can be used in future decades (e.g. DOE’s research and development initiatives). Policies should be promoted at the federal and state levels that can encourage expanded cost effective energy efficiency and demand response/load management efforts, and financing tools such as energy efficient mortgages and on-bill financing for energy-saving retrofits should be developed and encouraged. Energy performance ratings also should be created for existing buildings as a tool to help potential property purchasers and renters to assess relative performance.