New study assesses U.S. nationwide potential for demand response


Jon Wellinghoff,
Chairman, FERC
Washington, DC, U.S.A. — (METERING.COM) — June 19, 2009 – The potential for peak electricity reduction across the United States ranges from 38 GW to 188 GW through 2019, depending on how extensively demand response is applied, according to a major new study from the Federal Energy Regulatory Commission (FERC).

These reductions correspond to 4 percent to 20 percent of national peak demand, which is estimated will reach 950 GW by 2019, growing at an annual average rate of 1.7 percent and without any demand response.

The study “A National Assessment of Demand Response Potential” and the first such assessment on a state-by-state basis, considers a range of demand response scenarios. The base case (“Business-as-Usual”) considers the amount of demand response that would take place if existing and currently planned demand response programs continued unchanged over the next ten years. The highest level of demand response (“Full Participation”) is based on advanced metering infrastructure being universally deployed and dynamic pricing being made the default tariff and offered with proven enabling technologies.

On a nationwide basis the increase in savings with the FP scenario over the BAU scenario is as much as 150 GW – the equivalent of the output of about 2,000 typical 75 MW peaking power plants.

The study also finds that there are significant regional differences in demand response potential. Generally, regions in the western and northeastern U.S. tend to be the closest to achieving the full potential for demand response, with the Pacific, Middle Atlantic, and New England regions all having gaps between the BAU and FP scenarios of 12 percent or less. Other regions, particularly in the southeastern U.S., have differences of as much as 20 percent of peak demand.

Such regional differences are driven by many factors, including the customer mix, the market penetration of central air conditioning equipment, cost effectiveness of new demand response programs, per customer impacts from existing programs, participation in existing programs, and AMI deployment plans, the study notes.

The study identifies various regulatory, technological and other barriers to demand response programs and makes recommendations for overcoming these. In particular it is noted that at the national level the largest gains in demand response impacts can be made through dynamic pricing programs when they are offered as the default tariff, particularly when they are offered with enabling technologies.

“This study takes a flexible, real world approach to gathering information on the potential for demand response,” commented FERC chairman Jon Wellinghoff. “(It) has made clear that the potential benefits to consumers and the environment from wide scale demand response deployment is enormous.”

The study was a requirement of the Energy Independence and Security Act of 2007, and will now be submitted to Congress. In terms of the Act, the FERC is now required to complete a national action plan on demand response within one year.

The study has been welcomed by the Demand Response and Smart Grid Coalition (DRSG). In a statement Dan Delurey, executive director of the DRSG, said: “This assessment is essential to getting the attention for demand response that it deserves in terms of it being an important part of the solution to many of the challenges facing the electricity industry and the nation today.”

The study was prepared for the FERC by The Brattle Group, Freeman, Sullivan & Co, and Global Energy Partners, LLC.