Demand Response as a Distributed Energy Resource

Executing a successful demand response management solution (DRMS) can be a complex endeavor. You need to make sure you get the right number of participants and the amount of load, without committing to overly generous incentives. It is critical to hire a team of experts who can help you design a program to make sure you accomplish your participant and load objectives, on time and on budget. During your vendor selection process, seek to understand the number of years of experience the vendor has developing and executing multi-channel marketing solutions to attract and retain program participants, ensuring the enrollment rates necessary to achieve the megawatts you need.

Successful programs have the ability to provide demand response, energy efficiency and customer engagement solutions that enable electric utilities to ensure grid reliability, lower energy cost, meet regulatory demands and enhance the customer experience. This encompasses a unique and complete combination of software, hardware and services to help utilities optimize every aspect of a demand management program, from participant recruitment and device installation to call center support, control events and measurement and verification. During your early phases of program design, look for vendors who have developed a track record of program management success. This could be in the form of a small first-phase deployment to massive program roll-outs. It can also include the vendor assuming all the program risk by investing their own capital in the form of a pay-for-performance program with the utility.

Considerations when looking for a DRMS is a vendor who offers an enterprise-class software platform that automates every aspect of a sophisticated demand management program including a full set of capabilities for successful program deployment. These include energy efficiency and customer engagement mobile applications, customer care and work management features, DR Optimization, bring your own device (BYOD) and cyber security.

Through a demand response and energy efficiency program, utilities can offer a thermostat program to capture additional kWh earnings, deliver additional demand response capacity, participate in the connected device market and have a more coordinated approach to demand management and program administration. A demand response and energy efficiency program enables utilities to better engage customers by providing a Wi-Fi connected thermostat that helps the customer drive energy savings, while also providing the utility a reliable demand response resource. Using a broadband connected thermostat delivers an enhanced customer experience, improved cost effectiveness, more clear and consistent messaging for customers, utilities and regulators and provides more value against critical goals. The participant enjoys choice, comfort and convenience as well as receive significant bill savings. Participants also have the opportunity for more robust demand response incentives.

There has been much discussion around the growing importance of distributed energy resources. As reported in a Utility Dive study, “ a whopping 84% of utilities predict that distributed energy resources will also increase as their overall fuel mix.” Typically, when people hear the term distributed energy resource, they typically think of residential customers putting solar panels on their rooftops, back up generation at large commercial and industrial customers, or using batteries for storage. However, when you consider the Electric Power Research Institute’s (EPRI) definition of distributed energy resources as “smaller power sources that can be aggregated to provide power necessary to meet regular demand”, that sounds very much like residential or mass market demand response. Demand response is distributed, it’s a smaller power source and it can be aggregated. Demand response is also dispatchable and more importantly, it’s reliable when devices are used that enable an automated connection between the utility and program participants. When deployed in such a fashion, a demand response resource takes on the following characteristics; accuracy, responsiveness, quality load shapes, and location control.

A new channel for demand response programs has emerged as an increasing number of consumers are installing Wi-Fi thermostats in their homes. These customers provide utilities a very inexpensive resource for a demand response program, and by providing these customers with value-added services, utilities can help increase customer satisfaction. So when utilities start formulating their strategy around distributed energy resources, it should start with a proven resource such as demand response to receive unparalleled levels of reliability, predictability and availability with their program. This approach will deliver a reliable capacity resource and help integrate other intermittent distributed energy resources. It will also increase satisfaction across the customer base, meaning fewer customers looking for alternative ways to procure electricity.