Landscape Shifts in Demand Response Industry
2010 is developing into a year of expansion for Demand Response in many regions including regulatory changes, smart grid funding and partnering with renewable energy resources to maximize participation. FERC’s Order 719 on organized markets has resulted in development of market design changes enabling more retail customers to economically provide Demand Response-based services in markets. This article provides a snapshot of a few major shifts occurring in the Demand Response industry this year.
In the mid-west ISO (MISO), barriers to demand response are being torn down, allowing companies such as EnergyConnect to bring demand response services to MISO without having to contract through the local utility or the customer’s energy supplier. MISO is also implementing reliability-driven markets for capacity with much more transparent pricing, allowing policy makers and stakeholders alike to see the value that demand response can bring to electricity consumers.
In the Southwest Power Pool (SPP), standardization of market products will enable demand response services to compete with generation-based services to reduce costs for all consumers
In a show of interest and support, the Federal Department of Energy has awarded $4.5B in grants for Smart Grid development. This will lead to reduced metering and data collection costs thereby addressing a major expense for demand response participation in wholesale markets.
Additionally, the North American Energy Standards Board (NAESB) and North American Electric Reliability Council (NERC) are developing complementary standards for demand response participation in wholesale markets. NAESB is working on standard measurement and verification protocols that will standardize approaches to measuring the impact of demand response activities. These standards will reduce the cost of participation at many levels. For example, a nationally accepted standard will enable Regional Transmission Organizations (RTOs) to simply appropriate the standard for use, rather than engage in a tedious stakeholder process for each region. Similarly, standards will allow aggregators of demand response customers to standardize their processes across RTOs, and result in lower costs in participation. Lower costs mean more participation from smaller retail customers and greater value for all customers.
NERC is developing standards for assessing the impact of demand response activity on the electric system. This will help grid operators maintain and improve the reliability of our electric grid as demand response becomes a more robust component of operations.
And finally, the issue over the leveraging of renewable sources is dovetailing with the benefits of demand response. Increasing reliance on less controllable renewable resources such as wind and solar will increase opportunities for demand response. These resources will challenge grid operators to be prepared to manage the system when large quantities of these resources become unavailable on short notice. Demand response can provide the enhanced flexibility critical to grid operations.