Residential Demand Response Matters

Because of the large load that the commercial and industrial space offers, some often forget the critical role that robust residential demand response programs can play.
Published: Thu 13 Feb 2014

As the power grid moves away from traditional central power plants and toward more distributed energy resources, demand response will have a larger role to play as electric system operators use it to maintain reliability on the grid.

Advanced technologies such as automated demand response, which automates the demand response dispatch process without any manual intervention, are helping to speed this transition and enhance reliability.

As more renewable energy is added to the power grid, more flexible and faster responding resources will be called upon to help balance loads. Automated demand response will play a major role in enabling the demand side to participate in these market opportunities.

According to a new report from Navigant Research, the number of automated demand response-equipped sites worldwide will grow from less than 217,000 in 2014 to over 1.9 million by 2023.

Despite the large load that commercial and industrial sectors offer, residential demand response programs continue to play a critical role. Companies such as Comverge, AutoGrid and EnergyHub are beginning to tap into the residential market. Our article Residential Demand Response Market Gains Interest discusses how companies are merging to create solutions for this market.

Listed below are the reasons why companies are flocking to invest in the residential market:

The residential sector makes up a sizable portion of the energy industry

The residential sector makes up 20% of total energy demand, according to the U.S. Energy Information Administration (EIA). That’s a rather significant portion of the energy sector. With a figure like this, the residential market cannot be ignored when considering overall energy management challenges. When looking to leverage demand response to curtail overall energy load, the residential sector cannot be overlooked.

Residential energy consumption is growing

Residential demand forms a significant part of the overall energy mix and continues to grow at an alarming rate. Residential energy consumption is predicted to rise as the average size of houses grows in the coming decades. The EIA predicts that total residential square footage in the US will increase by approximately 41% by 2040.

To tackle this, the way in which consumers manage their energy will need to change. Residential demand response programs provide a perfect solution as they have already proven to deliver financial and environmental benefits. With this tangible incentive, consumers are encouraged to deepen the relationship with their utility, opening up opportunities for increased engagement and education.

In response, utilities should offer a wide range of dynamic pricing programs to give their customers a variety of options for controlling energy costs.

Residential load accounts for a disproportionate amount of peak consumption

Residential peak consumption accounts for 60% in some parts of the US. Since demand response is designed to manage peak load, the utility should incorporate the residential sector into its energy management strategy.

By focusing efforts on residential demand, utilities can better manage reliability and more effectively prevent outages and blackouts.

Automation delivers predictability

Automated demand response provides utilities a rapidly dispatchable resource that delivers guaranteed results. This is critical as utilities add more variable sources of generation to the grid.

Residential demand response delivers capacity that is always available when it is required and the speed at which the load reduction can be achieved is significant.

Consumers want it

Finally, and perhaps most importantly, residential demand response gives consumers what they want by helping to address environmental concerns, enhancing communications and providing a wide range of choices. An increasing number of consumers actually want to monitor their household energy consumption and want more information as to how they can save money. Consumers don’t just want to monitor energy usage-they want to apply the information in order to save money.

A residential demand response program provides a great way for utilities to engage better with their residential customers. It can also be an inflection point to start thinking about participation in energy efficiency programs available to them.

The residential sector offers unique and highly valuable benefits, such as a more engaged customer base and greater ability to reduce peak load. The inclusion of residential programs as a part comprehensive demand response vision allows utilities to fully harness the capabilities of demand response and improve the system overall.

Further reading:

Navigant Research-Automated Demand Response