Revenue from Demand Response Continues to Grow

Worldwide revenue from demand response programs is expected to reach US$9.7 billion by 2023
Published: Wed 25 Jun 2014

Since 2010, demand response systems have matured in the electricity market and now have the opportunity to bid directly against traditional power generation. This is according to Navigant Research which points to the steady growth in revenue from demand response-worldwide revenue from demand response programs is expected to grow from US$1.6 billion annually in 2014 to US$9.7 billion in 2023.

There are a number of drivers that are the cause for accelerating demand response adoption in the US [Engerati-Demand Response-A More Operational Resource for Utilities] and other regions across the globe. One in particular is the changing resource mix in electric grids which creates more potential for demand response to play a major role in curtailing energy consumption and maintaining grid stability.

“States like New York, Massachusetts, California, Hawaii and Maryland are at the forefront of grid modernization, and are transforming the utility business model to incentivize more active customer participation in demand response programs,” says Brett Feldman, senior research analyst with Navigant Research. “At the same time, technology advances in metering, controls, and end-use devices are making it easier for customers to participate in demand response programs and manage their energy usage.” [Engerati-Hawaii Gets a Smart Grid and Engerati-Will the 2014 Smart Grid Triple Crown Go To New York State?]

While the US will remain the largest market for demand response programs until 2023, demand response is also gaining momentum in many other countries such as Europe which is poised to open more markets. [Engerati-European Commission: Demand Response can generate Billions of Euros in energy savings by 2020.] The developed countries of Asia Pacific are also embracing automated demand response. Several countries in Europe are in the process of changing their electricity market structures, according to the report, and opening up more opportunities for demand response to compete against generators.

New stationary and mobile electricity storage capabilities and enhanced energy management tools are also giving residential customers more options to control consumption and lower costs. Residential combined heat and power (resCHP) systems represent another distributed generation (DG) technology customers might consider. These residential energy innovations and attractive financing mechanisms provide new choices for residential customers that heretofore were out of reach. Navigant Research forecasts that global residential generation and storage revenue will grow from US$54.7 billion in 2013 to US$71.6 billion in 2023.

Another way of curtailing energy consumption is through behavioural energy efficiency programmes which aim to give consumers control over their energy usage. [Engerati-Quantifying the Potential of Behavioural Energy Efficiency in Europe]

Further reading

Engerati-Understanding the True Value of Demand Response

Navigant Research-Residential Energy Innovations