Smart Technology is Supporting Residential Demand Response Development

Residential demand response revenue is expected to reach US$2.3 billion annually by 2023 thanks to smart technology.
Published: Tue 02 Dec 2014

The development of smart grid technology -- particularly advanced metering infrastructure (AMI) and smart, two-way communicating thermostats -- is giving utilities across the world the ability to offer residential demand response (DR) programmes.

Residential demand response set to grow significantly

According to Navigant Research, the spread of these DR programmes are definitely linked to the new approaches of designing the grid of the future. Navigant’s report, “Residential Demand Response” was put together after the firm analyzed the global market for residential DR in five major geographic regions, including global market forecasts for residential DR sites, capacity, and revenue through 2023.

The report predicts worldwide revenue from residential DR to grow from US$332 million in 2014 to US$2.3 billion in 2023. As of 2014, almost all residential DR activity is taking place in the United States. This will change over the next 10 years as other regions continue or start the pilot phase of DR and then build out full-scale markets or programmes. The largest growth will occur in Asia Pacific and Europe, which combined will approach North America in terms of residential DR sites and revenue by 2023.

"Advanced two-way thermostats are changing the business model for utility residential DR programs," said Brett Feldman, senior research analyst with Navigant Research. "The so-called 'bring your own thermostat' model, in which consumers purchase thermostats at retail stores, can vastly reduce the acquisition costs for programs and lead to greater customer satisfaction, since they are the parties choosing their own devices and initiating the participation process."

Authors of a new market report published by Transparency Market Research "Smart Demand Response Market By End User - Residential, Commercial, and Industrial) - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 - 2025" agree with this assumption and state that the roll-out of smart grid technologies, including smart meters and communication systems, as well as the growing demand in power (supplemented by capacity constraints) are likely to boost growth in the global smart demand response market. As technological advancements and developments by leading market players come to light, the market will develop and grow further. [Engerati – Demand Response Market Faces Major Growth.]

Demand response linked to a resilient grid

Residential DR will be an integral part of the development of a more resilient grid and the spread of microgrids -- trends that have gained increased urgency following recent extreme weather events. These will enable utilities to discreetly dispatch customers according to the load on the grid, and customers to control their own devices through mobile applications. This will give them more control over their energy consumption (and utility bill), according to Navigant.

The advent of grid modernization is closely tied to these new approaches to designing the grid, according to the report. In the US, residential plug-in electric vehicles are being examined as DR assets, and almost every domestic auto manufacturer has launched some sort of energy use optimization pilot, Navigant says. Nissan has just recently announced that it will be putting Japan’s demand response system to the test by using its electric vehicle, LEAF. [Engerati – Nissan Begins LEAF to Home Grid Demand Response Testing.] and [Engerati – Demand Response Via The Cloud and Electric Vehicles.]

Further reading

ACEEE - Big Data, Cloud Computing, and Real-Time Control: New Options for Integrated Demand Side Management and Customer Engagement [pdf]

Navigant Research - “Residential Demand Response”