As a response to demand for electricity that exceeds normal sources of energy generation, cities like New York call upon highly polluting “peaker” power plants. These power plants generally run only when the electrical grid is close to capacity. And because peakers supply power only occasionally, their cost per kilowatt hour is much higher. On top of that, peaker plants are generally built in minority or lower income areas and can create or worsen certain health risks.
Demand Response (DR) is a reaction to all of this. Utilities (or grid operators) pay commercial and industrial (and now residential!) consumers to reduce their energy consumption in response to peaks in electricity demand, reducing the necessity of turning on peaker plants in the first place. Alongside smart grids and energy storage, DR plays an important role in enhancing the stability and reliability of our grid.
What’s another way to think about DR? Think about what airlines do when you’ve been bumped from a flight. It is far easier - and cheaper - for the airline to pay for your hotel room than charter a new aircraft or rejig their schedule. Similarly, it is much better for utilities to lower electricity usage when energy demand exceeds available supply, than to turn on the dirtiest, most expensive electrical power plants to meet the demand.
DR, then, is a win-win for participants and grid operators: Utilities spend less than they would on a power plant, or to purchase the expensive electricity from peaker plants, and participants enjoy an economic benefit.
DR has attracted not only individuals and families as a money-saving reward for saving energy, but also businesses worldwide to help their energy management practices. The commercial market for DR management systems is expanding fast and seeing a lot of innovation. For some companies, DR platforms enable real-time connectivity of devices and assets, helping them make informed decisions, optimize resources, and enhance customer experiences. However, the market for DR management systems also faces challenges: the complexity of connecting diverse systems across different industries and regions, for example.
DR also helps a global-scale energy transformation. In an attempt to achieve net zero CO2 emissions globally by 2050, we will see large increases in electricity demand from transport and heating. Some of this new demand will be satisfied with the widespread rollout of solar power and wind, but even the new technologies require energy to run. DR programs contribute to the accommodation of these impacts from the demand side and reduce the need to build costly new transmission and distribution infrastructure. In this sense, DR eases our transition while also managing the current supply.
Further Readings:
1.https://www.enelx.com/n-a/en/stories/what-demand-response-5-easy-understand-answers
2.https://www.iea.org/energy-system/energy-efficiency-and-demand/demand-response
3.https://corporate.enelx.com/en/stories/2020/07/demand-response-benefits-for-companies
4.https://corporate.enelx.com/en/question-and-answers/what-is-demand-response-how-does-it-Work
