FERC releases report on demand response

Wednesday, November 9, 2011

Demand response is an innovative smart-grid approach to meeting society's electricity needs. As customer demands on electric grids increase, the generating resources needed to meet higher and higher peak demands are typically more expensive to run and have more adverse environmental impacts.  In essence, demand response means covering electric load by having individuals or companies agree to temporarily cut back on electricity consumption in response to peak demand conditions.  When customers are willing to provide this service at a lower cost than generation, demand response can be a decentralized, crowd-sourced alternative to peaking power plants.

U.S. federal regulatory staff released a report this week assessing the nation's demand response and smart  meter resources.  The Federal Energy Regulatory Commission staff report is the sixth annual briefing since the enactment of the Energy Policy Act of 2005, which contained provisions promoting the development of demand response resources and markets.

The report notes that more and more customers have access to the kind of advanced meters that facilitate demand response participation.  These smart meters can not only measure instantaneous electricity demand, but typically report back to a utility automatically using radio frequency communications.  Since 2009, advanced meters have risen from 8.7% to a 13.4% share of all installed meters.  The report suggests that the actual penetration rate of advanced meters may be even higher if it includes meters that are installed but whose advanced features have not yet been activated.

The report also notes that in 2010, the grid operators it surveyed had a total of 31,702 MW of demand response resource potential, or enough to cover about 7% of the total 2010 peak demand.  Regional demand response capacities ranged from as low as 2.3% of peak load in the Electric Reliability Council of Texas to as high as 10.5% in the mid-Atlantic region's PJM Interconnection.  The report noted that demand response resourcs "made significant contributions to balancing supply and demand during system emergencies" in 2011.

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