Demand Response Need Not Cause Customer Pain

bulb vs money

by Bob Shively, Enerdynamics President and Lead Instructor

At least in some parts of the U.S., demand response has been an important factor in energy planning since the 1980s.  When I was an account representative in Northern California in the mid-1980s, we signed up numerous industrial customers to interruptible rate schedules that allowed the utility to interrupt the customer multiple times each year in return for a rate discount of about 30%.  This allowed the utility to avoid building peak generation to cover the industrial customers’ loads.

The only problem was, no customer really wanted to have all their power shut off, and, when our utility occasionally did it on a hot summer day, I could brace myself for angry calls from my customers.  They would shut down their processes because they were obligated to, but customers weren’t happy about it and wanted to let me know.  As utility representatives, we all knew that demand response would remain a limited resource as long as it caused customers pain.

Fast forward to 2013: We are starting to see a new type of demand response that doesn’t negatively impact customers’ comfort or ability to do work.  The IEEE Spectrum magazine recently detailed a cold storage warehouse in Neuendorf, Switzerland, that represents the future[1].  The warehouse is operated by Migros, Switzerland’s largest supermarket chain, and stores food for 630 stores in a 2 million-square-foot facility.  Clearly such a facility is not willing to let power interruptions negatively impact the temperature within the warehouse (imagine explaining to your boss why you ruined 2 million square feet of groceries to get a bill discount!).  Yet the warehouse, working with software provided by IBM, is now able to offer Swissgrid up to 900 kW of demand response for limited periods of an hour or so.

How do they do this?  By closely monitoring temperature tolerances within their facility and forecasting how much flexibility they have to reduce power usage on any given hour.  This flexibility is the difference between the maximum amount of power the facility would use if power is cheap and the minimum amount necessary to maintain adequate temperatures.  As long as the facility stays within these bounds, everyone at Migros is happy and no work processes are interrupted.  And Swissgrid is happy to pay for the electricity “storage” whenever it is cheaper than running a peaking unit or buying peak power off the European grid.

Will such “smart” demand response come to dominate the future?  I believe so. Otherwise most consumers just won’t do it. Data for U.S. peak load reduction over the last decade show that the amount of peak load reduced by energy efficiency more than doubled, while peak load reduced by demand response only increased by 30%. A key reason is the energy efficiency allows you to get the same level of comfort or productivity while using less power.

Historically demand response didn’t offer this lack of pain.  Most people don’t want to come home to a hot house on a peak day.  Numerous researchers spread around labs and universities are working on software packages to bring concepts such as that being used by Migros into our homes. Perhaps in 20 years or so, this will all sound like the way the world works, and no one will find it at all unusual.  And we’ll need a lot fewer peaker units relative to our based energy usage.

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
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