April 24, 2014 – Vol.19 No.3
Demand Response: People, not New Power Plants, are Driving the Clean Energy Future.
by Cheryl Roberto
Associate Vice President
Environmental Defense Fund
Clean energy resources, like wind, solar, and energy efficiency, have certain key advantages over traditional, fossil fuel-based resources: they don’t require expensive, polluting fuels or large capital investment, consume little to no water, generate negligible carbon emissions, and are easily scalable. To take full advantage of low-carbon, renewable energy sources, we need a power grid with enough flexibility to harness clean energy when it is available and abundant. That’s where demand response, a people-driven solution, comes in.
On a hot summer day, for example, electricity use rapidly increases as people turn on air conditioners to avoid the heat of the late afternoon. A decade ago, the grid operator’s only option is to turn on another fossil fuel power plant to meet the increased need for electricity. But, at any given time, there are thousands of light switches left on, idle water heaters, cycling swimming pool pumps, and forgotten thermostats that people could temporarily turn off or down, if only they were offered the right incentive. If asked, people can adjust their power usage in exchange for a financial reward. We call this “demand response,” and it is increasingly helping to balance the flow of electricity with our energy needs at a given moment.
Demand response diverts money that would generally go to a fossil fuel power plant to homeowners and businesses instead. In this scenario, a utility or demand response provider sends a message for participants to reduce electricity use at key times in exchange for a credit or rebate on their utility bill, in addition to the cost savings they will earn through conservation. Of course, participants always have the option to opt-out with the tap of a button on their smart phone or thermostat.
While demand response might sound unconventional, it is actually a traditional, common-sense economic idea that has not been adequately applied within the electricity sector. In any market, customers are often encouraged to tweak their behaviors in return for a potential reward. When was the last time you were asked to give up your seat on a flight after the airline overbooked the plane? The airlines either offer money or a free plane ticket if you take a later flight.
Demand response can do the same thing for electricity, incentivizing more energy use when inexpensive, carbon-free renewable energy is abundant, and discouraging non-essential energy use when an additional, fossil-fueled power plant may need to be turned on.
Best of all, demand response is more affordable than constructing new power plants. As utilities invest around two trillion dollars over the next two decades to modernize our century-old electric grid, technology and people will play a larger role in deciding how power is produced and used.
Demand response adds a people-driven dynamic to the power grid, transforming our electricity system from a one-way, centralized power network in which customers passively receive electricity, to a more localized, two-way flow of power and information where both parties gain. Plus, we will all benefit from enhanced reliability on the power grid, as well as curbing energy use during the hottest and coldest months, offsetting the need for expensive, inefficient, and dirty ‘peaker’ plants generally only used to generate power several dozen hours per year during these periods of extreme weather.
If we are going to meet the challenge of climate change, we will have to accelerate the shift to a clean energy economy with innovative, user-friendly technology that puts people in the driver’s seat. Demand response is good for people, businesses, and the environment, and will unlock a future that relies on the intelligent, resilient, and clean energy solutions. Let’s put it to work for us.
Cheryl Roberto leads the national EDF Clean Energy Program.
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