Benefits of Demand-Response Programs

By William Atkinson | Feb 15, 2017




According to a recent report from the American Council for an Energy Efficient Economy (ACEEE), demand-response programs can reduce utilities' peak demand an average of 10 percent, complementing savings from energy efficiency programs. Both programs, of course, help utility customers reduce their energy costs.

"Demand-response and energy efficiency programs are complementary," states the report. "Energy efficiency reduces both energy use and peak demand, while demand-response provides additional peak demand reductions."

In 2015 (the year for which the most recent data was available), the ACEEE estimated that these programs combined saved about 200 billion kilowatt-hours, more than 5 percent of retail electric sales in the United States. In some states, the savings from these programs exceeded 10 percent of retail electric sales and could reach more than 20 percent by 2020.

The ACEEE recently reviewed data from the U.S. Energy Information Administration (EIA) on energy and peak demand savings for 25 large utilities.

"We found that for each one percent reduction in electric sales for a utility, on a median basis, peak demand reductions from efficiency programs are 0.66% of peak demand for that utility," states the report. "If these trends hold for additional utilities and future years, it would mean that, for a utility that reduces retail sales by 15 percent, the peak demand savings will be around 10 percent."

In terms of demand-response in specific, the report notes that it can involve a number of strategies, including interruptible rates, air conditioning and water heater cycling programs, and pricing programs (such as peak time rebates).

The ACEEE looked at all utilities that reported potential demand-response savings of 200 megawatts or more—a total of 28 utilities, which represent 64 percent of the potential demand-response savings reported to the EIA, and 58 percent of the actual reductions reported to the EIA.

The ACEEE found that potential demand-response savings ranged from 2 percent to 27 percent of the utility's peak demand, with 10 percent peak demand savings being the average.

Since utilities charge more for peak demand energy, it obviously behooves large customers (commercial, industrial, governmental, etc.) to introduce demand-response programs as a way to reduce their utility costs. And, of course, the best way to make sure peak needs decrease is to install equipment, systems, and other technologies that will keep these facilities operating efficiently, without the need for costly peak demand.

About The Author

ATKINSON has been a full-time business magazine writer since 1976. Contact him at [email protected]

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