Wise Moves: Demand Response

By Susan Bloom | Jun 15, 2014
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Once known as demand-side management, the implementation of products and practices designed to modify electricity consumption are proven methods for electricity providers and consumers to control usage. This field is now referred to as “demand response” or “intelligent efficiency.” In today’s era of rising electricity prices and desire for green and sustainable businesses, electrical contractors are wise to familiarize themselves with this field and the various measures that can help their commercial, industrial and residential customers achieve greater control of their energy consumption and costs.

The basics of demand response/intelligent efficiency

The Federal Energy Regulatory Commission (FERC) defines demand response and intelligent efficiency as “changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.” 

“The key here is the intentional adjustment of usage consumption on the part of end-use customers in response to a needs-based stimulus, whether that be higher cost or grid stability,” said Rita Renner, director of systems marketing, WattStopper, Santa Clara, Calif.

Phil Davis, senior manager of the Schneider Electric, Demand Response Resource Center, Palatine, Ill., agrees. 

“Demand response is any action taken by an electricity user to alter planned usage as the result of changing prices, avoidance of demand charges or a request directly signaled from the grid,” he said. “This can be as simple as manually setting back a thermostat or as sophisticated as a completely automated system linked to the grid. Products range from industrial supervisory control and data acquisition and building energy management systems to residential energy management systems and thermostats.”

“Intelligent efficiency products are smart products that can automatically save energy,” said Brent Protzman, Ph.D., manager of energy information and analytics, Lutron Electronics Co., Coopersburg, Pa. “Demand-response products can accept an input from the electric utility, aggregator or a facility manager and then automatically reduce the amount of energy they’re using, thereby reducing the load on the power grid. These products typically control the high-energy users in a building such as heating and air conditioning, lighting, manufacturing lines, refrigeration, etc.”

The state of the smart grid

In August 2003, North America experienced a glaring example of the inefficiency of its electric grid after an outage at an Ohio utility triggered cascading outages across neighboring grids. It was an extensive event, putting 45 million people throughout eight northeastern and midwestern states, as well as parts of Canada, in the dark for several days. 

The U.S. Energy Information Administration estimates claim such disruptions cost the nation $150 billion in productivity losses every year. In an attempt to avoid localized and widespread power outages in the future, the nation has since undertaken measures to add more intelligence to the electrical infrastructure via development of a smart grid. According to a spokesman for the U.S. Department of Energy, a smart grid is “a two-way flow of electricity from anywhere to anywhere that’s more information-rich, allowing the grid to behave more efficiently, react to changes and heal itself more quickly.”

Construction of the smart grid has involved efforts by host utilities to install a variety of digital equipment that can communicate to and from various points on the grid. 

“[This is] technology which can include everything from a customer-based smart meter to grid-embedded sensors in substations and along lines that let the utility know how well the grid is running,” Davis said. “As utilities complete these upgrades, the benefits are greater reliability, faster service restoration after outages, better resistance to storm damage, lower overall cost of operation, and much more.”

“Utilities are adding intelligence to the grid to become more efficient, integrate renewables, enhance reliability, improve response times and increase customer satisfaction,” Protzman said. 

However, because upgrades to the grid are addressed on a state-by-state basis as opposed to being overseen at the federal level, the degree of the smart grid’s progress varies. 

“The smart grid is still in its infancy and involves a lot more than just demand response,” Protzman said. “Some utilities have demand-response programs as part of their smart grid, but there’s a wide range to how these programs are implemented. Some utilities have automated systems, others rely on email and phone calls, and some have no demand response at all.”

“The U.S. is anywhere from 30–50 percent ‘smart,’ depending on the metric,” Davis said. “Much of that progress depends on utilities’ ability to secure funding to cover upgrade costs. There’s also more involved in modernization than just equipment upgrades. They must be linked to management systems, and those systems must be able to analyze the massive data feeds that can result.”

The FERC measures progress by assessing the potential for demand-response measures to provide a percentage of peak demand nationally. 

“Demand response in the U.S. has now grown to a point where it can potentially meet about 9.2 percent, or roughly 72,000 megawatts, of peak demand nationwide, which represents a growth of 22 percent over its 2010 status, according to FERC’s annual demand-response survey,” Renner said. “In terms of market size for demand-response-related products or solutions, estimates can range as high as $6 billion in revenue from different industry observers.”

“Utilities will spend $2 trillion over the next couple of decades just on their parts of the grid, while customers will spend varying amounts based on their needs,” Davis said.

Other approaches to intelligent efficiency

Davis confirmed a slow but steady growth in the interaction between utilities and customers, largely as the result of the rising popularity of renewable resources, such as solar installations, which can enable users to generate their own power and even sell unused power back to the grid. Microgrids—localized grid networks with generating capability that can exist for some amount of time disconnected from the main grid—contribute too. 

“Customers would be surprised at how many ways there are to make or save money through an ability to alter your demand profile to better fit energy-delivery resources,” Davis said.

At the end-user level, legislation is driving buildings to pursue more efficient and increasingly intelligent electric-based systems. 

“In California, Title 24 2013, effective July 1, 2014, contains some mandatory provisions that expand upon the 2008 version by requiring buildings greater than 10,000 square feet to be demand-response-ready to reduce total lighting consumption by at least 15 percent,” Renner said. “In addition, the demand- responsive controls must use at least one standards-based protocol. LEED Version 4 also includes some available credits for demand response under the ‘Energy and Atmosphere’ category.”

“Codes like ASHRAE 90.1, LEED, Title 24, etc., are adding more intelligent efficiency lighting schemes such as manual on/automatic off occupant sensors, daylighting, multilevel switching, and dimming,” Protzman said. “Lighting controls, especially in retrofits, help meet increasingly stringent building codes and can save enough energy to pay themselves back in less than two years. Quick and easy retrofit solutions are also becoming more common, including wireless devices, systems with minimal or no commissioning and packaged solutions that anyone can design and specify. Because facility managers would prefer to maintain and monitor one interface to lighting, HVAC, security, and other systems, whole-building integrated solutions are also gaining momentum in the industry.”

Taking the next step

“A majority of contractors may be just becoming aware of the business opportunities offered by demand-response and intelligent efficiency solutions on the commercial front,” Renner said. “For many contractors, the current business opportunities in this sector may be greater on the residential front. Perhaps the best course of action for contractors is to continue to monitor this area of development and to gain deep knowledge of the demand-response programs and opportunities offered by local energy providers.”

“Some contractors are heavily involved in intelligent energy, while many are still learning,” Protzman said. “As with all construction projects, system-integration issues may arise, so it’s essential that contractors use reliable technology from experienced manufacturers whose technicians and customer-service professionals can not only train the contractor but also help resolve issues quickly. When setting up a lighting demand-response system, always consider the effect on the occupants.

“Setting back a thermostat too far will cause considerable discomfort, whereas lighting can be dimmed by up to 20 percent without most occupants even noticing,” he said. “Contractors should avoid cutting light levels back by more than this in work areas to maintain productivity and utilize support spaces for the majority of demand-response power reduction, where only a little bit of light is needed for safety and circulation.”

Contractors are also advised to seek assistance on demand-response and intelligent-efficiency measures from reputable organizations, such as the Department of Energy, ASHRAE and the National Electrical Manufacturers Association, along with such websites as and

“Take advantage of trade group education and resources as well as vendor education to stay ahead of customers,” Davis said. “Also, acquaint yourself with the customer-facing individuals at your local utility, and partner with them to help educate customers, especially about rebates. And remember that the smart grid is an evolving arena, so standards matter much more than ever before. Customers will learn to appreciate total cost of ownership over low purchase price as they become increasingly comfortable that their contractor is providing a reliable path forward.”

Overall, experts agree that the growing field of demand response/intelligent efficiency offers a wealth of opportunity for informed and proactive channel members. 

“Most buildings were constructed prior to current code requirements and before intelligent controls were widely accepted, so there’s considerable opportunity for energy-saving retrofits,” Protzman said. “In commercial buildings, measures like dimmable lighting are currently only installed in a small percentage of existing spaces and occupancy sensing is also well below 50 percent penetration, which again reveals that there’s a huge market for contractors who are willing and able to perform energy-saving intelligent efficiency retrofits.”

About The Author

BLOOM is a 25-year veteran of the lighting and electrical products industry. Reach her at [email protected].





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