in Up Front
print the content item



Demand response (DR) is increasingly becoming an important part of the resource mix for utilities and grid operators, especially in managing peak electricity demand.

Although both the commercial and industrial (C&I) and residential sectors contribute to peak demand, households are responsible for a significant amount of such demand. As a result, utilities' DR programs can be essential tools to help mitigate load issues.

According to a new Pike Research report, there are nearly 11 million households globally that are currently enrolled in DR programs. With a compound annual growth rate of 11.6%, that number of households is forecast to more than double, to over 23.5 million, by 2018.

This year, households in North America, primarily in the U.S., represent the majority of residential DR participants (70%), but the report says this demographic will shift dramatically in the coming years as a fast-growing number of households in the emerging markets begin to take advantage of DR.

Direct load control (DLC) programs are the most common, especially in the early years of Pike Research’s forecast. However, the report says the number of price-based programs is expected to increase rapidly.

By 2018, about 8.7 million households worldwide are expected to be enrolled in some type of price-based program, growing at a robust rate from 3.4 million in 2012, the report notes.

Although the one-way communication systems that utilities and grid operators use to support their various DR programs are most prevalent today, Pike Research says adoption of two-way network channels, including smart metering and advanced metering infrastructure, will dramatically increase in the coming years.

The research firm estimates that utilities and grid operators will spend over $806 million for load control switch technology and $2.9 billion for thermostat devices, including programmable communicating thermostats, to enable their various residential DR programs on a global basis in 2012.

Thanks to their load-curtailment efforts through these programs, utilities and grid operators will be able to achieve a reduction of 15.3 GW this year and of almost 32 GW in 2018, the report adds.

Because they were early adopters of residential DR programs and because of their technology investments in providing such programs, North American power suppliers represent by far the largest share (70% in 2012) of load reduction in the world, followed by European suppliers, the report says.

Market drivers and inhibitors
According to Pike Research, the most important factors influencing growth prospects in the residential DR market include the following:

The need to achieve cost savings: This need affects both the utility and the consumer. Homeowners can, for example, obtain meaningful savings by participating in dynamic pricing programs, the report notes.

Increasing energy demand: This demand results in capacity restraints, especially during peak times.

Regulatory requirements: According to the report, utilities are creating both energy- efficiency and DR programs to meet the requirements that regulatory agencies and public utility commissions around the world are issuing for higher energy-efficiency goals, ranging from 15% to 30% improvements by 2020.

Introduction of new and advanced technologies: Smart meters, home energy management, home area networking, smart appliances, the increasing use of renewables like wind and solar by homeowners, and the introduction of electric vehicles are all developments that have a positive impact on the residential DR market, the report says.

Despite these aforementioned market drivers for residential DR, Pike Research says the following factors have served as serious obstacles:

consumer backlash to smart meters;
cost and uncertain return on investment to deliver DR to residents;
lack of consumer engagement or interest;
utilities’ significant reliance on legacy systems with limited functionality; and
regulating agencies’ resistance to change.

For more information on Pike Research’s report, click here.




Hybrid Energy Innovations 2015
Latest Top Stories

SPP Raises Concerns About EPA's Proposed Clean Power Plan

Stakeholders around the U.S. are mulling over the Environmental Protection Agency's blueprint to cut emissions from existing power plants. The Southwest Power Pool has released its assessment of the plan.


Comverge, Constellation To Merge Demand Response Businesses

The two companies have announced a deal to combine their DR operations serving commercial and industrial customers and establish a new, standalone entity.


Grid-Scale Energy Storage Continues Making Inroads

A new report from Navigant Research highlights the biggest markets and most popular technologies for grid-scale energy storage.


Demand Response And Renewables Help SDG&E Tackle Record-Breaking Heat Wave

San Diego Gas & Electric (SDG&E) recorded peak demand records last week and relied heavily on energy conservation, as well as imported wind and solar power, to keep the lights on.


Report: Utility-Scale Renewables Keep Getting Cheaper

A new study suggests the levelized costs of energy of utility-scale wind and solar power are catching up with those of traditional sources, even without subsidies.

Hybrid Energy Innovations 2015
S&C Electric_id176
edf_id180