Curbing Energy Use During Peak Demand Periods Reaps Economic Benefits I Illinois & Massachusetts

October 20th, 2015 by Glenn Meyers

Analysis of peak demand periods shows cost benefits for energy users

A recent Advanced Energy Economy report, prepared by Navigant Consulting, finds significant economic benefits take place in Illinois and Massachusetts while curbing energy use during peak demand periods.

According to AEE, demand response (DR) services enable utilities and grid operators to curb energy use by relieving stress on the electricity distribution system. By compensating commercial, industrial, and residential customers for curbing their electricity use during times of peak demand, economic savings are achieved.

In the complex and continuous challenge of energy use and grid management, grid operators manage DR compensation through wholesale capacity markets. Peak load reduction measures are then customized for commercial customer facilities. Proactive measures can include turning lighting, air conditioning, pumps, and other non-essential equipment down or off without affecting business operations, comfort, or product quality.

DR also concerns residential grid customers. Residential changes include advanced metering infrastructure, and two-way communicating load switches and smart thermostats are now facilitating effective demand response programs for participating energy use households.

The Navigant report, titled Peak Demand Reduction Strategy, shows states which adopt standards for reducing peak demand through DR can significantly reduce costs for customers, strengthen reliability of electric service, and ease compliance with EPA’s Clean Power Plan.

Researchers looked at the feasibility of utilities to procure the resources to meet demand reduction goals over 10 years. In each of three scenarios (low, medium and high), the cost-benefit ratio is highly positive, with the ratio of benefits to cost increasing as the standard rises.

“Specifically, in the medium scenario, where demand is reduced 0.25% per year over 10 years, Navigant concluded that the cost of every dollar invested in demand response programs is outweighed by benefits totaling $3.53 in Massachusetts., and by $2.66 in Illinois,” reported Monique Hanis from AEE.

“This month, the Massachusetts Department of Public Utilities (DPU) will receive final three-year energy efficiency plans from the Commonwealth’s utilities,” explain AEE in the accompanying press release. “These plans, and the approval process of the DPU, will determine the size and design of the DR market moving forward.”

Meanwhile, in Illinois, policy makers have for a year now been considering “comprehensive reforms” to the state’s energy policy, including the possibility of making changes to the state’s energy efficiency and renewable energy programs.

Image: Electric utility meters via Shutterstock









Appreciate CleanTechnica’s originality? Consider becoming a CleanTechnica member, supporter, or ambassador — or a patron on Patreon.

Sign up for our free daily newsletter or weekly newsletter to never miss a story.

Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Latest Cleantech Talk Episode