The Grid Optimization Blog

Smart Grid and Demand Response: Finally Getting Some Bang for the Buck?

A growing coalition is going to have a huge impact as the utility industry gets its act together to lobby for specific demand response/smart grid legislation:

DTE Energy, Consumers Energy, and Nexant Join the Association for DR & Smart Grid

Three more leaders in demand response and smart grid have joined the Association for Demand Response & Smart Grid (ADS), the national DR and smart grid organization. They come aboard as ADS prepares for the upcoming National Town Meeting on Demand Response and Smart Grid ( The new members are DTE Energy, Consumers Energy, and Nexant.”

Read the whole announcement here.

The timing is perfect. U.S. load growth is expected to be pretty flat for the next decade and we may be able to serve that small growth with just demand response enabled by smart grid technology. We may not need to build much more generation or transmission than we have now. That could a big shift in the U.S. utility technology market and a rethink of how utilities can make money without depending primarily on ROI from big capital expenditures.

Of course, this opens the door for even more non-utility entities to enter the energy market. Maybe we’re entering sort of a neo-deregulation era.

In any case,  technology is available. Now we need new rate setting procedures and legislations. This new coalition forms a powerful lobbying base to get those things done.

What do you think?

Discuss this Blog Entry 3

on Feb 7, 2014

Here is announcement of another demand response group, which says it represents consumers. Wellinghoff is involved:

on Feb 7, 2014

At the moment the growth in electric demand appears to be flat, but history tells us this could change due to unforseen circumstances over time. This coupled with the pick up in economically driven retirements of coal and nuclear plants could result in capacity problems down the road. As such, demand response and smart grid developments may not be enough to avoid deficiencies and new electric generating plants will be required along with transmission expansion.

on Feb 7, 2014

While I think the optimistic tone of this announcement regarding the maturity of demand response is warranted, especially given the credentials of those industry players just announced as getting on board, there are also reasons to tone down some of this optimism. While market designs, regulations and even technology maturity for demand response might be coming within the reach of large electric customers, I think the smaller ones will have to wait a while longer for additional maturity in these three factors before these customers can be counted on for high penetrations of persistent participation. And the phrasing “counted-on” I think is still a source of skepticism for the system operators who have to keep the lights on. How predictable and persistent will human behavior be among electric customers participating in demand response? From an operator perspective, if new generation and transmission are not built in the next decade, it will probably be due more to the societal resistance to siting and building new large generators and transmission infrastructure, than the appeal of demand response. So as you say in your article, ”Now we need new rate setting procedures and legislations,” I would add we also need more assurance of the “reliability” of the nature of demand response created by these much needed new policy and institutional instruments.

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