Demand Response: A Valuable Tool that Can Help California Realize its Clean Energy Potential

rp_Cover-photo-image-300x200.jpgA tool only has value if it’s used. For example, you could be the sort of person who’s set a goal of wanting to exercise more. If someone gives you a nifty little Fitbit to help you do that, and you never open the box, how useful, then, is this little device? The same is true about smart energy management solutions: good tools exist, but whether it’s calories or energy use that you want to cut, at some point those helpful devices need to be unpacked. The same is true for demand response, an energy conservation tool that pays people to save energy when the electric grid is stressed.

California’s electricity industry stands at a crossroads. The state got an early start on creating laws and policies to cut carbon pollution, and is now reaping the benefits of these policies through reduced emissions and healthy economic growth. That said, California can’t cut carbon emissions and reduce its reliance on fossil fuels without having alternatives to choose from — some focusing on promoting renewable energy, others on smarter energy management tools. Demand response is one of these tools, and a critical one. This highly-flexible, cost-effective resource should play a key role in California’s clean energy future, but several barriers stand in the way of unleashing its full potential.

It’s hard to think of California as anything but forward-thinking, but, right now, the state’s demand response programs are lagging behind those in other states and regions of the country like the Mid-Atlantic. There is good news, however, because demand response is an evolving resource. And, with advances in smart grid technologies, demand response has the potential to improve our energy mix in California. In EDF’s new report, Putting Demand Response to Work for California, we offer recommendations on how to unlock demand response as an important part of the overall strategy for California’s bright energy future.

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Demand response works by empowering customers to shift their energy use to times of day when there is less demand on the power grid or when renewable energy is more abundant. When energy demand goes up, this puts stress on the electric grid and encourages the use of “peaker plants” – dirty, typically coal-fired power plants reserved for use only a few days a year to accommodate “peak” electricity demand. Instead of turning on one of these expensive, polluting peaker plants, utilities can leverage demand response by asking customers to turn off non-essential appliances (like pool pumps, unused lights, idle water heaters, etc.), or delay the use of certain appliances (like dish washers) to a time of day when clean, renewable energy sources are more abundant. This “people-powered” solution saves customers money, prevents blackouts, avoids carbon pollution, and helps integrate more renewables like wind and solar onto the electric grid.

Simply put, demand response is good for people, businesses, and the environment – as demonstrated throughout the U.S. For example, in PJM Interconnection, the power grid operator that covers all or parts of 13 states (and Washington D.C.) throughout the Midwest and Northeast, demand response programs saved electricity users $11.8 billion in 2013 alone. Demand response also helped avoid blackouts during extreme weather events in the Northeast region of the United States between 2013 and 2014.

EDF’s demand response report calls for three actions to advance the resource in California:

  1. Identify the range of benefits demand response can offer, such as helping to reduce the cost of electricity for customers, integrate renewables, and improving grid reliability.
  2. Spur the rapid adoption of demand response programs by ensuring fair compensation for the value it provides to utilities, customers, the grid, and others.
  3. Properly account for all types of demand response in energy forecasts so the state can rely upon this tool when assessing energy supply and demand for the future.

While much more work needs to be done to follow through on the actions outlined above, significant change is already underway in California and much of the United States. For example, California recently passed S.B. 1414, which will help accelerate the use of the resource. Likewise, the state’s Public Utilities Commission (which is responsible for regulating the electricity industry) has been investigating how to increase the resource in its ‘demand response’ docket. EDF has been heavily involved in this case, given how important demand response could be in helping to lower customer energy costs and providing environmental benefits.

Let’s take demand response out of its box and start using this powerful tool to move California toward a low-carbon, clean energy future.

Photo source: iStock

This post originally appeared on our California Dream 2.0 blog.

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