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Continues on next page >> Editor's note: We told you recently about further proof AutoDR is fast becoming a reality and pointed to a Swiss pilot that may offer a better way to do demand response. That discussion continues with today's commentary from Kevin Klustner and Todd Greenwalt of Powerit Solutions which, you may recall, was one of our 12 Companies to Watch in 2012 as voted by SGN readers. Update: After reading this article, Comverge executive John Rossi wrote a response suggesting a holistic approach to demand response can meet (and exceed) the hype. . By Kevin Klustner and Todd Greenwalt
With all the hype in the market about how demand response (DR) is going to grow, many players –aggregators, utilities, and smart grid technology vendors – have assumed that they could succeed by pursuing DR on a stand-alone basis. We think the market is about to realize that to be successful, DR has to be part of an integrated demand management ecosystem.
Today’s demand response system is not scalable. Utilities and aggregators are focusing resources on DR participants – commercial and residential customers – that can’t deliver large, on-call reductions and are challenging to sign up. For example, earlier this year the Maryland utility Pepco recruited 150,000 customers, partly by going door to door, to provide about 200 megawatts of demand response.
About 100 or fewer industrial customers can deliver that much electricity with advanced automation. But utilities and system operators are spending large sums of money to compensate participants who use very crude, manual-response methods that limit DR capabilities. And aggregators, which play a crucial role in developing DR capacity, are likely to see staffing expenses rise as utilities bring on programs involving more frequent, shorter-term DR events – which mean more customer calls.
Operating as it is, this system won’t deliver the level of participation and control we need to ensure grid stability, integrate intermittent renewables into the grid, and generally optimize energy use.
Missing links
Given the level of reductions they can deliver, energy-intensive businesses are the linchpin of a successful DR market. Yet some observers looking at industrial DR – our
Much of this problem can be traced to missing links in the DR ecosystem:
· Industrial automation vendors are new to DR and demand management, and their products currently don’t connect directly to DR programs or the smart grid
· Industrial businesses have put DR initiatives on a separate track from facility automation projects, making them islands disconnected from core facility upgrades and business initiatives
· Aggregators can connect to the smart grid but lack hands-on expertise in the industrial automation environment
· Demand response management system (DRMS) vendors don’t have the capability to connect the last mile from the grid to the factory
· Utilities don’t have the experience to sell the connection capability to end users
Links between all these players and systems must be forged for DR to realize its potential. Without these links, there’s simply no way to succeed on a mass scale with the kinds of short-term DR events that can instantly relieve grid stress.
Page 2: The way forward >>
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