5 reasons why residential demand response matters
By: SGN Staff
By R. Blake Young
Increasing demand, variable supply, rising energy costs and environmental concerns are just a few of the challenges that face the energy industry. With such a diverse set of issues, it’s important to take a holistic approach to addressing today’s challenges and transitioning to a smarter grid.
This is particularly true in the demand response industry as the complex task of managing peak demand is not something that should be addressed in a piecemeal fashion. Given the large load that the commercial and industrial (C&I) space offers, some industry commentators often forget the critical role that robust residential demand response programs play. So in case anyone had any doubts, here are five reasons residential demand response is critical to the overall energy management equation.
1. The residential sector makes up a sizable portion of the energy pie
According to the U.S. Energy Information Administration (EIA), the residential sector makes up 20 percent of total energy demand. That’s a notable slice of the energy pie. With such a significant portion of the nation’s energy usage, the residential market cannot be ignored when considering overall energy management challenges. Here’s another way to look at it: imagine if one fifth of your paycheck was missing ... that would certainly be a significant enough portion for you to notice. Certainly you’d be motivated to rectify that situation. The story is no different with residential energy usage when it’s time to leverage demand response to curtail overall energy load.
2. Residential energy consumption is increasing
We’ve established that residential demand is a significant part of the overall energy mix. Guess what? It’s also growing. Residential energy usage is expected to rise as the average size of houses grows in the coming decades - the EIA has predicted that total residential square footage in the U.S. will increase by approximately 41 percent by 2040. One of the most impactful methods to address this growth is through changing the way consumers manage their energy. Residential demand response programs provide a perfect solution as they have already proven to deliver financial and environmental benefits. With this tangible incentive, consumers are encouraged to deepen the relationship with their utility, opening up opportunities for increased engagement and education. As a result, utilities would be wise to offer a broad range of dynamic pricing programs to give their customers multiple options for controlling energy costs. For example, a fully automated critical peak pricing (CPP) program can serve as a great way to further engage customers and add another reliable source of supply. After all, an educated energy customer is a key to addressing current energy challenges and realizing the promise of the smart grid.
3. Residential load accounts for a disproportionate amount of peak energy use
Back to our energy pie. While residential demand makes up only 20 percent of total energy demand, it makes up 60 percent of peak load in certain parts of the country. Since demand response is designed to manage peak load, the residential segment simply can’t be ignored as part of any utility’s energy management strategy. By focusing efforts on residential demand, utilities can better manage reliability and more effectively prevent outages and blackouts. And for utilities that pay for electricity based on their summer peaks, a residential program can be a great way to keep costs down. This is particularly important in times of peak demand and has proven time and time again to be the proverbial ace up the energy industry’s sleeve.