Can demand response scale to the height of its hype?
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.
The way forward
The DR community needs to recognize these gaps in the ecosystem and focus on initiatives that can close them. The key, though, is integrated automation. Energy-intensive businesses need industrial automation equipment that ships from the factory with DR embedded and that integrates with aggregator systems - so enabling DR is as simple as flipping an on-off switch.
That means manufacturers of furnaces, compressors, chillers, and other large-load industrial equipment need to start embedding intelligent demand management functionality into their products, effectively making them smart grid-enabled. Only then will we be able to realize DR’s potential. Because it is the industrial sector - not the residential or the commercial building sectors - that truly has the untapped reserves. Industrial facilities have a unique capacity to shed large loads on demand - if they possess the technology to do it without compromising productivity.
Kevin Klustner is CEO and Todd Greenwalt is vice president of engineering at Powerit Solutions.
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