Demand response bails out PJM


By: SGN Staff


Quick Take: I continue to be ambivalent about demand response. On the one hand, I think residential demand response is overhyped. The amount of energy you can pull out from a typical home does not justify the expense of the needed equipment and the ongoing customer education and support. On the other hand, commercial and industrial DR is proving to be a major boon in several parts of the country, as this recent announcement from PJM illustrates. - By Jesse Berst


PJM is a Regional Transmission Organization (RTO) that coordinates wholesale electricity in 13 states and Washington, D.C. It recently announced that its reserve margin for installed generation will drop from 13% today to 9% in 2014. (Several plants are retiring.) That's a problem given that the North American Reliability Corporation requires a total reserve margin of 15%.


To fill in the gap, PJM is increasingly turning to demand response, as explained by Adam James, Executive Director of the Clean Energy Leadership Institute writing in The Energy Collective.


He points out that DR will enable PJM to keep the total reserve at 20%, well above the 15% minimum. He predicts that PJM will call on DR twice as often in 2014-2015 as in 2013-2014.


The growing reliance on DR is quite an accomplishment given that FERC Order 745 - the rule that allowed DR to be treated as a dispatchable resource - was issued only two years ago.


Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.


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