Smart Grid 101: The past and future of demand response


By: SGN Staff


Ben Paulos is a key staffer at America's Power Plan (APP), an initiative designed to help America be more intentional about its energy future. The APP crew believes that we are in the early stages of a radical transformation. It seeks to facilitate discussions amongst policymakers and decision makers at all levels -- federal, regional, state and local.


I thought this recent essay about demand response (DR) was a perfect addition to our Smart Grid 101 series because it has the right perspective. It defines DR in terms of its potential to contribute to a better energy future. - By Jesse Berst


By Bentham Paulos


America’s Power Plan is a response to the rapid changes in the power sector being driven by consumer demand for clean energy, new technologies and policy. The project includes research on demand response and other critical topics.  This "postcard from the future” looks at places that are already deploying the technologies and policies that will be common elsewhere in the future.


When demand for something rises and its price spikes, you might choose to buy less of it. When it’s on sale, you might stock up. It’s the kind of calculation people do all the time, while buying groceries or clothing or putting gas in the trunk. But historically, it has been hard to apply that kind of thinking to electricity.


Now, new information technologies are enabling customers to reduce demand in response to high power prices, making efficiency a resource that can compete toe-to-toe with power plants. This is cutting costs, improving reliability, and cleaning the air. The PJM Interconnection, the largest single power market in the world, serves over 60 million people in 13 states from the Mid-Atlantic out to Chicago. 


In the traditional setup, customers pay an average price for power all the time, blissfully unaware of the dramatic daily and seasonal swings in the cost of generation.  With no incentive to cut back during times of peak power demand, they buy the most expensive power. This drives up total costs for everyoneâ€"and threatens reliability.


When demand is so high as to cause an emergency, utilities send out press releases asking customers to voluntarily reduce demand. Some utilities have installed remote-controlled cut-off switches on air conditioners and water heaters, in exchange for lower rates.


Now, thanks to the Internet and automated controls, this process has become highly refinedâ€"more accurate, more reliable, and market based.  Customers can sign up to respond to the market price of electricity in real time. Controls can automatically change the temperature of thermostats, dim lights, briefly turn off water heaters and refrigerators, and otherwise give the grid a break.