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Is this the elephant in the room for demand response?

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I first became aware of the impact peak demand has on the price a consumer paid for electricity about eight years ago.  It was during the period I was given the opportunity to lead Smart Energy for a large Asian utility. I have been fascinated with the topic ever since, trying to work out how to better influence demand by improving consumer engagement, encouraging behaviour change, and leveraging advancements in new energy and information technologies.

I recall my early conversations with senior managers from generation, from networks, from retail, from finance, just about from every department in the organisation.  I can best describe the feeling I had from the majority of responses as being akin to an adult patronisingly tapping a child on the head and saying ‘you don’t understand, you are only a child’.  Repeatedly being asked why we would try and inconvenience consumers and ask them to reduce their AirCon usage during hot and humid times? Why would we want to reduce our energy sales? Why would we want to cut return on assets?  

Over the years I have persisted.  It is my belief enabling consumers to reduce peak demand, if they so choose to, is the right thing to do by the consumer, and will, therefore, be the right long-term play for a utility.

Jump forward to 2019, and I have recently released my Demand Response diagnostic, designed to help a utility understand where they may need to focus if they are to improve their demand response program.  At the same time, the insights will help me further understand which aspects of demand response utilities are finding most challenging so I can explore and share approaches to address them.

The responses to the diagnostic make fascinating reading and patterns are already forming.  When I asked the question:

“Does your organisation have an agreed statement describing why you must have a demand response capability?”

The majority of people have answered “NO”.  I can’t help thinking back to my early days in 2011, where very few executives could authentically articulate why we were embarking on a demand response journey, simply because most of them did not believe it was the right thing to do.  Eight years on and I can’t help but think the reason so many people have answered no is that there are still so many sceptics at the executive level.

Is this the elephant in the room for demand response?

Wayne Pales's picture

Thank Wayne for the Post!

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Discussions

Bob Meinetz's picture
Bob Meinetz on April 2, 2019

Wayne, "demand/response" is nothing but an attempt to shift the responsibility for providing adequate electricity from a utility monopoly to captive consumers. What the utility saves on building new generation, customers lose in a cost of convenience.

And customers can't do a thing about it, can they?

Richard Brooks's picture
Richard Brooks on April 3, 2019

Good article, Wayne. Alcoa is a beacon of success with their demand response programs. At times, the Company can make more revenue by selling off its power than in using it to produce and sell aluminum. https://texasiof.ceer.utexas.edu/PDF/Documents_Presentations/Energy_Forums/Forum%203-7-13/2%20Alcoa%20Experience%20in%20Demand%20Response%20-%20Texas%20Industrial%20Energy%20Management%20Forum.pdf

This article is another good example of the "street buzz" about the misaligned incentives problem that is happening across the energy industry

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