Historically, the US power grid has primarily treated electricity demand as a (mostly) unalterable requirement that must be met by ramping dispatchable generation up or down to adjust the electricity supply. This system creates several drawbacks, including i) challenges associated with integrating intermittent renewable energy sources (such as solar and wind) that cannot be dispatched; and ii) inefficient use of resources, since the transmission, distribution, and generation systems must be built to meet the peak demand even though the peak occurs only a few hours during each year.
Demand-side management (DSM) approaches can alter the net electricity required from the grid rather than altering the electricity supply to meet the demand. Electricity pricing schemes like time-of-use charges and demand charges are one DSM approach. According to the Rocky Mountain Institute, electricity pricing schemes offer significant potential for altering electricity demand, but customers struggle with understanding more complex rate structures. Additionally, electricity costs are not high enough to drive behavioral change for many residential customers.
A second demand-side management approach is energy storage, which can be charged during low electricity demand and dispatched during high demand. A third DSM approach is improving transmission and distribution infrastructure to better link supply, demand, renewable energy, and storage resources in different geographical regions. Finally, DSM via demand-response (DR) allows utility signals to alter when or how electrical loads will run. Although DR has historically had narrow uses, today many residential and commercial buildings have communications infrastructure and access to computational power (via wifi or mobile internet), and many customers have user interface devices (smartphones), significantly increasing the potential for controlled DR of internet-connected devices.
DSM overall offers many potential advantages. Some proposed demand-side management policy approaches include (but are not limited to):
1. Support for transmission and distribution infrastructure and land;
2. Development of new sites for pumped hydro or compressed air energy storage;
3. Support for new hydroelectric dams;
4. Funding for research and development on flow (or other?) batteries;
5. Requirements and guidelines for electricity pricing schemes;
6. Cyber-security for internet-connected devices;
7. Mandates for energy storage or demand response, as was done in California
That’s an excellent summary of the options and issues surrounding DSM. I like it that energy storage has been included as a DSM technology. It’s not often thought of that… Read more »
Strongly agree on the removal of unnecessary obstacles. The regulations in deregulated markets that prevent storage from playing functions as both generator, provider of auxiliary services, and deferral of capital… Read more »
Brent: Here are a few thoughts you may want to consider. (1) Rocky Mountain Institute (RMI) in their March, 2015 report ” Community Scale Solar” stated (page 5) … Read more »
The point of how energy storage integrates with afternoon PV is an interesting one though I don’t think it necessarily to be a major challenge. I tried to imply this… Read more »
I’m a bit confused. Most of the examples provided are supply-side management, not DSM. More flexible grid storage, better transmission lines, and dams are all forms of SSM. But in… Read more »
Whether storage is behind the meter or in front of the meter, the effect is largely the same (aside from location-specific benefits of distributed storage) so I lumped them together… Read more »
Brent: I agree with Henry below that DSM should be reserved for customer demand responses. In your response, you say ‘how can we best foster a transition to fossil-free electricity… Read more »
I mean it more akin to saying “OK if the fire department is here putting out the blaze, how can we minimize the amount of collateral damage while still putting out… Read more »
I agree with Dan Miller that the term demand-side management should be focused on what energy consumers can do to manage their demand efficiently. This would include energy conservation and… Read more »
While real-time pricing is great in theory, there are some problems. First, most residential consumers get confused by anything more complicated that on/off-peak pricing and so more complex pricing schemes… Read more »
Brent, Responding to your comments about effectiveness of demand response systems for residential consumers, I agree that there are important issues to consider about users understanding the price information and… Read more »
I don’t think that consumers buying an airplane ticket is a good point of comparison – that’s something that occurs as a relatively small number of discrete active events, as… Read more »
Good demand response methods do not require user involvement beyond an initial agreement. For example, NEST is providing demand response to utilities in Southern California and elsewhere. You get a… Read more »
I think one of the keys for providing the right incentives to customers is to offer rebates at the time of purchase of equipment (e.g. a new refrigerator or dryer… Read more »
Brent is admirably restrained in expressing his reservations about the efficacy of variable rates for affecting residential consumer behavior. I’ll be more blunt: touting the supposed advantages of dynamic pricing of… Read more »
As I teach in my two interdisciplinary classes on sustainable energy at The George Washington University (GWU), it is always less expensive to save energy than generate it from any… Read more »
Great point about the opportunity for energy efficiency. I was one of the contributors to the building technologies chapter of the 2015 Quadrennial Technology Review from the DOE, and we… Read more »