Why Demand Response Will Shape the Future of Energy

When we use energy is just as important as how we use it. By stockphoto mania/Shutterstock

Whether we're talking about individual energy habits or the consumption of the entire world, we often talk about a nation's energy use in terms of the total energy used. But almost as important as how much energy we use is when in the day we use it.

Here's why.

Our energy grid is not designed to put out a steady amount of energy throughout the day. Rather, it is designed to crank up or wind down depending on the amount of energy that's being demanded by the markets.

That means there's a baseload of generation that's always on — churning out steady amounts of relatively cheap, dependable power night and day. This has typically been made up of coal and nuclear plants, which can produce large amounts of power but can't be made to cycle up and down efficiently in the face of fluctuating demand. On top of the baseload, you have an increasing amount of intermittent sources as the world transitions to renewable energy technologies like wind and solar. And then, on top of these intermittent sources are so-called "peaking" plants, often running on natural gas and sometimes diesel or even jet fuel. These can be deployed at very short notice, when there's either unusually high demand or when another source isn't available (e.g. the sun isn't shining enough for solar), but are expensive, inefficient and disproportionately polluting.

One of the most effective ways to meet this challenge also happens to be the simplest — reward people for not using energy when it's in highest demand.

An old idea whose time has come
Demand response, as it is known by those in the industry, is really not all that new. Many utilities have offered cheaper electricity rates for off-peak hours, encouraging consumers to shift their habits and reduce the pressure on the peak. Similarly, energy producers around the world have partnered with energy-hungry industries to ask them to power down at times of high demand. What's new, however, is an ever more sophisticated array of technologies, meaning more people can participate in demand response schemes with less disruption to their daily lives.

Nest thermostat

On the residential market, for example, the number of European and American homes with a "smart thermostat" doubled in 2014. While these devices are primarily marketed as a way to cut overall energy consumption, manufacturers like Nest are also partnering with utilities to offer benefits when homeowners cut back on peak consumption. In fact, your thermostat can even communicate with your electric car charger to make sure you're using the cheapest electricity available to recharge, again reducing your pressure on the peak.

This technology is gaining friends in some surprising circles. While the idea of an energy saving thermostat might seem like a threat to traditional energy producers, the concept is so attractive to some utilities, who are eager to rid themselves of expensive peaking plants, that they are offering rebates for smart thermostat installation.

A more sophisticated approach
On the commercial side, demand response has been a strategy for some time because it took very little infrastructure to implement — just an energy-hungry business ready and willing to cut its consumption in times of need, and able to educate its workforce about how and why to do so. Here too, however, the concept is becoming a lot more sophisticated and scalable as technology allows us to better communicate between producers and consumers, and to coordinate the specific needs of the grid. And as distributed energy storage becomes more commonplace, consumers may not even have to modulate their overall use — but rather allow the utility to switch them to battery power when grid supply is constrained.

Recent developments suggest we may be just scratching the surface when it comes to demand response.

A huge potential to cut peak demand
A report from federal regulators suggests that U.S. demand response capacity had the potential to shave 29GW off of peak demand in 2013, representing a 9.9 percent increase over 2012. When the U.K.'s National Grid, which manages the nation's transmission infrastructure, put out a call for companies willing to cut consumption at key times, over 500 different sites came forward. The combined result was the equivalent of 300MW of power that can be removed from the grid at times of need. And constrained by its rapid growth of renewables following the Fukushima disaster, Japan is now looking at shoring up its grid by starting a national demand response program in 2016.

Demand response alone will never meet the demands of a diversifying energy system increasingly reliant on renewables. But then it doesn't have to. From efficiency to energy storage to simply overbuilding our renewable energy capacity, there are countless ways to help ease the shift to renewables. But sometimes the easiest way to keep the lights on may simply be to (selectively) turn them off.