This is an excerpt from EERE Network News, a weekly electronic newsletter.

June 24, 2009

Report: Demand Response Could Cut U.S. Peak Power Demand by 20%

The extensive use of demand response could potentially cut the peak power demand in the United States by up to 20% in the next decade, according to a new report from the Federal Energy Regulatory Commission (FERC). Demand response gives utilities the ability to cut large commercial and industrial loads and to control other customer's use of air conditioning, refrigeration, and other large electrical appliances. For instance, demand response could cause your air conditioner to delay its next cycle or to cycle less often in times of high demand, usually in exchange for a credit on your power bill. More sophisticated means of demand response include the use of smart meters and "dynamic" utility pricing that varies with demand, so that customers are motivated to reduce or delay their electrical use during times of peak demand.

The new FERC report examines four scenarios: business as usual, which follows current trends in demand response; expanded business-as-usual, in which all states offer demand response programs, more customers participate, smart meters are partially deployed, and 5% of customers choose dynamic pricing; the "achievable participation" scenario, in which everyone has smart meters, dynamic pricing is the default, and other demand response programs are available for those who opt out of dynamic pricing; and the full participation scenario, which is an estimate of how much cost-effective demand response would take place if everyone had smart meters and participated in dynamic pricing, with help from such devices as "smart" thermostats and appliances that respond to utility prices. FERC acknowledges that the full participation scenario is more a measure of what is possible to achieve rather than what is practically achievable.

Looking ahead to 2019, the FERC report projects a 38-gigawatt (GW) reduction in peak load under business as usual, equal to 4% of the projected peak load; an 82-GW peak load reduction under expanded business-as-usual, equal to 9% of peak load; a 138-GW peak load reduction under the achievable participation scenario, equal to 14% of peak load; and a 188-GW peak load reduction under the full participation scenario, which yields a 20% reduction in peak load. The full participation scenario results in essentially no growth in U.S. peak power demand over the next decade. In this scenario, much of the load savings is achieved through dynamic pricing, combined with smart devices. The FERC report also includes a state-by-state breakdown of the four scenarios, providing a guide for legislators and utility commissioners as they evaluate their policy options for demand response. See the FERC press release and the full report (PDF 16 MB). Download Adobe Reader.