Ardish Morawala
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Smart utility with demand response management can solve the problems arising due to demand fluctuations. The result could be significant energy savings & uninterrupted electricity supply.

More than a century ago when Edison devised the first ever commercially viable electric light bulb, little did he know that ‘electricity’ would go on to assume ‘oxygen status.’ Now could you imagine life without electricity? Forget life, can you go through a single day without it? The answer would be a resounding ‘No’. But such a situation can arise if we fail to use electricity judiciously, and that’s where demand response programs can come to our rescue.

The growing power crisis and how it can be resolved

The global population consumed a whopping 20,450 kWh of electricity in 2014. This is up 6.65% from just two years ago and up 14.5% from five years ago. Understandably, utilities, as well as governments, are beginning to take action to balance the dynamic generation and consumption of electric power.

So, how do we tackle the growing demand for electricity? Increase the generation capacity or schedule power cuts, one would say. Additional power generation is effective but is cost-intensive too. Power cuts are not only inconvenient but also cause huge revenue losses to businesses that need an uninterrupted power supply.

Another approach is to charge more for consumption during periods when the demand is much higher than supply. Utilities use such dynamic pricing schemes (also called critical peak pricing) to impose higher electricity bills on consumers who will not voluntarily reduce consumption. Utilities generally use a mix of these options, but, of late, demand response (DR) programs have gained popularity across the globe. A cost-effective initiative, such a program helps utility companies accommodate cycles of peak demand.

How demand response programs typically work

Demand Response

A demand response program works on the simple concept that if some users opt to consume less electricity during peak times, there may be no need to generate additional power at all. The idea is to shift non-critical utility consumption from peak hours to leaner cycles. This flattens the overall load curve, avoiding the need for load shedding, and also enhances the efficiency of the power grid. For instance, if there’s water shortage in your locality, you would save water for critical activities like drinking and cooking, by reducing its use for say, gardening or washing cars.

To implement a demand response program, however, it is important for utilities to have a good understanding of the end user’s consumption pattern. If you choose to be part of such a program, for example, your electricity distribution company will identify your peak and lean consumption hours, as well as your critical and non-critical usage. Based on this analysis, a DR plan will be crafted for you. This plan will cause minimal inconvenience, and allow you to continue with critical activities when a DR event is invoked. Utility companies choose to invoke a DR event during peak hours, requesting registered volunteers to shift to their DR strategy of power consumption. In some cases, home automation systems take care of this on their own, as they are connected to the utility network. During the actual event, the peak load is flattened out or reduced below the normal, averting a crisis and maintaining grid stability. After the event is complete, you will receive an advice from your utility to resume normal power consumption.

Ensuring responsible power consumption

Demand response programs are not just successful in theory, some such initiatives have shown impressive results. According to a report by the United States Environmental Protection Agency (EPA), electricity efficiency programs in the country saved 155 TWh in 2014, enough to power some 14.7 million U.S. homes.

In 2013, Ausgrid, an Australian power distribution operator, tied up with Greensync, a leading provider of demand side management software, to deliver a component of its demand response program. Under this program, Ausgrid’s commercial, institutional, and industrial customers were required to reduce energy use during dispatch periods, for which they were compensated. Customers could view their energy usage in real time through the GreenSync PortfolioDR™, a cloud-based demand side management platform. They could choose how and when to participate in demand events.

Sustainability of DR programs will depend on the ability of utilities to attract more and more consumers to volunteer for such initiatives. Companies should consider offering incentives based on the subscriber’s profile such as whether it is an individual, an industry, or a commercial complex. They can offer simple cash backs, credits, or discounts on energy star appliances. Consumers who are aware of the effectiveness of demand response programs will be more than willing to adopt them, so educating them is a great way to start.

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