How demand response and distributed energy resource solutions changed in 2023
As 2023 draws to a close, we're looking back on how Demand Response (DR) and Distributed Energy Resources (DERs) transformed throughout the year, as well as the implications for future energy management and grid resiliency initiatives. The sector has witnessed exciting developments and substantial growth, presenting utilities, states, and other stakeholders with significant potential alongside new challenges and opportunities. Below, we delve into the key trends that shaped DR in 2023.
Winter demand response programs being added at record pace
Driven by climate extremes, rapid electrification, and escalating winter peak loads, our utility clients have rapidly incorporated winter DR programs into their portfolios. For instance, the aftermath of winter storm Uri in 2021 led to widespread, weeklong power outages across Texas as electricity generators experienced outages and the grid could not meet the unplanned demand. While Texas was the most directly affected, the storm had a ripple effect across the Midwest, and utilities across the central region had to purchase expensive capacity and energy to address the increased demand. Changing grid conditions are prompting several of our clients throughout North America to transition from summer-only programs to programs that include winter – or year-round – DR. Utilities are evaluating their DR and DERs portfolios to identify existing assets that can provide all-season capacity and exploring new measures to deliver capacity beyond the traditional peak summer demand response season.
Reliance on DR programs on the upswing
In previous years, DR programs were called only during peak load times or during climate-related weather events. Without a need aside from summer peaks, grid operations teams did not rely heavily on DR programs and were not involved with their utility partners in the day-to-day. Over the past year, there has been an increasing reliance on DR programs, accompanied by greater involvement from grid operations. Previously, grid operators monitored the grid independently and initiated demand response events only as needed to maintain the power grid’s electrical flow. Now, we are seeing that alignment is essential between the grid operators needing to use demand response events to alleviate grid constraints and the program teams who manage the demand response programs in their territories. To better manage these programs, strong collaboration and effective communication is key. As more and more demand response events are called by grid operators, utilities can continue to use this resource without relying solely on fossil fuel generation. As more demand response events are called by grid operators, utilities can leverage this resource without resorting to carbon-emitting fossil fuel generation. This not only saves them from costly purchasing but also contributes to progress towards emission reduction goals.
Utilities are driving smart device adoption
While evaluating demand response (DR) programs, utilities are also promoting the adoption of control-enabled devices, such as smart thermostats. Rapid electrification becomes less of an issue if the added loads are control-enabled at the time of purchase and installation. By integrating grid control into the incentivization of subsidized assets, these newly added loads resulting from rapid electrification can transform into a valuable grid management asset. We have seen utilities succeed at driving smart device purchases by educating their customers and providing marketplace promotions and in-store rebate incentives for smart device purchases. This works to boost control program enrollment and aligns with the broader goal of integrating control-enabled devices into the grid ecosystem while promoting consumer engagement and responsiveness.
Looking ahead, utilities will play a crucial role in steering customers toward smart devices and helping them navigate DR and DERs programs. This year showed us that as more and more grid-connected assets come online in parallel with increasing needs for flexible and reliable DERs-based load control, it’s in the utility’s best interest to have a robust distributed energy resource program in place. As always, our team at CLEAResult is excited to help our utility partners navigate this rapidly evolving landscape. To stay up to date on more industry trends, keep an eye on CLEAResult Insights for more on how 2023 shaped our energy future.