The true potential of demand response is for the system as a whole, not by considering one part at a time. Most of the value is in the relationships, which depend a lot on market architecture and design.
As can be seen in the article An Alternative Business Case for Demand Response, “[T]here are two sides on the DR coin. On one side, system crashes are mitigated by a least cost mix of supply and demand risk management tools that may be applied in time and space. On the other, DR is the key to the segmentation of customers supply security (a kind of insurance). Because of its fine grain nature, DR can help mitigate delays (intended or not) of lumpy investments in generation, transmission, and distribution.”
To engage customers to make inform decisions, please take a look at the comments under The Future Utility Customer Service Model. Please take a look also under the article EWPC: People Coordinating and Cooperating with Electrons Part 6 for a suggestion of a comprehensive national energy strategy, where I say that:
Two generic electricity systems models have been implemented: Model 1: old vertical integration controlled market and Model 2: faulty deregulation, based on open transmission access and “native” loadsThe deferring energy use value proposition is an integral part of Model 3. The barriers on the development of the demand side are integral to Models 1 and 2. Under Model 3, retail competition, under prudential regulation, instead of traditional regulation, is what let’s “the greater the value, the greater the anticipated response” operate. Customer classes disappear as customer segment themselves on the best value proposition in the market, as retail competition will also ‘ensure that programs… are implemented in a manner that achieves net benefits for consumers.”
As an emergent system is Model 3: electricity without price controls [EWPC]. Since Model 1 and Model 2 have barriers on the development of the resources of the demand side that are being addressed on a piecemeal basis [an alternative solution is needed]. Model 3 is based on an integral development of the resources of the demand side.”
The development of the residential DR mass market will depend on the development of business model innovations that include other resources on the demand side as well.
© 2007. José Antonio Vanderhorst-Silverio, Ph.D.