What is Demand Response?
Demand response is a strategy used by electric utility companies to reduce or shift energy consumption from peak hours of the day, when the demand for electricity is thegreatest to leaner demand periods. It involves allowing customers to choose non-essential loads, which can be shed by the customers themselves or by the utility, at peak times. It is a pre-arranged agreement between the Utility or
intermediate agencies like aggregators with the consumer with specific
conditions of load, price and time intervals. Since power plants and transmission systems are designed to respond to the highest potential demand, lowering peak demand during demand intensive times of the day helps utilities reduce overall installation costs, operating costs and mitigate potential grid failures.
There are three main types of demand response which includes emergency demand response, economic demand response, and ancillary services demand response.Each addresses critical system needs.
- Emergency Demand Response is used to mitigate the potential for blackouts or brownouts during times when demand threatens to exceed supply resources. This typically occurs on days of extreme hot or cold temperatures when heating and cooling systems are causing greater demand on the grid.
- Economic Demand Response is employed by utilities to avoid the significantly higher costs of producing energy during peak demand times of the day that is associated with ramping up "peaking" power plants to meet higher than expected demand.
- Ancillary Service Demand Response is used to support the transmission of electricity to loads in a manner consistent with reliability requirements that are imposed on utility companies by industry regulators.
Challenges to Demand Response
Implementing demand response events comes with its set of challenges all of which revolve around reliability.
- Fostering Customer Participation - From a customer's standpoint, participating in a demand response event can be burdensome, particularly because it might mean curbing heating and cooling systems on days of extreme temperatures. Utilities must find appropriate incentives to motivate customers. Customers with flat rates don't have a vested interested in curbing consumption. To address this, utility companies often offer rebates and bill credits to entice customers to participate or use variable pricing to change consumption patterns.
- Opt-Out Provisions- Since demand response events can be uncomfortable, particularly for vulnerable populations like the elderly, many utility companies have provisions that allow demand response participants to override an event. This presents reliability challenges.
- Signaling an Event – Utilities use various types of technologies to signal a demand response event to a customer; coordinating DR event with the IT and communication technologies requires proper selection, testing and implementation.
- Integrating Demand Response into Resource Planning
Building Blocks of Demand Response
Demand Response Strategies
There are two common ways in which demand response events are executed by utility companies including:
- Direct Load Control demand response events involve the remote interruption of customers' energy usage, in which power distributors cycle loads like heating, cooling, elevators, washing etc. on and off at varying time intervals during peak hours of the day.
- Dynamic Pricing uses variable electricity rates to encourage customers' voluntary curtailment during demand response events. Utilities use a variety of pricing schemes including peak time rebates, critical peak pricing, and time of use rates to curtail usage.
Demand Response Technologies
Technologies to implement a demand response vary depending on the type of strategy being employed – direct load control or dynamic pricing. Generally speaking, demand response technologies facilitate communications with customers and/or control heating and cooling systems.
- End-User Interfaces –Utilities send signals to the participants of the Demand Response program using a variety of channels, including email, phone, and web portals. In-home or business display devices are another way that utilities can communicate with consumers about an event, including information about energy usage and pricing with smart grid. Consumers need to acknowledge their participation in the program. HAN can be used to connect displays, load control devices and ultimately "smart appliances" seamlessly into the overall smart metering system.
- Load Control Devices – Utilities use a number of different tools to actually cycle systems like heating and cooling on and off during demand response events. Load control switches enable direct remote control over AC units or heating systems. Smart thermostats allow utilities to adjust temperature settings remotely.
- AMI –AMI is increasingly being used with demand response, because it enables both utilities and end-users to have more robust data about loads, energy usage and electricity pricing.
The key feature of the demand response under the smart grid paradigm is the availability of the non-proprietary, open standardized DR interface that allows electricity providers to communicate
DR signals directly to existing customers using a common language and existing communications such as the Internet. OpenADR Alliance is promoting the OpenADR and it was created to standardize, automate and simplify DR to enable utilities to cost-effectively meet growing energy demand, and customers to control their energy future.
Proper implementation of Demand Response promises to greatly improve the efficacy of the system in a number of ways.
- Early detection – Smart grid enables utilities to detect and respond to load increases early by calling a demand response event.
- Improved Communication – Smart grid promises to increase the efficacy of demand response by streamlining the notification process and providing real-time information to customers about their energy usage and pricing.
- Accurate and Easy Verification – Smart grid enables utilities to measure and verify customers' curtailment during a demand response event in real-time.
- Automation Systems – Technologies are under development to automate demand response processes using smart grid. An automated demand response would automatically detect the need to shed load, send signals to participants, and control all devices that use electricity within a home or business.
Figure: Demand Response Processes
- Demand Response Markets – Smart grid creates a market for energy efficiency by enabling large energy users to reduce consumption when pricing rates are higher. Similarly, small and large energy users with distributed generation systems, like renewable systems, will be able to sell energy back to the grid during demand response events when wholesale electricity prices are high.
Demand Response in the Indian Context
Demand response is in its nascent
stages in India.
Its benefits will mirror those seen in Western countries, such as reduced
electricity blackouts, reduced electricity costs, offsetting the need to build
supply resource and the ability to integrate electric vehicles and renewable
energy sources. Regulatory framework also
needs to be in place for implementation of Demand Response strategies. However,
considering the large diversity in the consumers to be served in India,
it is necessary to identify the appropriate consumers to be roped in for Demand
Response to ensure the success of the program. Consumer awareness and maintaining transparency with them must be a
priority to win their confidence and ensure acceptance of the Demand Response
electrical distribution network must be strengthened to ensure reliability in
operations. Also, to cater to the diverse needs of
the consumers, a variety of DR modules need to be prepared.
- V S K Murthy Balijepalli, V Pradhan, SA Khaparde and RM Shereef, "Review of Demand Response Under Smart Grid Paradigm", IEEE.