Challenges for Deployment of Demand-Side Electricity Delivery Resource Options and Energy Efficiency Programs

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A level playing field for both supply and demand-side resources is key to addressing the challenges of climate change, economic development, and energy security.  This session focused on the policies and programs that are currently being implemented to further demand-side resources in state and federal electricity decision-making. The Honorable Mark Whitenton, Deputy Assistant Secretary for Permitting, Siting and Analysis in the Office of Electricity Delivery and Energy Reliability, U.S. Department of Energy, presided over the session as its moderator.

The Honorable Robert Lieberman, Commissioner of the Illinois Commerce Commission, noted that there is enormous potential for using demand response in today's electricity infrastructure, but there is a lack of knowledge among decision-makers and consumers about how best to initiate and use technology that creates demand response programs.  Brett Perlman, Vice President of Corporate Development at EnerNOC, Inc., noted that demand response is not the same thing as interruptible power, and that customers will respond to price signals if provided the correct information.  Mr. Perlman contended that demand response and energy efficiency, along with energy conservation, could have a significant impact on demand-side electricity delivery requirements, as long as the signals are right.

Kathleen Hogan, Director of the Climate Protection Partnerships Division at the U.S. Environmental Protection Agency (EPA), provided a snapshot of the successful energy efficiency programs that have been implemented over the last 25 years at EPA.  Such programs include EnergyStar, CHP Partnership, Climate Leaders, and most recently, the National Action Plan for Energy Efficiency (NAPEE).  These programs have shown that consumers will respond to price signals as well as to voluntary programs, and that the programs can reduce energy consumption, reduce greenhouse gas emissions and improve the business environment.  Barriers to these programs include the lack of incentives for utilities to sell less electricity (the "throughput" incentive), high transaction costs for energy efficiency and demand response programs, the need for better consumer education, competing vendor claims, lack of federal and state funding, and state level policy and regulatory barriers.  To overcome these barriers, Ms. Hogan recommended the following (from the NAPEE Vision for 2025):

• Decouple utility profits from sales
• Share best practices among all consumers, vendors, suppliers, technologists, etc.
• Improve uniformity among programs
• Evaluate savings in a coordinated manner
• Understand how large the energy efficiency resource is
• Integrate demand-side resources into state integrated resource plans

Paul J. Tyno, Executive Vice President of Energy Curtailment Specialists, noted that demand response programs have been most successful in the deregulated marketplace, where price signals have provided strong inducements to conservation. Demand response practitioners need to foster simple, easy-to-understand programs that include all customer classes, and that represent all load models.  He encouraged the audience to heed the results of a recently commissioned survey of the obstacles to demand response – lack of information, knowledge, and understanding, rather than engineering or technical difficulties.  Mr. Tyno concluded by offering that when customers understand what is required of them, they will "rise to the challenge." 

In response to questions posed by Mr. Whitenton, panelists agreed on the necessity for system operators and consumers to be better educated on demand response, and the role it plays in a fully functioning energy efficiency and conservation marketplace.  Panelists agreed that clear price signals, together with behavioral changes on the way electricity is used, would improve the impact of demand response programs on total demand for electricity, as well as reduce levels of greenhouse gas emissions, and add to economic growth.  Panelists also agreed on the need for additional research on technical and institutional barriers that still stand in the way of widespread demand response deployment.