Demand Response Solutions in High Demand
Demand Response is a set of activities to reduce or shift electricity use to improve electric grid reliability, manage electricity costs, and ensure that customers receive signals that encourage load reduction during times when the electric grid is near its capacity. However, Demand Response is not the silver bullet to solve the issue of the aging grid, but it can be very instrumental in alleviating the peak demands put on the electric utility infrastructure while it is being upgraded.
The response to increased electrical energy demand cannot be met by the traditional build-out of central generation plants and new transmission lines due to national concerns over cost and environmental impact. Thus, a new paradigm has emerged that focuses on demand reduction.
This is a relatively nascent market segment, and there are a number of suppliers working in the Demand Response space. A Demand Response Provider is a company authorized to act as an intermediary between the independent system operator and end use customers to deliver Demand Response capacity.
North America clearly dominates the Demand Response market, and it will continue that way in the near future. However, there is a burgeoning market in the UK, and that is slowly spilling over to the continent.
Strategic Issues
Considering that Demand Response is forecasted to grow at a CAGR of 32.8 percent over the next five years, there are numerous strategic initiatives that need to be adopted if a Demand Response Provider is to be successful in this market. In order to help their cause, suppliers must strategically address:
- Work with ISO/RTO to educate uses
- Target investor-owned utilities in the US
- Integrate with building automation
- Create a vertically integrated value chain
- Join the OpenADR Alliance
- Go international
