Demand Response Programs-6Th Edition is Available Now

Business Wire, May 11, 2007

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c56529) has announced the addition of "Demand Response Programs-6th edition" to their offering

The 6th Edition of the Demand Response Programs report is a detailed 100-page look at the past, present, and future state of the market for demand/load response based upon market price signals. This report is intended to provide significant value to individuals and companies who are considering participating in demand response programs, energy providers and ISOs interested in offering demand response programs, and consultants and analysts looking for detailed information on demand response technology, applications, and participants.

The electric industry plays a critical role in our society on many levels. It advances the nation's economic growth, it promotes business development and expansion, it provides solid employment opportunities to American workers, it enhances the quality of life for its users, and most importantly, it powers the world. It is a robust industry - unparalleled in value - that contributes to the perpetual progress and prosperity of our nation.

A truly functioning electricity market incorporates dynamic supply and demand forces. A frequent criticism of current wholesale market designs is that the demand-side of the market is not active; thereby creating the potential for supplier market power. Enabling demand-side responses as well as supply-side responses increases economic efficiency in electricity markets and improves system reliability.

Over the last 25 years, Congress and the Federal Energy Regulatory Commission (FERC) have enacted a series of laws and regulations designed to open the electric market to more competition. As this historical reformation comes to pass, there are still many problems within the electric power industry that must be addressed and vanquished in order to ensure a happy ending. At the very top of the list is the need to find a remedy that will be instrumental in healing the long neglected wounds that ail our existing transmission grid. Electric system reliability has emerged as a critically important subject for attention by regulators and policymakers. The year 2001 witnessed rolling blackouts in California; capacity-sapping droughts in the Northwest; and heat waves, price spikes and tight supplies in the Northeast and mid-Atlantic regions. These difficulties have all combined to once again make energy and energy efficiency a priority policy issue. When faced with a capacity shortage, one option is to provide customers with an incentive solution to reduce demand during times of constrained or costly electricity supplies - and what better incentive is there than money? Encouraging customers to react to the time-value of electricity can be accomplished through a variety of programs known as Demand Response (DR) that have the potential to rapidly reduce demand at a relatively low cost and without adverse environmental impacts.

Demand response refers to customers selling load (demand) back to the system in response to some signal (i.e., price). Typically DR programs, also called load management or load response programs, are energy conservation and efficiency programs developed for, and used by, electricity consumers to reduce their use of electricity during times of peak demand. Like the yield management programs implemented by the airline industry to resolve flight over-booking situations at the gate, DR programs offer a favourable alternative to rolling blackouts or system collapse due to unmanageable peak usage. These programs call on customers to interrupt or shed load on short notice and can substantially reduce the chances of power outages affecting many customers. DR programs are currently being implemented in a number of states, and are typically sponsored by utilities or ISOs who need to balance the supply and demand for electricity in real time. The emergence of these programs is the first step in empowering customers to make wise decisions about their energy use and to make investments that reduce their expense. However, in order to take advantage of these programs, technologies must be developed and deployed that allow customers to receive accurate price signals that form the basis of decisions to reduce or shift consumption to off-peak periods. At present, the vast majority of users are neither aware that wholesale energy prices vary based on time of day, nor do they have any financial incentive to shift usage to times of lower cost.

The success of DR initiatives depends upon the implementation of a cost-effective systemthat can, within minutes, send signals to thousands of customers, confirm curtailment activities, or directly control loads or generation at customer sites. Based on a review of current utility programs, EPRI estimates that DR has the potential to reduce U.S. peak demand by 45,000 MW. This figure represents 6.4 percent of forecast baseline usage.

DR programs are not new - they have been used for years. However, historically consumers have had little control over how and when they participated. In addition, they were not typically able to capture the true market value of the load reduction they contributed to the system because the power saved was pegged to the cost of production rather than a spot market price based on supply and demand. Programs for peak load management have been in place for more than two decades, although participation has waxed and waned as utility objectives have continually shifted. The early tradition has been for mandatory participation among customers that have enrolled. With restructuring, DR programs are increasingly designed, implemented and administered by different entities, involve new market participants including retail suppliers, aggregators, or curtailment service providers, and are triggered by economic considerations as well as electric system conditions. Like markets for other products, in order for the DR market to work efficiently, competition for the end use customer is crucial. This means that the customer should have access to a number of competing retail demand response products from different providers.