Energy Efficiency

Demand response spending to exceed $1.3 billion a year by 2024

Global demand response spending is expected to grow from $183.8 million annually in 2015 to more than $1.3 billion in 2024, according to a new report from Navigant Research.

A number of forces are driving increased adoption of demand response, not only in North America but also around the world. The changing resource mix in electric grids globally is creating more potential for demand response to play a pivotal role in managing the grid and conserving overall energy use.

“The most important development in the demand response market is the spread of automated demand response (ADR), which automates the demand response dispatch process, from the grid operator to the demand response aggregator (if involved) to the end-use customer — all without any manual intervention,” says Brett Feldman, senior research analyst with Navigant Research. “Advances in metering, communications, and controls technologies are making advanced demand response a viable alternative in both the commercial and industrial and the residential sectors.”

One potential impediment to the expansion of demand response, according to the report, is a major case before the U.S. Supreme Court regarding the Federal Energy Regulatory Commission’s (FERC’s) jurisdiction over demand response that could drastically alter the demand response landscape in the United States. If the Court overturns FERC’s Order 745, which requires wholesale energy markets to pay the same for demand response as they do for electricity generation, it could cause a huge disruption in the demand response industry.