Peak load management programs have undergone a fundamental change in the way they are administered and the choices they offer, according to the Association of Energy Services Professionals International (AESP). In a newly published and freely available paper titled “Peak Load Management or Demand Response Programs: A Policy Review,” AESP contends that end-use customers, not utilities, are becoming the more active party driving such programs.
The shift in mindset is mirrored by a change in the way industry participants are referring to load management programs, which, AESP says, are becoming known increasingly as demand response programs, a phrase which better connotes the focus on customer involvement.
“Historically, the utility operated peak load management programs in a command and control style,” the paper states. “Now, customers are becoming the more active party. Accordingly, the trend is away from mandatory programs to voluntary programs and with more customer choices.”
AESP’s 20-page paper examines varying types of demand response programs for residential and commercial and industrial customer segments and addresses issues involving customer eligibility, voluntary vs. mandatory participation, incentive structuring and program marketing strategies.
AESP’s Pricing and Load Profiling Committee conducted more than 40 utility interviews as a starting point for its demand response analysis, which is written from a utility point-of-view.
“While customers should be the ultimate consideration in determining peak load management programs, utilities are the lead entity in most situations at this time,” the paper states.
AESP points out that technological advancements both within the customer’s facility and on the utility side of the meter are driving new opportunities in demand response programs. Advanced metering, control, communications and data warehousing systems are making it easier for utilities to implement time-of-use and real-time pricing, direct load control, and demand buy-back programs. As broadband capabilities develop, the association predicts that more robust information systems will drive greater variety in demand response programs.
The association concludes that there is growing interest among customers for demand response programs, and that utilities are becoming more aware of the benefits of such programs. As demand response becomes a function of the market, AESP predicts even greater customer participation.
“The trend is away from mandatory programs to voluntary programs,” the paper states. “Furthermore, the trend is toward demand response programs where customer behavior is a function not just of a system need but a system price. The move away from utility-driven programs to market-driven programs should be a positive trend for greater customer participation and more peak load management.”
AESP’s “Peak Load Management or Demand Response Programs: A Policy Review” is available for free at www.aesp.org.