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What is demand response (DR) and what problems can it solve?

The Bonneville Power Administration has identified demand response as a strategy for increasing the flexibility and reliability of the region’s public power resources and transmission grid by leveraging existing assets to serve utility customers at the least cost.

Definitions

  • A voluntary, temporary change in consumers’ use of electricity when the power system is stressed (Northwest Power and Conservation Council).
  • A resource that allows end-use electric customers to reduce their electricity usage in a given time period, or shift that usage to another time period (2016 BPA DER Benchmarking Report glossary).
  • A program that compensates customers for minimizing their electricity load when instructed by BPA. This may occur during times of high power costs or when the electric grid reliability is threatened due to high seasonal demands.
  • A program that enables industrial, commercial, agricultural and residential consumers to play a significant role in the operation of the electric grid by reducing their energy use during times of peak power demand in response to financial incentives, including time-based rates  (BPA DR fact sheet).

Managing peaks and valleys of electricity use  

Daily activity patterns collectively create periods of high electricity use, called peak demand or peak load, that can strain the grid.

Demand response can be an immediate money saver for utilities and customers by reducing the amount of energy used during times of peak demand and the cost of holding power reserves that may not be needed to balance supply and demand. Using DR to moderate electricity use during peak hours can keep rates lower by reducing the need for utilities to purchase energy from expensive sources or add infrastructure to meet spikes in demand.

DR projects also can reduce the risk of power outages, by avoiding an over-strained electrical grid and keeping energy demand within the limits of the system’s production and transmission capacity. These benefits position DR as a key component of a modern grid that is low cost, flexible, reliable, resilient and environmentally friendly.

How does it work?

Demand response uses notification or direct-control devices to shut off, shift use or change the energy consumption of appliances and other electrical equipment when needed. In homes, residents may allow a utility to reduce the energy consumption of appliances such as water heaters or air conditioners at times when overall demand for electricity is high (peak usage times are morning and evening hours), or to turn on appliances when demand subsides and power is more abundant (overnight). Large-scale commercial versions of this type of load control, which signal industrial plants to power up or down, could provide substantial grid flexibility.

Drivers behind BPA’s work to develop DR strategies and tools

The BPA Resource Program, which analyzes upcoming demand for power, shows a growing capacity gap during summer starting in 2020. Capacity refers to the maximum demand for electricity that the system can fulfill under given conditions. Increased use of air conditioning in the Northwest, as well as possible long-term changes in weather patterns and snowpack, mean the Federal Columbia River Power System needs to prepare for summertime constraints and challenges to maintain cost-effective reliability.

BPA is also exploring demand response to relieve transmission system congestion at crucial points in the grid, such as an area along the I-5 corridor called South of Allston, near Longview, Washington. This type of demand response is often referred to as a “non-wires” strategy because it can help to defer or avoid construction of costly new infrastructure, or “wires.”

Other developments in the region and industry have strengthened the business case for DR including:

  • New variable energy resources, such as wind and solar, that tax the Federal Columbia River Power System's capacity to balance unexpected fluctuations in generation.
  • The high cost of stand-ready generation capacity to meet spikes in energy use.
  • Aging lower-voltage distribution systems.

The potential of demand response for Northwest public power

A 2018 study on regional potential found more than 1,500 megawatts of demand response is achievable in BPA’s service area. That represents enough electricity to serve about 10 to 12 percent of winter and summer peak demand for power.

Other resources on BPA.gov: