Posted 7.24.17 by Matthew Rose, Director
The Current Value of Demand Response: It All Depends Where You Look
Depending on where you look, the value and business rationale for demand response (DR) varies. In certain parts of the country, there seems to be a growing focus on DR; in others, market forces are reducing the value of DR. In some areas DR is viewed as a resource competing in capacity markets whereas in others it is a resource included in utilities’ integrated resource planning.
In the Pacific Northwest, the focus has traditionally been only on energy efficiency, but the current 20-year power plan prepared by the Northwest Power and Conservation Council indicates demand response could offer billions in cost savings. In California, the state’s Investor Owned Utilities (IOUs) now participate in the state’s Demand Response Auction Mechanism (DRAM) program. DR also is unfolding in the Northeast with both utility and ISO programs.
Despite new areas of DR attention, there are signs that activity levels are tapering off in some of the more mature markets. A review of the current market for demand response points to a fragmented landscape affected by varying aggregator activities, changing market rules, and a capacity market that has notable swings in capacity requirements and value. For a closer look, click here.