Residential demand response (DR) becoming more customer-friendly

Residential demand response (DR) hails as far back as the 1970s when it was used as a component of the energy conservation focus of demand-side management (DSM) programs to encourage consumers to use less electricity during peak hours or to shift their energy use to off-peak times, according to Navigant Research, and utilities have run residential direct load control (DLC) programs as forms of demand management for many years.

Traditional DLC programs paid customers an annual fee for agreeing to have a control device installed on their air conditioners. However, customers had no engagement with the program, and many would override the controls or quit the program if comfort was compromised. With the development of advanced metering infrastructure (AMI) and smart, two-way communicating thermostats, the technological and market limitations to demand response are being overcome. Utilities can discreetly dispatch customers according to system need and can get real-time feedback on performance and outages. Customers can control their own devices through mobile applications, making them more empowered.

Navigant Research expects the total number of worldwide residential demand response sites is expected to grow from 6.8 million in 2014 to 64.8 million in 2023.

“As AMI is deployed around the world, residential DR follows closely behind,” said Brett Feldman, senior research analyst with Navigant Research. “AMI allows for near real-time access to interval meter data, so residential DR programs will migrate from the traditional long-lead time command and control model to more customer-friendly, flexible, and price-based methods.”

As the overall market for residential DR expands, the number of sites linked to dynamic pricing programs will also grow rapidly, according to the report. Today, Navigant says, 88 percent of residential DR sites are part of direct load control programs, which pay customers an annual fee for agreeing to have a control device installed on their air conditioners, and only 12 percent are associated with dynamic pricing systems, which bill customers different rates for different time periods. By 2023, the researcher expects that split to be closer to 50/50.

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