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Demand Response: Tackling Peak Energy Use

August 18, 2009

Peaks in electricity use have begun to generate discussions and innovations in mechanisms called ‘demand response’. Demand response is a system where by end-use customers change their use patterns with regard to fluctuations in the price of electricity or to other incentives. It is designed to promote lower electricity use during peak times or when prices are at their highest.


Currently, there are few incentives to reduce electricity consumption because our metering systems are not detailed enough to provide us with real-time pricing information. We are paying the same price per kilowatt regardless of its origin (coal, solar, wind, etc) and regardless of when we use them (peak or off-peak). The rates are averaged out so that everyone is footing the bill for being able to run their air conditioners on the hottest days of the summer. In truth, we are actually paying anywhere from 20 to 50 times higher in price for that peak electricity usage, but that doesn’t show up anywhere on our meter reading. In providing this service, utility companies are forced to keep building fossil fuel burning plants in order to keep up with this peak usage. Utilities often are in fact forced to overbuild in order to have the capacity to meet peak load electricity demand, which may ultimately only occur once or twice a year. So many people have started asking, how can we build a smarter grid?

While many of the technologies are still being developed, we are well on our way to understanding electricity use, and to reducing our peak loads. As Bryn Nelson from MSNBC reported in ‘Smart Appliances Learning to Save Power Grid’ , many of our kitchen and laundry appliances can be outfitted with computer chips that are smart enough to “talk to” the grid and cut back on electricity use when peak is highest. Maybe your refrigerator would turn off for a minute at a time (but leave the light on), which would be completely unnoticeable. Or your dishwasher would wait to run its cycle until later at night, when most people had gone to sleep and demand was lowest. The article suggests that in the United States, these smarter, energy-saving appliances could result in savings of almost $70 billion in new power plant construction and electricity distribution over 20 years.

When provided with the actual real-time cost of electricity per kilowatt hour, many households will readily adjust the thermostat, or turn down their water heater to save money. The customer saves money and electricity and the grid avoids fluctuations between demand dips and peak highs, which saves the utilities money as well.


While we wait for the technological advances in metering that will enable demand-response to become a part of every home and business, many companies, such as GE are already on the road to production of ‘smart’ appliances. These appliances will be efficient in terms of how they’re using energy. Soon, being energy efficient and reducing demand on our grid will be as automatic as running the dishwasher.

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