The demand response “Catch-22” (and how to fix it)

Smart Grid News 7 March 2013.

Demand response technologies, such as smart appliances, thermostats and home energy management systems, could revolutionise our energy consumption. By encouraging consumers to buy controls or appliances that can automatically reduce or shift power use during peak demand periods, demand response (DR) solutions can deliver benefits in many areas, including pricing and grid reliability…

An example of a new approach

What if a consumer friendly brand, for example a favorite online retailer or supermarket chain, were to become an aggregator of DR services, acting as the middle-man between millions of consumers with smart appliances and the electricity generators and network operators.  The ability to reduce the cumulative loads from millions of smart appliances during peak times could be sold by these aggregators for a good price, and then a fair fraction of this revenue could be passed onto the participating consumers. This would be clearly separated from the bills that they normally receive from their energy suppliers or network operators. Ringfencing the rewards from DR, rather than applying small discounts to existing energy bills, would allow consumers to measure the benefits of their smart appliances, and to choose how to spend these rewards with their favorite retailers on items or services that they are most interested in…

(Comment: An excellent idea for new appliance purchases and perhaps the model could be expanded to incentivise other demand response ideas. However we still have to tackle the fact that demand response will never work if it is managed by entities that make money out of selling electricity, e.g. Eskom, the Treasury and the municipalities – they need to sell more electricity at higher prices.)

More…

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