Weekly Brief

5 Benefits Making Demand Response a Perfect Solution for CIOs to Pick

Utilities Tech Outlook | Monday, September 09, 2019

As the utility sector is changing in several ways concerning electricity system and customer requirements, the adoption of demand response technology practices offer exclusive benefits to utility CIOs inevitably.      

FREMONT, CA: The power and utility sector is undergoing a sea change as the demand for traditional metering system is diminishing and a massive shift toward digital technologies and smart grid technology has come to play. How does the smart grid save money? How does smart grid technology better benefit an energy provider and user? These are immediate concerns to be addressed by a utility CIO. Growing investments and initiatives toward grid digitization are demanding smart grid innovations—demand response technology is one among them.

Electricity customers are seeking providers who offer the lowest prices for a fully reliable supply. Intense and growing competition between power suppliers also drives the need for utilities to deliver more services at even lower costs. Demand response schemes give price reductions, as end-users receive significant new incomes through the monetization of their load flexibility for consumption stimulation. CIOs investing in demand response technology could be an opportunity for the firms to increase operational optimization of the energy grid. Offering demand response services is becoming an unavoidable argument for utilities toward customers and prospects, who expect to benefit from their services. Following are the unique ways in which utility CIOs can benefit from demand and response technology.      

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• Boosting Sales

The sales part of utility business can use demand and response technologies to expand its energy services offer to customers. It can help providers gain an edge over competitors in an increasingly cutthroat market. Ensuring customer satisfaction using innovative methods, programs, and tools mat lead to significant net reductions in electric utility bills. This helps in better customer retention and more solid revenue streams. Today, demand response is a significant argument and economic string lever for the sales activity in the utility sector.

• Trading and Optimization

The trading and optimization of utility business can benefit from new and competitive products that mitigate risk and optimize their portfolio. Key players are stressing on volatility and price strategies coupled with demand and response, which provide more benefits for utilities. The imbalance between supply and consumption can be very costly, and regulatory authorities can impose a significant charge for that. Before utilities face the prospect of such penalties, a standard solution is to turn to demand and response technology. It can help services avoid such scenarios by offering reactive and flexible techniques to balance consumption and supply. Demand and response can be a superior alternative to conventional balancing mechanisms at times of very high grid constraints.

Another benefit of demand and response for trading and optimization is that it can help utility manage its capacity charges. This can result in gains through optimization by using demand and response for ancillary services, freeing productive assets to focus on energy sales.

• Energy Generation and Distribution

Demand and response programs can empower energy plant utilization rates by catelyzing energy consumption during off-peak hours and flattening the demand curve. It also allows a generation portfolio to commit increased amounts of energy or capacity without taking on any additional contractual challenge. It might be beneficial for generators to increase demand at certain times of the day to ensure profitability. Demand response can also be used to satisfy the need through consumption stimulation or displacement.

For distribution demand and response, technology can provide an alternative to massive investment in grid reinforcement. Distributors can benefit from congestion management support and avoid high penalties during peaks.

• Grid Stabilization

Demand response has a vital role in grid stabilization during peak climates when it eases severely constrained electric grids. Future energy crisis caused by electricity demand’s exceeding system capacity can be postponed through demand response. Balancing swings in energy supply and demand with ripe demand response program can be useful when it is efficiently automated. The Federal Energy Regulatory Commission ideates the ability if demand response to avert energy crisis as so promising and as a killer application for the smart grid technology.

• Reducing Cost

Energy utilities practicing demand response program can reduce power demands to save money, sometimes a substantial amount. Electric utilities across the world see this as a resource they can invest in a lower cost than having to offer a new generation of power, particularly peak generation. Effective peak demand control helps facilities reduce energy costs and help utilities supply energy more reliably and economically. The demand response programs are now widely offered by utilities to customers, thereby encouraging them to reduce loads in response to peak demand events translating to cost savings.

The challenges in adoption of demand response program can be avoided with the right measures taken to help end-users engage in knowledge and the benefits of those programs. This can gradually and eventually make demand and response a viable and potentially attractive option for CIOs to increase efficiency and cost-savings. Hence, the future of demand response revolves around the continuation of utilities leveraging the programs to achieve energy efficiency and goals. Demand response will be a vital tool, and CIOs should urge their firms to develop and learn from demand response programs. Experienced partners can support CIOs to save significant time and effort in the design, implementation, and operation of demand response solutions to serve their needs and customers’ expectations. 

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