Con Edison Approved for Natural Gas Demand Response Program

In the middle of a hot, sweltering summer, it seems like the electric grid has become robust enough to deal with peak loads from air conditioning. Historically, peak loads have been the most challenging times to maintain sufficient generation capacity. However, in some areas meeting winter peak demands has become as critical—if not more critical—due to tightening natural gas supplies from increased gas-fired electric generation.

Gas Generation and Fuel Switching Grow Demand

Case in point, Con Edison, an electric and gas utility in the New York City area, recently got its natural gas demand response (DR) program approved by the New York Public Service Commission (NYPSC). Demand for natural gas has grown substantially in the utility’s service territory due to gas generation and fuel switching. This has led to significant increases in peak day demand during the winter heating season. Rather than building more pipelines, which is the standard procedure, NYPSC is encouraging the development of smart alternatives.

The pilot program will target both commercial and residential customers over the initial 3-year period at a cost of $5 million. The pilot consists of two components: a large commercial and industrial customer-focused pilot, and a residential and small commercial customer-focused pilot using smart thermostats, both designed to be similar to Con Edison’s existing electric DR programs. These efforts are in addition to enhanced gas energy efficiency programs that Con Edison will be implementing as part of its non-pipes solutions (NPS) initiative.

Interest Increases in Non-Pipes Solutions

DR in the electricity sector has been a common practice for utilities and grid operators for decades. Non-wires alternatives have come to fruition more recently. DR and NPS have been less prevalent in the natural gas industry but changing market factors have increased interest in the practices. Only a handful of utilities have undertaken them to date, but these innovative programs demonstrate the promise of DR and NPS to provide potentially less expensive, cleaner, and more customer-friendly means of alleviating pipeline constraints.

Guidehouse Research’s recently published report, Natural Gas Demand Response and Non-Pipes Solutions as Alternatives to Pipeline Expansion, covers these topics. It discusses how these market trends are forcing utilities to readdress their approach to gas system planning, and how vendors can seize these trends as growth opportunities. It provides detailed and actionable recommendations for utilities, DR providers, technology vendors, and gas marketers to address these new phenomena.

So far, natural gas DR and NPS schemes have been limited to Southern California and the Northeast US. However, if the initial programs prove successful, look for utilities in other regions to consider following suit in order to find ways to transition to lower carbon, lower cost energy systems.