DSM Can Help Combat Climate Change

In May, the Carbon Disclosure Project awarded 43 cities with "A" climate-report card ratings. The 2019 A-List recognition contributes to the growing global conversation that suggests public concerns about climate change may have surpassed tipping points and become city-planner priorities; more cities are putting in place plans to reduce their greenhouse gas (GHG) emissions by optimizing city-wide energy consumption.

In a previous blog, I reviewed New York City’s climate action plan and noted that demand side management (DSM) would be a critical component to achieving the city’s goals. A recent pilot between Southern California Edison and seven California public universities indicates that it’s not just municipalities that are undertaking larger energy management strategies, including flexible approaches to DSM, to achieve sustainability targets.

Blurring the Lines between DR and Energy Efficiency

Integrated demand side management (IDSM) is the merging of energy efficiency and demand response (DR) applications in a manner that reduces operational costs for program providers and simplifies program enrollment for participating customers. Beyond energy efficiency and DR, additional technologies can be brought into IDSM programs to offer more streamlined energy savings.

Within the broader categorization of IDSM technologies is a swath of devices already in or poised to enter residential customer homes and commercial buildings all capable of driving deeper behind-the-meter (BTM) savings. Merging conventional notions of energy efficiency and DR, Guidehouse Insights finds the following:

• Smart water heaters, once connected to the grid, will provide a higher value proposition for DR and energy efficiency programs. Smart water heaters can help shift energy consumption to heat water during off-peak hours and shut down during demand peaks. Con Edison and Aquanta are currently piloting smart water heater applications for natural gas DR, but alerting customers to the efficiency benefits such as notifications of high energy usage or potential leakage alerts.  
• Learning smart thermostats will remain key components to many bring your own device (BYOD) DR programs, but will play a greater role in efficiency programs as well. Wi-Fi enabled thermostats allow customers to adjust their setpoints while they are out of the home or building. Critical for deeper efficiency savings, Efficiency Vermont stresses, is the ability of some smart thermostats to learn usage and occupancy patterns, automating energy savings without the need for grid or price signals.  
• Utility and energy retailer online marketplaces that can provide customers with an Amazon-like shopping experience, instant rebates, and feedback will support both energy efficiency and DR programs by helping customers choose the right technologies to optimize their home or business energy use. Orange & Rockland Utilities has been piloting how easy-to-use online marketplaces will drive customer engagement since 2016. While not entirely new, recent interest has been in improving the user-friendly nature of these tools; as this happens, marketplaces will support direct install, self-install, and BYOD initiatives, even if customers do not directly purchase devices through the marketplace. 

DSM Market to Double in the Coming Decade

By the end of 2019, Guidehouse Insights expects combined global spending on energy efficiency and DR will exceed $31.5 billion; a number that will nearly double by the end of 2028.

DSM Spending and Capacity Data by Technology, World Markets: 2019-2028

(Source: Guidehouse Insights)

Guidehouse Insights’ recent report, Demand Side Management Overview, delves into the next decade of energy savings sourced from BTM. The abovementioned technologies will play a role in both DR and energy efficiency programs designed to reduce help GHG emissions and while maintain customer comfort. Other technologies to watch include EVs and charging infrastructure, heat pumps, and grid-edge computing.