• Utilities
  • Demand Response
  • Advanced Metering Infrastructure

Three Transformations Necessary for Achieving DR 3.0

May 23, 2019

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In a world of competing goods and services, the energy industry remains relatively open to sharing industry best practices. Information exchange is possible in part as utilities do not vie for customers in the same way that companies in competitive industries (retail, IT, and manufacturing) do. While project implementors and technology vendors may compete for utility business, knowledge exchanges are supported by a shared mission to keep public lights on and energy rates reasonable. One industry forum is the Peak Load Management Alliance (PLMA), which recently held its 39th conference in Minneapolis, Minnesota, from May 13-15. During the event, presenters shared their take on best practices to move demand response (DR) from traditional peak shaving (DR 1.0), through economic and market-based programs (DR 2.0), toward operational value and customer engagement (DR 3.0). 

Three Key Ingredients in the Shift to DR 3.0

DR 3.0 will be here before we know it. In fact, it is in place in some utility jurisdictions where DR is a tool to defer distribution and transmission system upgrades as a non-wires alternative, or where DR is a tool for integration of other distributed energy resources. As advanced metering infrastructure data from networks capable of computing in real-time and at the grid edge, DR 3.0 will be engaged as an automated frequency regulation measure. 

While a clean, distributed energy future is coming, several transformations are necessary to implement the transition to DR 3.0:

  • Customer-focused planning: Entergy stressed that DR 3.0 programs will be driven by and designed for the customer. As customers transition from energy consumers to energy prosumers, DR will be needed to optimize customer-sited generation assets and other grid communicating devices. Thus, DR 3.0 requires incentivization designed with utility customers in mind. 
  • Embracing analytics: Con Ed noted that new data streams are advancing all components of DR, from automated dispatch of capacity into the ancillary services market to targeting the appropriate customers to source such capacity. A transition away from paper-mailing, device direct-install, and event notification phone calls toward targeted engagement is expected to drive DR 3.0 programs that have negligible effects on customer comfort and business processes. However, it is anticipated to yield desirable utility bill savings. 
  • Co-optimization leads to simplification: Tendril noted that utilities may be able to reduce operational costs associated with their demand side management programs by delivering them as a streamlined service offering. Such integration is anticipated to support the customer-focused deployment noted above. Customers are expected to work with utilities and their partners to identify cost savings as a package deal, potentially reducing the customer-sided resource requirements for participation. 
Demand Side Management Insights as a Tool to Overcome Barriers

Along with sharing industry best practices, PLMA attendees openly discussed challenges in shifting to customer-focused DR design, the embrace of data analytics, and the integration of formerly siloed programs. Challenges ranged from the unsolved mismatch in pace of technological development, utility planning cycles, and regulatory reform to newer concerns of cybersecurity. 

The energy sector benefits from its ability to exchange information to overcome these barriers. As utilities are not competing with one another for customers, they should continue to voice lessons learned with their industry peers. Where implementers and technology vendors do compete, they may use industry discussion to develop new and innovative product offerings that help to overcome old and new challenges. Through industry forums like PLMA, market research, and old-fashioned storytelling, a united energy sector will bring futuristic DR 3.0 toward the present.