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What Is Demand Response 3.0, And How Do We Get There?

Think about the last meeting invite you accepted. You clicked “yes,” and instantaneously the time slot appeared as “busy” in your calendars on your computer, phone, and tablet. As the event approached you got an email and a text message; alarm bells even went off reminding you to call in. All of this because you clicked one button.

The future of residential demand response will function like a really good calendar app—one that automatically communicates across devices and software platforms, requiring nothing more than one click from the customer using it, while providing great benefit to that customer. A demand response program that reaches this level will maximize energy efficiency, ensure grid reliability, and enable the integration of intermittent supply resources. It will need, at its foundation, technology that connects all the devices in play for home energy management. It will need to be fully integrated, alongside supply resources, into energy providers’ dispatch systems and markets. And it will need to appeal to customers to secure their engagement, which it will do by increasing their comfort and lowering their bills while taking virtually none of their time.

These requirements came to light in a recent webinar hosted by the Peak Load Management Alliance (PLMA). Panelists detailed the history of demand response, from what they called DR 1.0—direct load control programs that gave customers short notice of peak events and depended on manual switch adjustments to tamp down consumption—to DR 2.0, which brought increased automation, voluntary behavioral programs, and two-way communication.

The future of demand response—DR 3.0—will build on the elements of DR 2.0, the panelists agreed. Automation, in DR 3.0, will include load forecasting and predictive pricing models that prepare energy providers to respond to changes. Communication will happen not only through smart meters, but also through in-home devices, with signals between HVAC systems and pool pumps, for example, triggering those systems to respond to each other. Utilities will manage these signals, with the help of technology that makes the process automatic and intuitive, and thereby gain the ability to continuously balance each customer’s home’s consumption to optimize efficiency.

And for the customer, as I see it, DR 3.0 will operate like today’s digital calendar. It will turn the active role customers currently play in demand side management programs—changing light bulbs, turning off air conditioners, consciously running appliances at off-peak times—to a passive role that requires only setting home devices to respond to price signals. When the price signals are received, the signals, along with local or cloud based intelligence, alert the devices to make the subtle adjustments they need to make to avoid outages and high prices during peak events. Customers do nothing more and they feel nothing change drastically in their home environments. They maintain their comfort, avoid worrying about the impact of time-of-use rates, and don’t have to turn off the AC because they can trust their utility is already, behind the scenes, making any necessary adjustments to balance efficiency, affordability, and comfort. It’s like the metaphorical calendar app: customers have gone from writing their appointments down in three different places (the figurative equivalent of managing each device in their home separately) to clicking one button (symbolized by pre-setting their devices to respond to price signals) and letting technology do the rest.

Despite the passivity DR 3.0 allows from customers, it still puts energy providers in the position of depending on their customers for DR program success, the PLMA panelists noted. Energy providers need customers to buy intelligent devices and to want to increase their efficiency—to take an interest in the automation and the programs that provide it. So marketing, program implementation, and aspects of the technology itself need to be customer-facing, which can be intimidating.

The PLMA panelists agreed--as do we--that the technology needed to make DR 3.0 happen is coming along quickly; it’s the utility business models, marketing tactics, and customer relationships that need to realign to meet customers where they are and engage them in new DR programs.

What do you think? Do you agree with the panelists’ vision of DR 3.0? PLMA has invited the public to weigh in on their predictions for the future of demand response. Visit their blog on the topic to share your comments.




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