Demand Response as a Power System Resource – Growing Experience in the US
The evolution of demand response in the United States provides evidence of the value of demand response as a cost-effective and reliable power system resource. There are various “types” of demand response, including energy efficiency, price response programs, peak shaving, reliability response, and regulation response. In a discussion hosted by the Forum for Energy Analysis on the challenges and opportunities for demand response in Poland, Richard Cowart drew on experience from PJM, the regional transmission organization in the Eastern interconnection, and other U.S. power markets to demonstrate the increasing importance of demand response to the power system and reinforce a number of lessons that are useful for other jurisdictions considering how to enable demand response. First, capacity markets are not a “prerequisite” to stimulating demand response. Second, it is important to allow demand response to bid into markets on a competitive level with supply. Third, regulatory oversight is essential to ensure fair competition. Fourth, “smart grid” is helpful but not essential. Finally, there remains room for more effective engagement of demand response.