Demand Response Cuts Ratepayer Costs, Utility Emissions
Demand response could cut U.S. ratepayers’ electricity costs and make it easier for utilities to comply with the Environmental Protection Agency’s Clean Power Plan, Advanced Energy Economy concluded in a report released last week, just days before the final CPP rule was published.
“The report, prepared by Navigant Consulting, finds that for every $1 spent on reducing peak demand, ratepayers in Illinois can save at least $2.62, and ratepayers in Massachusetts can save at least $3.26,” Greentech reports, as long as the states’ peak electricity load doesn’t increase in the next decade. If peak load falls 0.25 to 0.5% per year, the savings will be even higher.
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Demand response plays an important role because “approximately 10% of U.S. electric system capacity is built to meet demand in just 1% of the hours during the year,” Pyper explains. “Procuring demand-response resources reduces the need to invest in expensive new capacity, which saves consumers money.”
That avoided energy “also translates to avoided emissions,” she adds, citing the AEE report. “Therefore, by creating peak-demand reduction programs or passing peak-demand reduction mandates, states can mitigate the cost of compliance with the EPA’s Clean Power Plan.”