Demand Flexibility Can Save Grids $10 Billion Per Year…Or Much More
Simple measures to tune down devices like heating systems and smart appliances in tandem with real-time electricity price changes can cut peak power demand by 8% and save American utilities US$10 to $15 billion per year, the Snowmass, Colorado-based Rocky Mountain Institute concludes in a recent analysis.
The startling cost and power saving would result from just two demand flexibility initiatives, smart thermostats that shift an HVAC system’s output by plus or minus two degrees, and smart water heaters that adjust the timing of their energy draw, write RMI Principal James Mandel and Enbala Power Networks Chief Experience Officer Ginger Juhl in an RMI blog post.
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“These potential savings, as large as they are, are only a hint of what demand flexibility ultimately can provide,” they note. “There is ample evidence to believe that commercial and industrial (C&I) loads almost certainly have more flexibility to offer compared with the residential sector,” although the higher diversity of devices would make it more challenging to tap the full value of the technique.
They also note that retail power pricing only recognizes “a fraction of the value that demand flexibility can capture. Much greater value can come from looking at wholesale prices, ancillary services like frequency regulation, and distribution-level services like congestion relief that can defer expensive new infrastructure investment.” Powerful as the savings can be with individual energy systems, they add, the real potential is in aggregated systems in larger, more complex markets.
“As more and more loads, batteries, and distributed generation sources like smart appliances and electric vehicles become connected, and our ability to orchestrate them to create less obtrusive but highly valuable energy services increases,” Mandel and Juhl write, “we foresee a future where the electric system does not need to be built to meet occasional peaks, but one in which supply and demand can respond to each other dynamically, benefitting customers, utilities, grid operators, and the environment.”