8/10/2019 DR Fact Sheet 2 Environmental Benefits of Demand Response

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Environmental Benefits of Demand Response

Great Plains Institute Winter 2014-15 Page 1

Energy Efficiency 

Demand response programs increase overall system

efficiency by shifting electricity consumption away from

peak load times to more desirable periods when demand

has settled. In addition to shifting demand, DR reduces

overall energy consumption and has historically been

included in utility conservation plans.

While the peak reduction impacts of demand response are

well-known, the overall energy conservation impacts are

less understood. At issue is the magnitude of the snapback

effect , or the increase in energy use experienced after a

DR event. For example, if a utility reduces output from

residential air conditioners during a hot summer day, the

 A/C units may in theory need to work harder afterwards to

return their homes back to the original temperature.

 A recent study done for the state of Minnesota explored

the energy savings impacts of demand response. It

found that even after incorporating the snapback effect,

residential demand response technologies still generate

overall energy savings after an event (see table below).

 The degree of savings varies by technology. For example,

the study found that cycling electric heaters generates a

net savings of 3.11 kilowatt-hours (kWh) per household

for each DR event, while cycling air-conditioners produces

a net savings of 0.71 kWh per household.

 The study also showed even greater energy savings from

commercial and industrial demand response programs.

Program Type Net savings

per home, per event

 Air Conditioner Cycling 0.71 kWh

Electric Heat Cycling 3.11 kWh

Domestic Hot Water

Curtailment (summer)

0.4 kWh

Sources:1. Minnesota Department of Commerce and Michaels Energy, Demand

Response and Snapback Impact Study . August 20132. Star Tribune, Schafer: Promise of power storage still lacks payoff .

February 15, 2014.3. California Public Utilities Commission, Decision Authorizing

Long-Term Procurement for Local Capacity Requirements Dueto Permanent Retirement of the San Onofre Nuclear GenerationStations. February 11, 2014

Reduced Reliance on Fossil Fuel Power Plants

Power plants that run during peak hours tend to be

inefficient and higher-emitting. For example, during the

summer the carbon intensity of electricity in California can

be up to 33% higher during peak times compared to off-

peak times.2 Offsetting these peaking plants with demand

response can significantly reduce environmentally-harmful

emissions. In the Midwest, natural gas combustion

turbines are often used for peak electricity. While this type

of electric generation from natural gas is significantly less

carbon intensive than baseload coal plants, it is actually

more carbon intensive than baseload combined cycle

natural gas plants.

When considering new investments in electricity resources,

demand response should be looked at on equal footing

with electric generation as an option for meeting demand.

For example, regulators and utilities conducted an analysis

after the shutdown of a large nuclear power plant in

southern California, and recommended that over a third of

the replacement resources should be met with  preferred resources, including demand response, energy storage,

renewable energy and energy efficiency.3  This reduced

the need for new conventional generation. Given declining

technology costs, these resources make economic sense

in many situations. Many states in the Midwest have well-

established integrated resource planning, which are well

equipped to give similarly fair consideration to demand

response and other technologies as alternatives to

conventional generation.

 

Example MISO Summer Day Generation by Source

NG Combustion Turbine

NG Combined Cycle

Coal/Nuclear Steam Turbine

Wind

Pumped Hydro Storage/ Other

By reducing electric demand during peak hours, demand response (DR) can provide multiple environmental benefits

while making regional electric grids more reliable. Demand response can save energy, reduce the need for fossil

fuel power plants, and help integrate renewable energy onto the electric grid by providing increased stability and

management.

Source: MISO Market Reports

  Real-Time Cleared Offers

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Great Plains Institute Winter 2014-15 Page 2

Renewable Energy Integration

Renewable energy like wind and solar are variable by

nature—the sun does not always shine nor does the

wind always blow. Demand response can help managethis variability and will become increasingly valuable as

renewables continue to come online. Many power plants

cannot vary their output quickly in response to changes

in renewable generation, but demand response can be

deployed quickly to respond to variation and help integrate

wind and solar.

Managing an electricity system with higher levels of wind

and solar requires more system flexibility to manage

swings in supply. For example, wind output in the Midwest

can vary significantly throughout the course of a day (see

figure below).

MISO Wind Power Availability

From July 18, 2013, MISO’s summer peak.

 

If the supply of energy surpasses demand, then system

operators may need to curtail renewable energy

generation, effectively wasting the opportunity to generate

clean energy. Wind curtailments in the MISO region have

been increasing over the past couple years (see next

figure) in conjuction with growing wind generation in theMidwest. Demand response is one tool to deal with this

issue. Managing demand to match more closely with

renewable generation will help reduce curtailments and

ensure that wind energy can meet its full potential. This

could involve shifting some energy usage to night, when

wind production is typically higher and demand low.

Sources:3. Rocky Mountain Institute, Reinventing Fire. October, 2011.

& National Renewable Energy Laboratory, Renewable ElectricityFutures Study; Volume 3, End-use Electricity Demand . 2012.

MISO Wind Curtailments

From November 2012 to July 2014

California is facing increasing penetrations of solar, which

impacts the system differently than wind. A challenge

arises when electricity demand increases as people get

home from work at the same time as solar generation

diminishes with the setting sun. High demand combined

with the drop-off in solar produces a steep ramp-up in the

evening that must be met by other resources. Deploying

demand response to manage energy usage during this

period would help mitigate system challenges brought

about by solar generation.

Recent studies exploring high penetrations of renewableenergy point towards the important role of demand

response in facilitating the implementation of high

renewables. Research exploring 80% renewable

electricity penetrations conducted by the National

Renewable Energy Laboratory and the Rocky Mountain

Institute assumed aggressive expansions of demand

response as a tool to reliably operate the system.3 

 They determined demand response could reduce peak

electricity demand by 20% or more, which can be used

to mitigate reliability issues and shift electricity usage to

hours when renewable supply exceeds demand.

Demand response offers a variety of environmental

benefits, such as reducing energy usage, offsetting

the need for fossil-fueled power plants, and helping to

manage system challenges from increased wind and

solar energy. Thus, demand response has an important

role to play in helping us meet clean energy and climate

goals throughout the US.

 Actual Deployment

Environmental Benefits of Demand Response

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Source: MISO Market Reports, “Real-Time Cleared

Offers”

Source: MISO Monthly Market Assessment Reports

Written by: Steve Dahlke Policy Associate

  Dane McFarlane Senior Research Analyst