Let’s Democratize Demand Response – Power from the People!

Demand Response (DR) in the Texas restructured market seems to be on verge of becoming the next big thing. Unfortunately, it has been on the verge of being the next big thing for quite a while. The mounting evidence, however, seems to support the democratization of DR by enabling technologies that address the greatest source of power reserves in the state: Peak Residential Demand.

Unlike regulated markets with their top-down, command-and-control structures and captive rate payer base, the Texas deregulated market presents new challenges and opportunities that require new ways of solving the DR problem; new views of how DR works in a market with customer churn and financial payback of one year or better. It is a market in which the consumer can buy any smart thermostat available and still expect to be served by a Retail Electric Provider (REP) who provides the option of DR services.

The customer really does matter, however, in the restructured, competitive electric market. They have choices of service, cost, and service levels. They can choose to participate in DR. They can choose their smart thermostat from the plain to the sleekest. They can choose their level of participation and be appropriately compensated for their choice from any of the available Retailers or Aggregators in the market who offer DR as an option.

Choice adds a burden to managing the grid. Choice adds a burden to administering the decentralized DR programs. But choice also adds magnificent flexibility that the command-and-control, top-down model can never provide. In Texas, ERCOT can still manage to keep the grid from collapsing, the local lines and wire company can still keep the circuits in operation, and the REP can hedge their demand while offering the consumer lower rates.

Participation in a DR program by choice carries so much more potential value than the one-size-fit-all strategy of the utility mind set. As long as participants have a choice, they can be incented to purchase a smart thermostat. They can be incented to choose their comfortable level of participation. They can be incented to stay with a Retail Provider.