Energy Efficiency, Demand Response and Demand Side Management

Among many challenges human beings are facing, two are related to energy resources and infrastructure, such as:

• Do we have enough coal (or fuel or natural gas) to burn over the next few centuries? 
• How to meet the peak demand with limited budget for infrastructure?

Energy efficiency means using the less energy to provide the same service. It is one of the methods people use to try to tackle the challenge of energy resources. Examples include LED lightbulbs and energy efficient A/C systems and other appliances, such as refrigerator, washer, dryer and TV. Some utilities offer energy efficiency programs to encourage customers to replace the existing appliances or lightbulbs by the energy efficient counterparts.

These energy efficiency programs may have mixed influence to the long term load. When an end user simply replaces the big old CRT TV by the new, thin and energy efficient LED TV, the total energy consumption for watching TV may be dropped, assuming the end user is not spending more time watching TV. However, if the end user buys a new energy efficient refrigerator and puts the old one in the garage to cool beers, the total energy consumption for refrigeration is actuarially increased. Therefore, we cannot simply use the marketing dollar for the energy efficiency programs to predict the long term load.

Demand response means the changes in electric usage by end users in response to the changes in the electricity price or incentive payments. It is one of the methods people use to try to tackle the challenge of meeting peak demand. Instead of expanding the infrastructure, utilities can try to slow down the peak demand growth. Typical demand response programs include time-of-use rate (the end users pay a very low rate during off peak hours and very high rate during  peak hours) and critical peak rebate (the end users are getting case rebates for the utilities to curtail the load during peak hours).

The demand response programs may significantly affect the short term load forecasting process. Traditional day-ahead load forecasting process only requires a one-time forecast based on the historical load and weather data and the weather forecast. With demand response programs involved, utilities have to do one backcast and two forecasts:

• The backcast is based on the historical load and weather data during the regular hours that are not affected by the demand response programs. Comparing this backcast with the actually metered loads, the utility can understand how much load has been cut due to these programs. 
• The first forecast is again based on the historical load and weather data during the regular hours that are not affected by the demand response programs and the weather forecast. This forecast tells when and how much the load will be if no demand response programs were triggered. 
• The second forecast is based on what we have learned from the backcast step, where we obtained the relationship between the curtailed load and weather. Together with the weather forecast, we know how much load a demand response program will curtail. This forecast will help utilities determine which demand response program(s) to trigger at what time. 

Energy efficiency targets the energy, while demand response targets demand. (refer to Load, Demand, Energy and Power) The two solutions also have overlaps. For instance, energy efficiency may help slow down the peak demand growth. Demand response may help reduce some energy consumption. Both of them are meant to tackle the aforementioned two energy challenges from the demand side rather than exploring alternative energy resources or building new infrastructure. Demand side management is the concept that covers both energy efficiency and demand response.

Reference:

• Tao Hong and Pu Wang, "On the Impact of Demand Response: load shedding, energy conservation, and further implications to load forecasting", 2012 IEEE PES General Meeting, San Diego, CA, July 19-22, 2012. (download paper from IEEE Xplore; download slides From Load Forecasting to Demand Response)

Back to Load Forecasting Terminology.