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Demand response capacity to increase six-fold by 2023: Navigant

Iain Morris
September 23, 2014

Demand response capacity is expected to increase more than six-fold by 2023, according to a new study from Navigant Research, although changes in market rules could entail more risk for demand response resources.

The market-research player predicts that the total worldwide capacity of demand response programs will grow from 30.8 gigawatts in 2014 to more than 196.6 gigawatts by 2023.

It says efforts to limit power generation by utilities, along with the changing resource mix in electric grids globally, are creating new demand for demand response programs.

The US market still leads the way on demand response, but utilities in other geographies are beginning to find ways of “incentivizing” more active customer participation in these programs, says Navigant.

“Technology advances in metering, controls, and end-use devices are making it easier for customers to participate in demand response programs and to manage their energy usage,” says Brett Feldman, senior research analyst with Navigant Research.

“At the same time, the retirement of large numbers of coal and nuclear plants, and the expansion of large-scale intermittent renewable resources like wind and solar power to fill this gap, are creating more need for backup solutions when the wind is not blowing and the sun is not shining,” he added. “Demand response fills that need in an efficient and cost-effective way.”

Nevertheless, as demand response programs grow, so will the various challenges they face.

Regulation attempting to standardize rules between demand response and generation could put additional requirements on and entail greater risk for demand response, according to the report.

Moreover, as demand response accounts for a bigger portion of the resource mix, it is likely to be relied on more heavily.

That will force companies to guard against “customer fatigue” caused by more demand response events in order to maintain reliability and prevent customer attrition, warns Navigant.
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