Study: Demand response could offset 2 GW of summer peak demand growth in Michigan

Dive Brief:

  • Michigan's Lower Peninsula will face a projected 2,000 MW increase in peak demand between now and 2026, but a report from Advanced Energy Economy concludes the state can meet all of that need by using a variety of demand reduction strategies.
  • Demand response, connected thermostats and time-varying rates could net benefits up to $1.2 billion over the next decade, the report estimates. A more moderate estimate of $482 million would still be a substantial win.
  • Michigan Radio reports utilities are already heading in that direction, with DTE Energy and Consumers Energy ramping up demand response and time of use rates to help keep peak demand in check.

Dive Insight:

Michigan Radio takes a look at demand response programs in the state, and reports some interesting stats: On-peak pricing for DTE Energy is $0.95/kWh, more than 10 times the usual rate. Consumers Energy now has about 4,500 customers in its demand response programs, but wants to enroll 400,000 in the next five years.

Both of those figures line up with the results of a recent AEE study, prepared for the group by Demand Side Analytics LLC and Optimal Energy Inc. The firms examined demand response, thermostat programs and variable rates under three market scenarios. Savings back to Michigan customers, on the low end, totaled $53 million over 10 years.

Resource constraints in the Lower Peninsula are mainly a factor of weather: heat and air conditioning load. According to AEE, that makes the peak demand events "predictable and good candidates for management."

The report looks at potentially constrained zones in Michigan, which are located in Midcontinent ISO load zones 2 and 7. An examination of the system over the past two years showed load exceeded 95% of the annual peak for 76
hours, meaning the system was designed with 2,000 MW of capacity needed to serve load in just 0.4% of hours.

"Demand reductions are less capital-intensive and often more economic for meeting demand during these peak hours than investment in traditional 'peaker' power plants, which sit idle for most the year," the report concludes.

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Filed Under: Efficiency & Demand Response
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