As a host of technologies are utilized in new ways to balance the electric grid, the definition of "demand response" is becoming more nebulous. But, however defined, one thing is certain: As a resource, it is growing more important.
Federal Energy Regulatory Commission (FERC) staff recently issued an annual analysis of advanced metering infrastructure (AMI) and demand response (DR), concluding both are on the rise.
The report found that DR participation in wholesale markets rose by about 3% from 2016 to 2017, to a total of 27,541 MW. And the contribution of demand resources to meeting peak demand reached 5.6% last year, up from 5.3% in 2016.
All this points to a growing flexibility in the nation's electric grid, though it is region and utility-specific. And it is being driven, at least partly, by AMI deployment. Smart meters are now "the most prevalent type of metering deployed throughout the country, accounting for nearly half of all meters installed and operational in the United States," according to the staff report.
The most recent data from the Energy Information Administration (EIA) shows 70.8 million out of 151.3 million operational meters were advanced meters in 2016. EIA's data, shown in the chart below, has AMI at about a 46.8% penetration rate; the Institute for Electric Innovation pegs the number at 47.6%.
But, it appears that the penetration rate of AMI is slowing.
"The number of AMI meters grew quickly over the period from 2007-2011, partially due to American Recovery and Reinvestment Act funds," FERC staff said in a statement to Utility Dive. Since then, according to EIA data, the growth in annual deployment of AMI has been "fairly steady," with the number of AMI meters increasing by about 13% per year on average from through 2016.
FERC staff added that those numbers have held true in more recent 2017 data from EIA, and over the past year "utilities in several states have received approval for, or proposed large-scale deployments of AMI."
But some regulators have been pushing back on further deployments.
Some regulators "don't think full deployment of AMI is justified, or that the benefits will justify the costs, and they think a more targeted approach is the way to go right now."
Senior manager of policy research, North Carolina Clean Energy Technology Center
"AMI penetration sits around 50%, and it seems that's just where it's at," Brenda Chew, an analyst at the Smart Electric Power Alliance (SEPA), told Utility Dive. "Part of me wonders if those that have a lot of changing customer needs and a lot more demand response resources have already got AMI installed."
Chew also points out that some utilities have switched from installing smart meters to replacing them. "After a decade or more of AMI being in the field, some early adopters are actually replacing existing meters," she said.
There are a few reasons the deployment of AMI is slowing, in particular that federal support for smart meters, which was authorized by the Energy Independence and Security Act of 2007, has dried up, according to Navigant analyst Brett Feldman.
There have been some concerns about the benefits of time-based rates, leading Massachusetts regulators to deny AMI deployment. While some utilities, like Consolidated Edison in New York, are still pushing full deployment, "other utilities [are] more targeted for now," he said in an email.
ConEdison plans to deploy 5 million smart meters by 2022, for instance. FERC staff's analysis noted that in Massachusetts, Kentucky and other places, "state regulators and utilities are taking more targeted or cautious approaches to advanced meter deployment."
In August, the Kentucky Public Service Commission rejected proposals by two utilities to install smart meters throughout their service territories. The utilities can resubmit the plan in the future, but for now regulators said no to the $350 million expense.
In some states, regulators "don't think full deployment of AMI is justified, or that the benefits will justify the costs, and they think a more targeted approach is the way to go right now," Autumn Proudlove, senior manager of policy research at the North Carolina Clean Energy Technology Center, told Utility Dive.
And as larger utilities roll out the infrastructure, that leaves "a lot of smaller utilities left so it's harder to get the benefits of scale," Feldman said.
Demand response making 'comeback'
FERC's report also illustrates the growth of demand response, both at the retail level where it is managed by utilities and at the wholesale where it is procured in organized markets. But while the overall numbers rise, the data also shows it is dependent on decisions by specific utilities and grid operators.
FERC staff's report pointed out that demand resource participation in the wholesale markets increased by approximately 3% from 2016 to 2017.
The increase "is mainly attributable to an increase in demand resource participation in MISO and ERCOT, which was offset by small decreases in participation in other regions," staff concluded. The contribution of demand resources to meeting peak demand rose slightly, "due to a decrease in peak demand levels in 2017."
The report also looked at retail demand response, using EIA data from programs within each of the eight North American Electric Reliability Corp. regional entities, as well as Alaska and Hawaii.
"Nationwide, total potential peak demand savings from retail demand response programs increased by almost 3,050 megawatts," the report found, or approximately 9%.
For utilities, said Chew, they are embracing a wide range of technologies and expanding previous ideas of what constitutes demand response.
"There is a big shift in movement. Demand response is growing with new capabilities."
Analyst, Smart Electric Power Alliance
"It's hard to talk about demand response without getting into it in a more existential sense," said Chew. "There is a big shift in movement. Demand response is growing with new capabilities."
The resource may even be underestimated, she said. "I don't think they're counting all of it. It takes a while for them to change the terminology."
SEPA's own report earlier this fall, which it published along with Navigant and the Peak Load Management Alliance, concluded utilities were embracing use cases for demand response far beyond emergency, direct-load control programs.
The report surveyed 155 utilities and found they dispatched 10.7 GW of demand response last year out of a total reported enrollment of 18.3 GW of capacity. And increasingly, these include additional uses for demand response: soaking up solar, or utilizing controllable thermostats, rather than emergency load reduction.
"There are a lot of things that can be demand response," said Chew. "There is a lot of dispatchable, direct load control, but there are changes in the way people are calling on these devices. There is more locational deployment."
Compared with its origins as an emergency resource, Chew says "I think demand response is making a big comeback."