Wide Ties, Polyester and the Demand Side
- Jun 10, 2015 2:47 pm GMT
In the heyday of demand-side management 15-20 years ago, the world was a different place in both style and social sentiment. Ties and lapels were wide, people made fun of those wearing leisure suits and the utility industry, aside from its public posturing, still felt DSM was the free lunch they were paying customers to eat.
Those were heady days for an entire community of consultants and entrepreneurs who joined in the feeding frenzy as utilities dealt with the pressure to conserve, not necessarily out of a need for energy, capacity or transmission, but in response to a vision painted by some of rapidly escalating avoided costs. The reward was to have been recovery of lost revenue, improved regulatory relations and a reduction in the need for supply-side resources. Interestingly, this could not have come at a better time, as some in the industry foresaw the coming of deregulation.
The good news is that markets were indeed transformed over a period of time through good programs, codes and standards revisions as well as a change in consumer mentality with regards to energy consumption. The nation continues to benefit from those transformations. The bad news is that millions of dollars were spent on programmatic equivalents of free timeshare dinner ticketsa whole lot of talking and bullying with very little to show in terms of the investment.
This time around, the industry has a real opportunity to benefit from the lessons learnedabout what works and what does notand bring demand-side resources to its original roots of clipping peaks and filling valleys and away from free compact fluorescents and fuel switching. Efficiency needs to be monetized exactly the same way as its supply-side cousin.
For the first time, the majority of utility executives are starting to see the real value in the demand side while facing difficult generation decisions, transmission constraints, delivery system challenges and gas prices that were unimaginable just five years ago. And fortunately, technology and policy are finally catching up with demands of this market in the form of demand response, automated metering infrastructure and building controls. Appliances are getting smarter; the Internet gives the communications ubiquity necessary for advanced load control schemes and open markets now exist for the re-sale of electricity.
What should be done to take advantage of the new DSM?
- Clearly separate efficiency marketing programs i.e. compact florescent give-aways and true demand-side management activities. It is the active management of resources makes it real and persistent.
- Move demand management as well as demand response accountability and operations away from marketing and into the hands of power supply or power marketing organizations. Make sure the reward structure is equalized to recognize the value of the demand-side resource that is managed and re-sold into the marketplace.
- Monetize DSM and develop interruptible contracts to deliver real valuenot just provide a discount to pacify large customers. Let customers share in the use of the resource as well as the benefit of saving energy. Put as much effort into contracts for demand-side resources as supply-side. The technology exists for thisuse it.
- The market can create virtual power plants with all the benefits of standby and spinning reserve if approached properly.
- Continue to influence - via codes and standards - the upgrading of end-use technologies across the board that can take advantage of the coming revolution in infrastructure and metering.
- Continue to market social programs while recognizing that their value comes less from the energy saved than from the commitment to efficiency overall.
Polyester has made a hugely successful comeback from the days of the powder blue leisure suittoday the market supports products such as micro fiber and fleece. Whole companies such as Under Armor make millions on what had been an eschewed technology.
The reincarnation of demand side management as a value-driven, monetized product as it was originally envisioned has such a promise.
As for the wide ties and lapelshopefully not.
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