Utilities’ demand-side management programs save energy, reduce peak demand

Energy efficiency programs are becoming ever more efficient, according to the Energy Information Administration’s latest Annual Electric Power Industry Report, which revealed millions of megawatthours are being saved by utilities.

From 2014 to 2017, the amount of incremental energy saved through such programs rose from 26.5 million megawatthours to 29.9 million megawatthours. This is in spite of the fact that the funds being invested in these programs are not increasing by much. Over the same period, spending has only increased by $300 million.

Much of these efficiency programs are focused on residential and commercial customers. New participants saved around one kilowatthour of energy for every 20 cents spent in 2017. For the utilities, the programs tend to be profitable long-term as well, given that most of the expense is up front, one-time only, even though they produce savings for years after — energy efficient appliances and energy-efficient light bulbs to name a few.

They are but one part of a larger system known as demand-side management programs, though. The other part of these programs, called demand response programs, work to decrease customer demand during times of high system demand or emergencies. They are smaller than energy efficiency programs, but the EIA reports that they offer customers a rebate or lower energy costs for reducing energy use during certain hours or allowing their utilities to cycle their air-conditioning.

In this way, demand response programs lower peak demand to lessen blackout risk, as well as reduce the need for construction of new generation. They provide stability, where energy efficiency programs provide discounts and efficacy. Both are currently working well, by the EIA’s estimation, to cut costs for utilities and save customers money.