Demand side management – It’s more than switching off the lights at night!

The use of intermittent renewable energy resources is increasing, and the electricity demand is rising as well. In order to obtain a supply and demand balance, the grid needs to be more flexible and reliable. There are many countries in the world suffering from power outages. For example, in March 2018, a power outage hit large swathes of Brazil due to the failure of a transmission line, affecting millions of people. Fortunately, there are plenty of emerging and innovative solutions to shave peaks and fill valleys. Demand-side management (DSM) is one of them.

DSM is not only about switching off the lights at night. It is broader than that. DSM is any group of actions, incentives or programs designed to manage a site’s energy consumption efficiency.

Evolution of demand side management

You may be wondering when this term was first coined. Back to the 1970s USA was importing 1/3 of oil and gas to meet its needs. But in 1973 the big middle eastern oil producers cut off shipments to the major consuming countries, most notably the USA. Overwhelmed by the rising price of a barrel, the USA passed the public utility regulatory policies act (PURPA). As a result the USA reduced dependence on foreign oil and promoted energy efficiency and alternative energy resources. This act pushed utilities to control energy demand. Therefore many countries were mandating DSM programs.

DSM does not necessarily aim to decrease the total energy consumption, but it aims to reduce any extra investment in building new power plants and power delivery systems. Also, DSM promotes further integration of variable renewables (VREs).

When speaking about VREs, a critical challenge is “The duck curve”. This is also called the net load, which is the total electricity demand minus the VREs generation. As the integration of VREs in the grid gets higher, the difference between the bottom and the top of the curve gets higher. Hence grid operators will be facing two problems:

Over Generation risk

When there is not enough demand for all the VREs available, grid operators will curtail renewables. Of course, storage is the first solution that comes to mind. However, it will not be economically possible to build the whole storage infrastructure to store every rising amount of electricity.

The ramp-up needs

The sun is setting, people are home, and turn on all their appliances. Hence, the net load increases rapidly. Here comes the role of DSM, where some of the peak energy use shifts towards a time where renewable generation is available. Of course, it is not the only solution to flatten the curve. However, it is a multi-scale solution engaging everyone from individual consumers (for instance, district heating and cooling moving towards the utility-scale) to the national scale (implementing legislation and standards in housing, building, appliances and transport)

Demand Side management takes multiple forms that can be classified into four categories

Energy efficiency: It tackles using more efficient load appliances (water heaters, refrigerators, washing machines, etc.).

Demand response: It is the change in electric usage by end-use consumers from their normal consumption behaviour in response to various customer engaging methods (time of use pricing, financial incentives, etc.).

Dynamic demand: It is the control (delaying or advancing) of the appliance operating cycles to get an adequate balance between loading and generation.

Distributed energy resources (DER): Unlike conventional power stations DER, are decentralized (located close to the load they serve), modular (capacity additions or reductions can be made in small increments) and therefore more flexible.

IRENA defined in her last report “IRENA innovation landscape” the enabling innovations:

The enabling technologies

 The internet of things (IoT) and artificial intelligence (AI) are two powerful technologies to facilitate demand-side management. For instance, smart homes use IoT and AI devices such as sensors and smart meters to collect and analyse data. And this data is used to control home energy consumption efficiently.

Business models for Demand Side management

The principally used business model is energy as a service model (Eaas). Typically, this is paying for an energy service without making any upfront investments. It takes the form of a subscription for an electrical device owned by a service company. For instance, a company that owns and schedules your water heater to heat the tank during times of highest renewable production and then store it for later use.

Market design

The market design encompasses the time of use tariffs ( i.e., cheaper tariffs when demand is at lowest and higher tariffs when demand is at highest) and the net billing schemes which are a new way to charge prosumers. The invoice is the withdrawn energy minus the injected energy, and it is calculated based on the value of the kWh consumed or injected.

System operation

System Operation tackles advanced forecasting of variable renewable power generation. DSM goes hand in hand with grid modernization efforts, and it requires changes in the regulatory framework and the will of the consumer participation.

Oumaima Ben Amor

Oumaima Ben Amor is a renewable energy engineering student from Tunisia; concerned about climate change and interested in the sustainable energy transition. Her goal is to be an active contributor to the renewable energy industry and to promote knowledge sharing and lifelong learning.