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Behind-The-Meter: Manage Demand to Match Supply - Challenges & Benefits

In earlier blog we discussed how with participation of demand resources under demand dispatch program can stimulate action towards further optimizing grid operations. In this blog let us see challenges and benefits of this program.   


As a consumer, my interest would be to see how I get benefited in terms of my energy billing and what incentives do I get by participating in demand response/dispatch programs. Whereas, utilities need to come up with the intelligent framework where they could meet grid optimization and provides incentive schemes to all types of consumers which encourages them to participate and respond to the needs of the grid.  Generally, in supply-dispatch scenario consumer borne the cost of increased generation during peak demand but if generation were better utilized then consumer would be paying less for their energy usage. Demand dispatch and other smart grid applications such as Demand response not only improves the utilization factor but also makes consumer happy when he sees the reduction and incentives in his monthly bill.


Following are the key insights of the value that might be created by demand dispatch programs:


·         Improves the reliability, peak demand management, utilization of demand resources and energy efficiency throughout the value chain.

·         Provides the most economical pricing of meeting demand for utilities and energy usage for consumers.

·         Benefits all types of customer (not only those participated in DD program) in grid by reducing the real time price of wholesale electricity in market. Eliminating the overall cost of generating & transporting additional power from supply end during peak demand in turn brings down the retail price of unit which helps clearing the wholesale market at low price.

·         Improves the carbon foot print which helps in environmental benefits.


As this program provides potential benefits so as there are challenges which cannot be avoided and needs to be address for this program to be successful. Following are key challenges:


·         Smart grid technologies and infrastructure shall support the seamless integration and operation of demand resources within electrical grid network.

·         Architecture defining the breadth and depth level of demand dispatch monitoring and control in the grid network. A decision on what demand resources would be integrated and for how long they will be available for monitoring and control.

·         Data Management and Integrity - Smart grid itself faces challenges with huge amount of data handling. In this case demand resources participation, monitoring & control and reflecting the correct compensation/incentives data, adds more complexity in terms of data management and integrity. Will this overload the system and cause the system to collapse under its own weight.

·         Framework defining clearly the regulatory policies and interoperability standards for this kind of program. Demand resources are located behind-the-meter and ownership, liability etc. issues need to be address clearly and completely to define the boundaries and area of jurisdictions.

·         For this program to be successful one of key requirement is the high level of customer participation which brings in the enough demand resources that will make the significant contribution in demand management program. Customer shall be encouraged, educated and attracted so that they accept participation into this program.

·         Security of system and data will be one of the major challenges for the utilities.

·         Well define compensation model which will drive customers participating into this program.


In today's power system world, customers are insulated from the utility wholesale operations and pay bills as they receive with not much control over the charges. Programs like demand dispatch will integrate the customer and help balance the supply-demand by modifying the way they use and purchase electricity.  Interestingly with Smart Grid and Demand Dispatch programs, future electric power system will see a robust and widespread link between customers and gird operations. With this I leave discussion open on this concept and readers can drop in their views and ideas.

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