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Architecting the Consumer Side of the Grid for Energy Efficiency

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Reliance on the standard cumulative kilowatt-hour metersubstantially compromises energy efficiency and demand response programs.Without advanced metering, utilities cannot support time-differentiatedrates or collect the detailed customer usage information necessary to (1)educate the customer to the economic value of efficiency and demandresponse options, or (2) distribute load management incentivesproportional to customer contribution. These deficiencies prevent thecustomer feedback mechanisms that would otherwise encourage economicallysound demand-side investments and behaviors. Thus, the inability tocollect or properly price electricity usage handicaps the success ofalmost all efficiency and demand response options. Historically,implementation of the advanced metering infrastructure (AMI) necessaryfor the successful efficiency and demand response programs has beenprevented by inadequate cost-benefit analyses. A recent California efforthas produced an expanded cost-effectiveness methodology for AMI thatintroduces previously excluded benefits. In addition to utility-centriccosts and benefits, the new model includes qualitative and quantitativecosts and benefits that accrue to both customers and society.
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In managing the migration of electricity users to the demand response world, five first principles can help with that tricky human element.
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This paper provides hourly own and cross price elasticities for industrial customers with up to 8 years of experience on Duke Power optional real-time rates. We include the effects of customer characteristics and temperature conditions. Aggregated results show larger own elasticities than have previous studies, complementarity within the potential peak hours and substitution in the late evening. As customers gain experience with hourly pricing, they show larger load reductions during higher priced hours. As compared to a TOU rate, net benefits are $14,000 per customer per month, approximately 4% of the average customer’s bill, and much greater than metering costs. Copyright Springer Science+Business Media, Inc. 2005
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