In Demand Response, Ushering in the New (DERMS) Should Not Mean Replacing the Old.
By Matthew Haak
“Is DR a thing of the past?” It’s a question being asked, to various degrees, across the energy sector. It comes down to this: in the age of BYO devices and automation, of DERMS and big technology solutions, people are asking where long-operating demand response programs (DR) fit. The question itself isn’t wrong: we should absolutely think about how programs can improve and how we can better meet the needs of our customers. But one implication of the question is that DR programs (as a whole) are obsolete in the new world order. At Calico, our experienced utility program consultants and technologists feel differently.
Internally, we’ve talked through multiple analogies for the relationship between longer tenured DR programs and DERMS solutions. Whether DERMS are “the last mile” and the solution for delivering those final, difficult, more expensive megawatts or our older DR programs should be considered sunk costs and torn down to be fully replaced – at either end of that spectrum, cost per megawatt managed should matter. Using an ROI lens, not only should we hold onto our existing load management and demand response programs, we should invest in maintaining them. And yes, we should move down the DERMS path at the same time. But let’s insist that our valuable, grid critical programs be embraced and supported by DERMS solution providers as well. Here are a few of the reasons why.
Existing programs are the backbone of whatever comes next.
Though DR is no longer the forefront of utility innovation, it is still a critical piece of the puzzle – in an industry where political winds will always have an effect and the core directive is reliable service, the megawatts these programs offer to ensure grid reliability should at least be used as a starting blueprint, if not a cornerstone, for what is coming next. We all agree that reliability is essential. Even in a new world order where alternative energies have reduced peak demand spikes, DR/load management is a critical safety net.
As grid supply and demand dynamics evolve, of course the load will look different. But that doesn’t mean we won’t need to curtail. If anything, the finer we’re able to tune our generation and controls, the tighter the margin for error. We will have less capacity for absorbing any spikes in demand or unexpected reductions in supply. Particularly in emergencies, we will still need the control more traditional demand response programs offer, which is why DR should continue to be a core component of grid management.
We, as an industry, can’t afford to leave these investments behind.
Dollars that have been spent on these live, at scale programs should not be treated as sunk costs. It’s impossible to know internal conversations on the topic, but lots of public discussions of DERMS solutions are silent on the issue of existing, established programs and technology. Utilities need to include internal DR expertise when designing new processes. When these functions are fully automated via or moved into departments lacking subject matter expertise, balls will be dropped.
Millions of dollars have been invested in demand response over the years, and significant organizational experience and industry expertise are housed within these teams and programs. Today, as longtime leaders and program managers retire, there’s significant risk in thinking that the programs of tomorrow are completely distinct from those of the past. Future programs, whether DR is the dedicated purpose, or one spoke of a larger wheel, should be built on successes and failures of legacy programs. Otherwise, they may be needlessly expensive, and, most importantly, they may not deliver the megawatts we need.
Progress happens when we break down walls, rather than starting at square 1.
Program silos are, or should be, a thing of the past. We all know this in theory but changing standard practices can be deceptively difficult. The fact is, programs operate more effectively when tools and information overlap, when people in the same positions (or better yet, across positions), program to program, talk. That’s why combining functions is a key path forward. And this is where a DERMS cannot replace pragmatically connecting dots, identifying overlaps and leveraging organizational knowledge.
Big solutions are undoubtedly part of our industry’s future, but meaningful progress relies on breaking down the walls that may have historically limited us. Let’s not pretend that DERMS will be the thing we can finally, truly “plug and play.” That doesn’t exist. And if we unplug our current programs thinking we’re going to replace them with something new, we’ve got it wrong. No question we need to connect and innovate and manage all the new and yet unknown resources we’ll be connecting to our grid. But let’s not try to fix what isn’t broken in the process.
About the author...
Matthew Haak is Calico Energy’s Engagement Director. Matthew brings utility systems and energy sector subject matter expertise, project leadership and team management to make every customer initiative and technical undertaking successful. To find out more about Matthew, read his bio.
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