• Demand Response
  • Demand Response Management Systems
  • Utilities

US Drought Puts Spotlight on Demand Response Management Systems

Brett Feldman
Sep 09, 2016


The extreme heat and drought that has engulfed much of the United States this summer has led to the most active demand response (DR) season in many years. Regional transmission organizations (RTOs) and utilities across the Mid-Atlantic and Northeast regions such as PJM, Independent System Operator of New England (ISO-NE), and Consolidated Edison (Con Ed) all called upon DR to alleviate peak demands in excess of available generation resources or extraordinarily high real-time energy prices.

In the old days of DR, this process would have entailed a lot of phone calls and manual interactions that have a lot of failure points and a lack solid feedback mechanisms. As the scale of DR programs has increased, their operational reliability has become more critical and the choices of communication protocols and devices have expanded. There is a need for more centralized management and control, similar to what is done on the power generation side of the electricity market. Numerous vendors have come from many different angles to offer solutions that are categorized as demand response management systems (DRMSs).

Developing Vendor Offerings

DRMSs are developed to help utilities manage their DR programs and improve program ROI, though to date vendors indicate that the uptake of DRMSs has been slow. The core functions of DRMSs are to allow utility operators to view and add to the database of loads available for DR, to call events and/or issue pricing signals, and to perform the measurement and verification (M&V) after events to determine how much customers need to be compensated for reducing their load. In addition to this core functionality, there are many other functions and analytical tools that can be built upon this platform.

Outside of the strictly regulated utility construct, competitive retail energy suppliers have also offered DR programs to their electric commodity customers in order to provide more value and increase customer loyalty. The most striking examples are in Texas, where all customers must choose a competitive supplier as utilities are not allowed to provide supply services. Some retailers in the United States are active only in certain regional markets, while others have coverage in most—if not all—of the competitive markets. As with utilities, retailers could develop their own DRMS capabilities in-house, but in most cases it is not worth the effort. In recent years, Direct Energy has selected Siemens for its DRMS; NextEra Energy chose AutoGrid.

DRMS Drivers

The key drivers for advancing DRMSs include technical, policy, and economic factors such as DR program management, internal and grid cost reductions, and integration with other utility information technology (IT) and operational technology (OT) systems. However, the slow rate of DRMS development points to the depths of barriers, such as system cost, integration complexity, and flexibility and interoperability limitations as being major hurdles to be overcome.

These trends and more are covered in Navigant Research’s new report, Demand Response Management Systems. Utilities are just starting to gain interest in DRMSs now, but as resources like solar and energy storage grow, DRMSs will act as a bridge to distributed energy resource management systems (DERMS).