As we collectively move towards electrified energy consumption, more pressure is put on the grid to meet the growing demand for electricity. Clean and emission-free electricity sources, like solar and wind, are valuable grid contributors and are key to breaking our reliance on fossil fuels and meeting net-zero climate goals. But, increasing electrification doesn’t come without new challenges.
The power generated by renewable energy sources is produced according to nature rather than consumer demand – which can increase intermittency. This shift in how the grid operates affects the balance between electricity supply and demand and, ultimately, grid stability. Demand response programs aim to lessen the strain on the electricity grid during peak demand events to avoid grid failures. In this article, we explain the role flexible loads play in demand response solutions and the benefits of participating in them. Find out what solar + storage costs in your area in 2023
Key takeaways
Demand response programs aim to lessen the strain on the electricity grid during peak demand events to avoid turning on additional power plants.
Flexible loads are a type of demand response in which appliances are used strategically to shift electricity demand and restore balance to the grid during peak events.
Consumers receive more favorable electricity rates in return for load flexibility and minimizing consumption during peak demand.
Common appliances with flexible loads include water heaters, EV chargers, and smart thermostats.
Installing solar panels and/or solar batteries on your property shrinks demand for grid-produced energy and your carbon footprint. Use the EnergySage Marketplace to receive free quotes from qualified, pre-vetted installers.
Demand response
The amount of power the electricity grid is able to safely produce is finite, making the balance between electricity supply and demand crucial. Generally, the greater the demand for electricity, the more stress the grid experiences, and the higher the prices ratepayers (if you live in an area with demand charges – this will vary by state and utility). When demand peaks, power producers must respond accordingly in order to reduce costs and keep the lights on. There are a couple of ways to balance electricity supply and demand: utilize more power plants to increase supply, or reduce demand to meet the current supply.
Oftentimes “backup” power plants, also referred to as “peaking” power plants or “peakers” are expensive and can be harmful to the environment. Demand response is one such solution that reduces demand and stress on the grid without having to turn on additional, less efficient power sources. Facilitated by utilities and private organizations, demand response programs incentivize the temporary reduction of electricity consumption during peak demand events. To participate in a demand response program, you’ll typically need a solar battery and you’ll need to give your utility company access to it. Your utility will then be able to distribute electricity from your charged battery when overall demand for electricity is particularly high. This way, everyone wins – participants are paid to “shut down,” electricity providers don’t have to invest in more plants, and rates are lower for everyone.
Flexible loads: a demand response strategy
Flexible loads refer to the strategic use of appliances to shift the timing of electricity demand and restore balance to the grid during peak events. It’s a type of demand response with more of a systematic approach that doesn’t require the complete shutdown of operations – just certain appliances. When circumstances allow, flexible loads minimize demand from things like water heaters and EV chargers until off-peak periods. In return, participating consumers enjoy lower rates of dynamic pricing.
Let’s say you own an electric vehicle. Upon arriving home at 5:00 PM you need a full charge as soon as possible. Under those circumstances, you’re not offering much flexibility – the charger (and the grid) must meet your needs completely during a peak demand period. Now, let’s say you arrive home at the same time, but instead of a full charge, you only need 40 percent by noon the next day. An EV charger with a flexible load has the ability to defer that demand to off-peak periods – and you reap the reward for offering flexibility through the rate you pay for the electricity used.
Smart appliances for demand response
The practice of conserving electricity during peak demand events or running appliances overnight when rates are lower is nothing new. But, energy management can be time-consuming and isn’t intuitive for everyone. Keeping up to date with the utility, peak demand events, and how to manually manage your consumption to optimize your home’s energy operations isn’t easy or convenient. Thanks to smart technology, though, energy management can be easily implemented as a demand response solution to automatically adjust your load when possible.
Smart thermostats, for example, allow your HVAC system to communicate with you in real-time to suggest efficient temperature settings and more. As a demand response solution, some smart thermostats have the potential to connect with and be adjusted by the utility during peak demand events. Similarly, water heaters have been used as a utility asset for decades, and smart water heaters expand demand response abilities. If you’re looking for a more comprehensive load management solution, explore energy management systems that provide both remote monitoring and control of your loads for maximum electricity savings.
Frequently asked questions
How do demand charges work?
If you’re on a demand charge electric rate, your electric bill will be based on the maximum amount of power you use over a single time period (like an hour or fifteen minute period) in a given month. You’ll still be billed for your monthly consumption, but the rate you owe for consumption will be low compared to a typical electric bill; thus, the best way to reduce the amount you owe each month is to decrease the amount of electricity you use all at once – like by installing a solar or solar-plus-storage system.
What are fixed and variable electric rates?
If you live in an area with retail energy providers (REPs), you may choose to switch from your standard electricity utility to a REP. There are two main options for REP contracts: fixed and variable rates. If you choose a fixed price plan, you’ll pay a fixed price per kilowatt-hour (kWh) that will remain throughout the duration of your contract. On the other hand, if you choose a variable rate plan, the rate you pay for energy will fluctuate based on the wholesale price of electricity, which represents how much power plants charge energy providers to buy the electricity they produce.
What are time-of-use electric rates?
Time-of-use electric rates are designed to incentivize you to use less electricity when the cost of generating electricity is high. Time-of-use rates follow a set schedule, charging you more for your electricity consumption when the cost of generation and demand for electricity are high (i.e., the afternoon of a hot summer day) and less when both of these are low (i.e., in the middle of the night). You can save money by being thoughtful about when you’re running certain appliances or by installing a solar battery to reduce the amount of electricity you pull from the grid when rates are high.
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