Focusing on the Demand Side of the Power Equation: Implications and Opportunities
Adoption of new and more aggressive demand-side policies by state regulatory commissions and legislators has dramatically increased in the past year-with over half of the US states adopting or developing such policies. Compared to the last wave of interest in energy efficiency and load management, the forces driving this policy interest appear to be more diverse and long-lived, ranging from climate change to controlling wholesale price volatility. Together with other emerging trends in the power sector, demand-side management (DSM) could be a growth area in the electric power industry in the years ahead-and could have, in aggregate, a much larger impact than might now be anticipated.
* More than 25 states have or are developing new requirements for energy efficiency and load management, including many states that have previously shown little support for such policies.
* If this current interest by regulators turns into concrete investments in successful demand-side programs, there could be a material impact on the rate of US electricity demand growth. In 2004, 80 percent of all the energy savings from utility energy efficiency programs were achieved by only 25 utilities, suggesting a large, untapped potential for significant savings in many regions where DSM has not yet been a focus.
* The near-term prospects for turning DSM into a profitable business appear to be increasing for both utilities and energy service companies. Regulators are starting to consider and adopt economic incentives for utility demand-side investments.
