Peak Reduction Is Increasingly What the Grid and Utilities Need from Demand Management Programs

Posted
on
March 1, 2023

Energy efficiency and other demand-side solutions can help Illinois reach its proposed statewide peak reduction goal, but only if they target the right customers.

This is Part 3 of a blog series about Recurve’s recent study of four ComEd energy efficiency programs. Read Parts 1 and 2.

In our last blog post, we showed how Recurve’s recent study of ComEd’s energy efficiency programs proved conclusively that customer targeting based on pre-program AMI data was an effective method for identifying customers who have the greatest potential for savings. We also explained how to use this targeting data to increase the total energy savings and cost-effectiveness of the ComEd energy efficiency program portfolio. 

With grids in the Midwest and across the country under strain and fears of blackouts growing, however, it's increasingly clear that aiming interventions toward average savings isn't enough — programs must be designed to reduce peak loads. 

In September 2022, the Illinois Commerce Commission voted to increase peak load reduction targets for the two largest utilities in the state, Ameren and ComEd. While this ruling is still in process and not yet approved, it speaks to the Illinois Commerce Commission’s focus on grid reliability, air pollution, and less reliance on dirty peaker plants.

Recurve’s recent study of ComEd’s energy efficiency programs shows that customer targeting can identify ahead of time which cohort of potential customers can deliver the greatest peak savings and value to the grid. Optimizing programs to serve these customers is the best way to ensure that program funds help meet peak reduction goals.

Recurve’s targeting analytics can predict in advance the customers that are most likely to deliver peak savings. If ComEd were to focus on marketing its programs to the top 25% of customers, it could deliver as much as 7x more peak impact. This means more savings for customers, more grid impact, and lower costs to ratepayers.

As utilities move to time-of-use or real-time rates, reducing consumption during peak periods has become critical to driving customer savings. Not all kWh of savings are worth the same. 

As the grid moves increasingly to renewable energy sources that are often intermittent, balancing supply and demand has become critical to ensuring grid reliability and affordability. These are the periods when generation is dirty and costly, the grid is under the most stress, and customer rates are highest.

As Illinois, and the country at large, move towards the electrification of buildings and transportation, the demand for electricity will inevitably rise. While this new electrical load can promote equity by spreading costs across a broader cost base, its actual impact on the grid and customers' affordability will depend on the timing of increased demand. If we are using more clean and low-cost energy, then these resources are helping the grid, but if demand increases during system peaks, it can be costly and polluting.

Energy efficiency and demand-side programs can play a critical role in helping Illinois achieve its peak reduction goals, but these programs will only achieve their potential if they are designed to target peak load reductions. 

 Targeting for Optimal Peak Savings

The Recurve study shows that meter-based targeting analysis is the fastest way to identify those customers most likely to provide significant peak load reduction by participating in demand-side programs. Implementing meter-based performance programs that provide differentiated incentives for the time value of changes in energy consumption could further enhance these peak load reductions, providing greater reliability and reduced costs for all customers. 

Therefore, in order to optimize programs to help more customers save money, and increase savings and cost-effectiveness, utilities like ComEd should:

  • Implement meter-based targeting to identify customers most likely to save money and deliver value to the grid
  • Use project savings tracking to give program managers real-time feedback into how their programs are operating
  • Evolve existing programs to take advantage of this information through direct marketing and sharing information with trade allies to optimize outreach
  • Adopt a pay-for-performance and/or market-based approach that empowers aggregators and implementers to find the best customers and incentivize them by paying for the actual metered grid value they deliver based on when savings occur.  

You can read the Executive Summary of the report here. To request a copy of the full report or learn more about Recurve’s approach to identifying the right customers for your program, get in touch.

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