Assessing the Interactive Impacts of Energy Efficiency and Demand Response on Power System Costs and Emissions

Utilities are increasingly interested in integrating energy efficiency (EE) and demand response (DR) measures and technologies (as well as other distributed energy resources) as a strategic approach to improve their cost-effectiveness and performance. However, the specific EE and DR features that may be best integrated, the interplay between changing EE and DR resource potential, and resulting utility system impacts are not well understood. We quantify the impacts of EE and DR in isolation and in combination on bulk power system costs and emissions based on changes in generation expansion, transmission expansion, and dispatch patterns. The study methodology mimics utility resource planning and uses more novel techniques to select least-cost generation and transmission capacity from supply-and demand-side resources, as compared to more commonly used utility approaches that only consider supply-side resources. The results identify key EE and DR characteristics affecting each other’s power system value and the most valuable technologies and strategies that can be jointly deployed. We discuss implications for EE and DR cost-effectiveness frameworks, program design, and integrated resource planning.