Coordination of Energy Efficiency and Demand Response

This paper reviews the relationship between energy efficiency and demand response and discusses approaches and barriers to coordinating energy efficiency and demand response. The paper is intended to support the 10 implementation goals of the National Action Plan for Energy Efficiency's Vision to achieve all cost-effective energy efficiency by 2025.1 Improving energy efficiency in our homes, businesses, schools, governments, and industries—which consume more than 70 percent of the nation's natural gas and electricity—is one of the most constructive, cost-effective ways to address the challenges of high energy prices, energy security and independence, air pollution, and global climate change. While energy efficiency is an increasingly prominent component of efforts to supply affordable, reliable, secure, and clean electric power, demand response is becoming a valuable tool in utility and regional resource plans. The Federal Energy Regulatory Commission (FERC) estimated the contribution from existing U.S. demand response resources at about 41,000 megawatts (MW), about 5.8 percent of 2008 summer peak demand (FERC, 2008). Moreover, FERC recently estimated nationwide achievable demand response potential at 138,000 MW (14 percent of peak demand) by 2019 (FERC, 2009).2 A recent Electric Power Research Institute study estimates that "the combination of demand response and energy efficiency programs has the potential to reduce non-coincident summer peak demand by 157 GW" by 2030, or 14–20 percent below projected levels (EPRI, 2009a). This paper supports the Action Plan's effort to coordinate energy efficiency and demand response programs to maximize value to customers. For information on the full suite of policy and programmatic options for removing barriers to energy efficiency, see the Vision for 2025 and the various other Action Plan papers and guides available at www.epa.gov/eeactionplan.