Phase 1 Results: Establish the Value of Demand Response

This report describes the work performed in response to the Demand Response Research Center’s Research Opportunity Notice DRRC RON‐01: "Establish the Value of Demand Response." A research team led by Energy and Environmental Economics, Inc. (E3) reviews approaches for demand response (DR) valuation applied in California and other states, and recommends an approach for developing a comprehensive DR valuation methodology. The review identifies no complete DR valuation framework that can be applied directly in California, and recommends the current standard practice for cost benefit analysis of energy efficiency be modified to capture the attributes of DR. The team identifies a minimum of six gaps in the existing standard practice that need to be addressed to appropriately value demand response. A Phase 2 proposal is developed to address these gaps, and others that may be identified, in a stakeholder process.