Grid stability hit headlines in 2022 with damaging hurricanes in Puerto Rico and Florida and the threat of blackouts in California bringing power reliability to the forefront. As we look to next year, GridPoint has six predictions regarding demand response in 2023.
1. An increased focus on engaging the commercial sector in demand response programs due to curtailment reliability and the convenience of automated demand response
According to the U.S. Energy Information Administration (EIA), of the approximately 5.9 million commercial buildings across the U.S., more than 90 percent are small- to medium-sized with footprints under 50,000 square feet. This includes coffee shops, fast food restaurants and convenience stores. This means there are over 5.3 million small- to medium-sized commercial buildings in the U.S. with major opportunities for improving efficiency and reducing emissions.
The commercial sector provides a level of curtailment reliability that the residential and industrial sectors cannot. Most commercial operations can participate in curtailment events without impacting operations or customer comfort. At GridPoint, we have seen an increase in demand response program participation, specifically among the restaurant segment. Technology, such as GridPoint’s energy management platform, enables restaurants to participate in demand response programs and earn monetary incentives, without impacting the comfort of their customers and staff. As we move toward more automated demand response solutions vs. manually curtailed load, demand response will be treated as a true grid resource. By automating demand response, the load curtailment is more predictable and reliable for grid operators.
2. The rapid expansion of distributed energy resources (DERs), such as solar, electric vehicles and storage, will continue. However, HVAC load is a major peak driver and the greatest opportunity for short-term, grid capacity improvements in 2023
According to the EIA, the average breakout for end-use electrical consumption in commercial buildings:
- Heating, ventilation and air conditioning (HVAC) 33%
- Miscellaneous loads 32%
- Lighting 17%
- Refrigeration and cooking 18%
HVAC load in commercial buildings is HIGHLY correlated with extreme weather temperatures and peak intervals on the grid. Both heating and cooling drive peak HVAC loads during winter and summer months, respectively. While peak loads are often associated with hot summer days, extreme cold snaps call for extra heating from HVAC systems and water heating systems. This coupled with a decrease in solar generation during a cold snap can contribute to supply shortages. HVAC curtailment offers a huge opportunity for grid capacity and reliability during times of extreme temperature.
GridPoint has several solutions that can help commercial businesses manage grid variability and cut down on HVAC energy costs.
3. Increased participation among commercial businesses specifically in California and Texas
The ERCOT events in February 2021 and the ongoing threat of blackouts in California are top-of-mind for business owners who are disproportionately impacted by rising energy costs, business disruption and even costly inventory loss. There is increased awareness of grid-interactive solutions available to businesses and a growing interest in participating in grid stability in these geographies and we anticipate more drastic program growth in these geographies in 2023. In addition, utilities are not only offering more demand response program opportunities, but utilities are also increasing the program incentives turning participation into new revenue streams for these businesses.
4. A shift from energy reduction to carbon reduction
Often, curtailment events are called when energy costs are highest or in emergency when the grid is stressed. We are now seeing a focus on curtailment when the grid is dirtiest to reduce carbon emissions and leverage carbon accounting equivalencies for ESG reporting through DR.
GridPoint’s recent partnership with TimberRock combines automated building controls with carbon accounting reporting to enable customers to adjust building performance to a variety of factors like energy cost savings, utility signals like demand response and now, carbon emissions.
5. Utility-sponsored incentives will be a catalyst for grid-interactive technology deployment
Demand response programs were historically targeted at the industrial sector. The commercial sector is proving to be a reliable curtailment source and utilities are focusing on the incentives and tech deployment for this segment. For example, GridPoint customer Aloha Petroleum took advantage of their utility Hawai’i Energy’s Smart Device program, which gave businesses up to a 50 percent rebate for installing GridPoint technology. Since deploying the technology in June 2021, Aloha Petroleum has achieved over 13 percent average savings on energy across locations. To further put the total ROI in perspective, for every $1 spent on GridPoint’s technology over these 12 months, Aloha Petroleum saved over $12.50.
6. A strengthened utility – commercial relationship due to converging business and grid goals
Increased energy demand, electrification trends, and rising energy costs are factors driving commercial businesses and utilities together to find new equally beneficial solutions. Businesses who have not previously engaged with energy-efficiency assessments and demand response options will be searching for cost-reduction opportunities. Utilities are committed to providing reliable service to their service territories. Together, there are solutions available to help businesses reduce energy consumption and costs while utilities can provide reliable service. All while working toward a more sustainable energy future.
GridPoint can help businesses optimize utility incentives for commercial customers while helping manage energy demand at your facility. GridPoint provides your business with the tools to adjust operations automatically and on-demand to unlock new revenue opportunities and support your energy and sustainability goals. We are committed to helping more sites than ever in 2023 reduce energy consumption and provide more capacity to the grid.
Rachel Marcus is a demand response program manager at GridPoint, a leader in building energy management and optimization technology that decarbonizes commercial buildings and drives grid modernization.