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June 10, 2016

What is Demand Response, and how it can save you money?

by John_A

Everybody likes to save money, especially when it comes to bills, and being smarter with your energy could save you hundreds of dollars a year.

In the US, a program called Demand Response will help ensure you’re being as energy efficient as possible.

Here’s everything you need to know about Demand Response and how it can save you money on energy bills.

What is Demand Response?

The Federal Energy Regulatory Commission issued an order in 2011 to encourage the use and implementation of Demand Response in the US.

This can get complicated, but what you need to know is that Demand Response is sort of like a technology-enabled economic rationing system for electric power supply.

To maintain system stability, energy providers use Demand Response to change end user energy consumption to help alleviate the load on the grid – these are known as Demand Response events. There are financial incentives to the end user alongside the technology that is used in Demand Response.

Just imagine the electricity grid as a scale that needs to be regularly balanced. During the summertime, when the air conditioning load soars, generators often can’t keep up with the demand for power. Demand Response doesn’t generate more power to maintain the grid’s balance but instead leverages technologies to reduce consumption on things like as air-conditioners, water heaters, lights, etc.

How can Demand Response save you money?

Demand Response provides an opportunity for you to reduce or shift your electricity usage during peak periods. Demand Response programs are offered by electric system planners, utilities, and operators for balancing supply and demand. Such programs can lower the cost of electricity in wholesale markets and lead to lower retail rates for you.

With energy efficiency, the goal is to lower overall energy use, but with Demand Response, the goal is to lower energy consumption at specific times. Large buildings have been doing this for years but now it coming to individual users. ConEdison in New York City offers a voluntary program that allows it to remotely adjust your air-conditioner thermostats at peak hours, such as during hot days in the summer. In exchange for participating, you get a rebate.

However, you might not like the idea of a utility company controlling your air conditioning, for example. A utility company could alleviate those concerns by allowing you to adjust your thermostat manually.

What companies work with Demand Response?

If you choose not to join your utility’s Demand Response program, or if you choose not to reduce your electricity usage during peak periods, you may end up paying “surge” prices. To avoid all this, invest in smart products that work with Demand Response, or ones that can detect peaks, utilise automatic switching to reduce power, and prevent you from paying surge prices.

There are lots of companies involved in Demand Response throughout the system, from the energy suppliers to the hardware manufacturers, spanning both big businesses and individual consumers. These include companies like Honeywell, Nest, Ecobee, Zen, GridPoint and MelRok.

Manufacturers are investing in all areas. For example, Honeywell bought California-based Akuacom in 2010. Akuacom is a major player in the Demand Response and Smart Grid arena. Since that acquisition, Honeywell has shipped thousands of Demand Response thermostats and other energy efficient smarthome devices throughout the US.

How can I get Demand Response?

Firstly, you’ll need to go to your utility provider and opt into its Demand Response program. This will give you an idea about what hardware you will need in your home.

As mentioned, companies such as Honeywell, Nest and Ecobee all offer smart thermostats that support Demand Response but not all models do. For example, Honeywell’s Lyric Wi-Fi Thermostat currently doesn’t but some of its other Wi-Fi thermostats do so be sure to check.


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