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Task 19 Micro Demand Response and Energy Saving

Synopsis | Background | Aims and Objectives | Benefits | Subtasks | Deliverables | Participation | Contacts | Publications | Publications


Energy plays a central role in each of our everyday lives. We use electricity for lighting our homes and offices, for powering our fridges, ovens, televisions and computers. For most of the time we do not even think about it, it is simply there to enable us to carry on with our normal activities. However, our use of energy impacts on our environment and contributes to global warming.

The domestic and SME sectors consume up to 50% of electricity in developed countries and are attractive for the implementation of energy saving measures based on providing customers with information and also automatic/remote switching of demand.

The results are delivered from influencing millions of micro loads to save energy in the customer premises and a fast response to price and control signals from the energy markets or system services markets.

To approach consumers to integrate their energy use in a complex net of energy optimisation is a new and expensive task. Any approach should simultaneously attack all the opportunities for customers to save money and volunteer environmentally friendly behaviour [1].

Greater participation of the demand side is a very important mechanism for addressing the issues of improving overall system balance and increasing the utilisation of wind generation capacity. If end use demand can be reduced and profile shape changed for smaller and SME customers in response to financial and other stimuli, it can be used to reduce peak generation capacity and spinning reserve, enable demand participation in balancing and reserve markets and the full potential for wind generation to be exploited, particularly in off-peak times. It can also save energy and CO2 as well as money for customers.

With the growth of embedded generation, there are also strong financial motivators for local areas to become “self-balancing” in terms of local demand and local generation.

[1] ZIVIS Project (“Lend your computer to the science”) in the Spanish county of Zaragoza, where 7% of the county internet navigators have permitted the European Science Supercomputer Mare Nostrum to use their personal computers’ calculation capacity when its owner doesn’t need it. This process has advanced the work programme by 1 year.


End Use Monitoring and Feedback (EUMF)

One of the ways in which customer motivation to save energy can be developed is by identifying and presenting to customers a breakdown of their individual end uses of energy, its cost and environmental impact.

Feeding back disaggregated energy end use information to smaller customers using a range of methodologies has been shown to motivate energy savings of the order of 10%. A survey in one country showed that 70% of smaller customers were prepared to make changes to save energy if they were advised how to do it and it involved little inconvenience. Monetary savings resulting from the application of EUMF to direct electric heating customers have been estimated to be worth €100 per year per customer. Direct measurement of specific customer end uses of energy on a continuous basis is probably too expensive for wide scale application to smaller customers. Estimates of the costs of face-to-face and Internet interviews with customers to collect data and feedback end use information and advice show this to be an attractive option. EUMF motivator messages have also been shown to encourage customers to replace energy inefficient end uses with efficient ones.

Time of Use Pricing (TOU)

Time of Use electricity pricing is another mechanism for encouraging energy demand and profile shape change. This is already a normal pricing, billing and settlement mechanism for larger customers. Mobilising customer demand changes and shifting energy use to different time periods has the potential to save energy and money for customers as well as system capacity. The financial savings result from customers taking advantage of lower price energy at non-peak times through tariffs and other more dynamic measures offered by Suppliers. Energy and CO2 savings can result from reduced system losses, the extent of the savings being determined by the generation mix in different countries.

IEA, DSM, Task XI, Subtask 2 estimated the financial viability of implementing different TOU and Dynamic TOU pricing regimes by equating reliable and flexible demand shift, including operation of embedded generation, with scheduled generation, transmission and distribution network construction costs. In order to do this, the study estimated the costs of implementing TOU pricing régimes per kW of demand shift as well as the costs of new supply side construction.

The study identified that thermostat reductions of direct space and water heating and air conditioning for a few hours per year are able to make significant contributions to reducing system peak demands. It also identified that small scale micro generation could easily be controlled on the basis of TOU pricing to reduce unscheduled peak demands. Results of field trials of dynamic pricing identified that automatic intervention is preferred by customers for shifting demand, rather than requiring manual actions.

Demand Side Bidding (DSB)

Demand Side Bidding is a mechanism enabling the demand side of electricity markets to participate directly in energy trading. Micro DR Demand Aggregators (DAG) deliver demand changes at customer premises and these benefit System Operators, Suppliers and customers. DSB allows demand changes to be predicted, made to happen on a reliable basis, be validated and built into schedules as alternatives to generation in meeting system demand and offsetting wind generation intermittency.

Examples of DSB products are illustrated below.

Product 1

  • Consumption is reduced instantaneously and recovered in half an hour. 1000h a year, 5 times a day. Guaranteed (house fridge), iced food (SME).
  • Variants: 1 hour duration aggregating consumer responses, 300 a year.
  • System: Secondary reserve in the demand side, emergency reserve.

Product 2

  • Consumption is reduced, 1 hour notice and recovered in half an hour. 1000h a year, in the night valley period, once a day. Guaranteed (house fridge), iced food (SME), heaters. In the previous hour pre-cooling or pre-heated.
  • System: Reserve for deviation of wind production from programmed generation.

Provision of Demand Response and Energy Saving Services to Smaller Customers

The provision of Demand Response (DR) and energy saving services to smaller and SME customers, in terms of demand disaggregation information and “smart” metering and controls, offers opportunities to Energy Saving Service Providers(ESSPs)/DAGs for potentially profitable business. The business model is likely to be different to that of Energy Services Companies (ESCOs) and based on delivering services to millions of micro loads and customers rather than hundreds or thousands. A very low cost of service will be a requirement of ESSP/DAG businesses.

Task XI, Time of Use Pricing and Energy Use for Demand Management Delivery

Conclusion of the previous Task XI work, mid-2007, showed that EUMF, TOU pricing and DSB all have the potential to deliver valuable demand profile change and financial benefits. The work demonstrated that relatively small amounts of demand flexibility can have large benefits in reducing peak capacity requirements.

The basis for an extension of this work, via a new Task (Task XIX), was therefore proposed at the October 2007 DSM ExCo meeting, held in Brugge, Belgium. Eleven candidate participants indicated interest in this proposed activity and it was therefore agreed to develop the basis for the work programme, via a dedicated Task Definition Meeting.

The Task Definition Meeting, EA Technology, Capenhurst, Chester, UK, 23rd-24th January 2008

EA Technology therefore convened a Task Definition Meeting, at its Capenhurst offices, 23rd-24th January 2008. Representatives and experts participated from four countries and received keynote addresses from National Grid (UK) and Defra (UK). They then discussed the essence of the proposed new Task, with detailed consideration being given to the content of each of the proposed work packages (or subtasks). The conclusion of the workshop, provided a clear steer for the development of the new Task, as embodied in the present paper.

Task XIX

The proposed Task XIX will define DR and energy saving products and how to actually deliver them into the residential and SME markets on a commercial basis using ESSP/DAG businesses. Funding mechanisms and the provision of information and controls infrastructure will be studied and evaluated. The potential for these measures to be accredited for financial support by Governments and Regulators, (White Certificates, EEC/CERT, etc) will also be evaluated. Accreditation to enable Suppliers to include DR measures towards meeting their energy saving targets is an important consideration and will also be evaluated.

Proposed ESSP/DAG business tasks are expected to include the following:-

  • identify potential customers and develop DR data base
  • recruit DR customers and energy end uses to be managed
  • develop the demand switching schedules into System Operator, specified products
  • conduct face to face energy advisor interviews and demand modelling with customers
  • contracts and settlement mechanisms
  • negotiate accreditation for energy savings
  • funding and grants management
  • micro generation advice/promotion/management
  • end use remote diagnostics/leasing
  • manage DR payments (customer/System Operator/Supplier)
  • aggregate DR customer groups
  • finance/install DR control infrastructure
  • advise on DR enabled end uses
  • advise customers on tariffs
  • micro loads local control dispatch and metered energy saving accounting system

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Aims and Objectives

The aim of Task XIX is to investigate the implementation of TOU pricing, remote/automatic demand switching and energy end use monitoring for SME and residential customers so as to quantify the costs, benefits and business viability of such measures from the System Operator, Demand Balancing and energy saving perspectives.

Specific objectives of Task XIX are to:-

· Define DR and Energy Saving products to meet System Operator, Supplier, Government and Customer requirements;

  • Identify, develop and define packages of DR and energy saving service products for residential and SME customers, based on EUMF, TOU pricing and demand control to meet the above requirements;
  • Develop mechanisms to deliver DR and energy saving service products;
  • Evaluate how ESSP/DAG businesses can provide DR and energy saving service products for residential and SME customers;
  • Develop ESSP/DAG routes to market for residential and SME customers;

· Make an overall assessment of common ground and technologies to be shared with smart metering infrastructure;

· Estimate incremental costs of implementation of product delivery systems

· Quantify the business case for the provision of DR and Energy Saving products.

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Participation in Task XIX will enable Task Participants to:-

· understand the advantages and disadvantages of TOU pricing, Demand Response and demand disaggregation and feedback for residential and SME customers in competitive energy markets;

· gain an independent view of technology and benefits available for TOU pricing and demand disaggregation

· quantify the value and technologies for end use monitoring and feedback, Time of Use Pricing and DR to customers and its potential for achieving DSM objectives;

· develop national policies to encourage time of use metering, pricing and demand disaggregation within competitive energy markets;

· understand the role of demand side participation in energy markets through the use of DSB/DR programmes and mechanisms;

· quantify the need for time of use metering or developed profile metering in order to validate DSB/DR implementation;

· quantify infrastructure needs for alternative load control options and savings calculations;

· understand the contribution that Dynamic DR can have on the improving the utilisation of wind generation capacity.

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Subtask 1 (DR and Energy Saving Products)

  • Define DR parameters required by SO, Suppliers and Balance Responsible Parties (volume, shape and timescales)
  • Determine Energy savings (volume, sustainability) from DR and EUMF products
  • Write report chapters

Subtask 2 (End Use Demand Changes)

  • Identify specific demands which could be influenced by the demand change motivating mechanisms in Subtask 3
  • Identify what demand changes may be possible as a result of applying the motivators to SME end uses
  • Identify what demand changes may be possible as a result of applying the motivators to residential customer end uses
  • Outline technical architectures for collecting and estimating end use demand information and delivering control motivators to change demand.
  • Write report chapters

Subtask 3 (DR and Energy Saving Delivery Mechanisms)

  • Define mechanisms for motivating and delivering energy savings by residential and SME customers (disaggregated demand information, TOU pricing, remote switching, DSB and customer interviews)
  • Define “smart” metering, disaggregated data and control mechanisms for motivating and delivering demand shifting by residential and SME customers (metering, switching, pricing, EUMF)
  • Write report chapters

Subtask 4 (SME Customer Costs and Benefits)

  • Determine ESSP/DAG costs and benefits for delivering Energy Saving and Demand Shift services for SME customers using disaggregated demand information, metering and control
  • Determine ESSP/DAG implementation methodologies for delivering benefits and viable businesses
  • Estimate energy savings
  • Write report chapters

Subtask 5 (Residential Customer Costs and Benefits)

  • Determine ESSP/DAG costs and benefits for delivering Energy Saving and Demand Shift services for residential customers using disaggregated demand information, metering and control
  • Determine ESSP/DAG implementation methodologies for delivering benefits and viable businesses
  • Estimate energy savings
  • Write report chapters

Subtask 6 (Business Case Estimation)

  • Determine customer financial instruments and reward mechanisms to achieve commercially viable ESSP/DAG businesses delivering CO2 savings and equivalent, network and generation capacity provision, by modifying demands of residential and SME customers
  • Quantify the potential for DR and energy saving measures to be accredited for meeting Government, Regulator and Supplier energy saving targets (White Certificates, EEC/CERT, etc) and obtaining financial support.
  • Compare overall costs and benefits
  • Write report chapters

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The principal deliverables associated with Task XIX are one or more reports, addressing:-

· Definition of requirements for Micro DR and Energy Saving Products

· Analysis of End Use Demand Changes for delivery of DR and Energy    Saving

· Analysis of DR and Energy Saving Delivery mechanisms and Technologies

· Costs and Benefits for SME Customer DR and Energy Saving

· Costs and Benefits for residential Customer DR and Energy Saving

· Business case assessment of the provision of DR and Energy saving products for SME and residential Customers

· Regulator and energy policy overview

It is anticipated that Task XIX will require 15 months to complete.


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Task XIX









Operating Agent


Participating Country


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barry watson
john baker

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Evaluating The Business Case for Micro Demand Response and Energy Saving

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Task XIX: Evaluating the Business Case for Micro Demand Response and Energy Savings
[363 kb]
 This report is the second and final output of Task XIX - Micro Demand Response. The report builds upon the findings of the first output (Requirements and Options for Effective Delivery, published Mar...
Task XIX: Requirements and Options for Effective Delivery
[2112 kb]
 This report explores the requirements and options for the effective delivery of micro demand response and energy saving products. The requirements and options are identified by consideration of the f...

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