Texas is struggling to cut peak energy demand. This tech could help it succeed.

Texas has been an energy innovator on many fronts: the state instituted the country’s first Energy Efficiency Resource Standard (EERS) in 1999; it leads the nation in installed wind capacity; and it has created a highly effective framework for smart meter adoption.

Despite its innovations, however, it’s trailing in a key category that has big implications for the stability of its power grid: Texas lags behind other markets when it comes to shaving down peak power demand.

According to FERC, the current demand response resources of the Electric Reliability Council of Texas (ERCOT) — which manages three-fourths of the state’s grid — only account for 2.9 percent (or 1,950 MW) of annual peak demand. By contrast, the current peak reduction potential of PJM Interconnection — which covers the mid-Atlantic and neighboring states — is markedly higher at 6.3 percent.

ERCOT’s current potential peak reduction only accounts for 2.9 percent of peak demand and trails the national average of 6.1 percent. (Source: FERC)

That’s a huge deficit between the national average (6.1 percent) and Texas’s own potential peak reduction — one that leaves the Lone Star State’s power grid particularly susceptible to blackouts and brownouts.

So, how can Texas’s energy retailers help cost-effectively curb peak demand?

One common option is to install devices that facilitate demand response — such as smart thermostats — in customer homes. In Texas, however, that’s a riskier proposition than in other markets, as customers regularly switch electricity providers. Such an investment could result in high sunk costs for retailers when a customer elects to change providers after receiving a device.

Fortunately, there’s a demand response technology that neither requires price incentives nor the installation of costly in-home devices. That technology is Behavioral Demand Response (BDR) — a software-driven approach that leverages smart meter data in real time to send personalized insights and advice to customers that help them slash peak demand. Built upon a unified and well-designed technology architecture that can engage millions of homes at once, BDR is proven to drive peak reduction at scale.

And Texas’s peak reduction potential with BDR is vast. A 2012 Brattle Group report found that “price responsive demand response” — similar to Baltimore Gas & Electric’s peak time rebate program that last summer sparked $7 million in savings for customers — could cut Texas’s peak demand by as much as 15 percent.

Our own analysis reveals that 5.6 million Texan households could help spur more than 953 megawatts of annual capacity savings through Behavioral Demand Response. That equates to the capacity of about 19 peaking power plants. Avoiding the need to build or activate those plants represents a huge cost-savings and emissions reduction opportunity — one that can help the Lone Star State remain one of the nation's leading energy innovators.


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