There are two ways to ensure that there is always enough electricity available to meet demand:
- Build enough electric generation capacity to satisfy the maximum expected demand plus a comfortable reserve
- Find better ways to manage energy use and spread that use more evenly throughout the day.
Building more power plants is time-consuming and expensive, especially if they’re only needed during a few hours each year.
The alternative is Demand Response (DR), whereby electricity consumers are encouraged to reduce their electric demand at critical times. EnergyConnect works with its participants to implement their own Demand Response programs. These DR systems typically employ dynamic pricing and tariffs, utilizing mechanisms such as contractually obligated and voluntary curtailment, direct load control and cycling, and payment incentives.
During peak hours on certain days, energy demand increases. For example, in August 2006 there were periods of extreme heat throughout the Eastern US, increasing the electricity demand for services such as air conditioning, causing significant increases in electricity prices. When implementing Demand Response, participants shift their consumption out of those periods to times where demand (and consequently, prices) are lower, resulting in greater system efficiency and lower costs for everyone.