Winter demand response: Managing peaks and enhancing efficiency

Winter demand response: Managing peaks and enhancing efficiency
By Drew Durkee and Stephanie Hsiung
Drew Durkee
Director, Flexible Load Management Pilots and Programs
Jul 10, 2024

Utilities face many challenges in managing electricity demand. Winter demand response (DR) programs play a crucial role in maintaining grid stability and ensuring customer comfort. DR is a widely used resource in the utility industry, as utilities across the country and world have leveraged different technologies and strategies for decades to adjust electricity consumption during peak demand periods to alleviate strain on the grid.

Standard DR approaches have been effective in reducing peak demand in summer months. But the need for specialized winter DR has become increasingly apparent as regions experience more frequent and extreme winter weather events, as well as increasing rates of electrification.

The need for winter DR and its multiple benefits

For most utilities in the U.S., demand peaks have shown up in the summer months on the hottest days of the year due to air conditioning usage. However, recent trends show that winter peaks will soon rival or even surpass current summer peaks due to the adoption of heat pumps. Some regions within the U.S. are already facing higher peaks in winter rather than in summer due to a high prevalence of electric heating.

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Unlike summer peaks, which tend to occur in the late afternoon to early evening, winter peaks tend to occur twice in a day: during early mornings when people are waking up and again during late evenings when temperatures drop. Managing these high demand periods is essential to prevent grid instability and ensure that utilities maintain both reliable and affordable services to customers.

By implementing a winter DR program, utilities can realize the following benefits:

1. Addressing grid congestion: Winter DR allows utilities to shift energy usage away from critical hours, thereby reducing strain on the grid. By strategically managing load, utilities can use winter DR programs to address constraints at both the bulk power system and distribution system levels.

2. Financial benefits for utilities: By lowering peak demand, utilities can reduce their need to procure expensive capacity and energy resources, and potentially defer costly infrastructure investments. These cost savings can provide financial benefits to ratepayers by keeping rates affordable for everyone.

3. Financial benefits for participating customers: The incentives offered to customers for enrolling and participating in winter DR programs can provide a meaningful benefit to those facing higher bills, especially after taking actions to electrify their homes. These incentives can range from bill credits to rewards for decreased energy consumption.

Considerations and challenges for a winter DR program

There are several differences to consider with a winter DR program versus a summer DR program. These differences are most apparent in smart thermostat programs. A smart thermostat that controls a heat pump may also control a backup or auxiliary heating system, which can be electric or gas-powered. Winter DR programs can also include smart line voltage thermostats that are connected to electric baseboard heating.

In a typical program, participating winter DR customers receive advance notice about upcoming events—typically a day before—and events are usually called in the early morning or evening. Customer discomfort, particularly during early morning DR events, can warrant shorter duration events and smaller temperature adjustments compared to typical summer DR events.

Without the proper implementation, a winter DR program may lead to unintended consequences like increasing customers’ energy usage and bills. Heat pumps, while efficient, can create challenges post-event. High temperature differences between set points and actual temperatures may trigger backup or auxiliary systems (e.g., gas or electric resistance heating), leading to additional peaks or increased gas usage.

It’s also important to keep in mind that each customer is different when it comes to what they consider to be an uncomfortable temperature threshold. Ultimately, balancing load reduction with customer comfort is crucial, as winter DR programs must address individual thresholds for temperature changes. Assuming each customer will respond the same way to an event may lead to an increase in opt-out rates.

5 best practices for winter DR programs

Utilities can maximize program benefits and overcome program challenges by involving an implementor. Through our work implementing winter DR programs, we’ve identified five key success factors for utility companies to optimize program benefits and savings:

1. Thoughtful program design: Choose the right Original Equipment Manufacturers (OEMs), distributed energy resource (DER) technology, and DER management system (DERMS) provider to partner with to achieve program goals.

2. Winter heat validation: For smart thermostat programs, identify and recruit customers by using advanced metering infrastructure (AMI), billing, program participation, and telemetry data with electric heat. For all winter DR programs, understand the value customers and their DER technology bring to load reduction objectives.

3. Strategically calling events: Determine the purpose of the event, create effective customer communication, and measure the impact.

4. Dispatch-to-comfort: For smart thermostat programs, tailor temperature changes for different customer segments while adjusting load invisibly to enhance customer comfort.

5. Easing the post-event: Consider the option of gradually adjusting temperatures post-event to avoid triggering the backup or auxiliary system, and minimize snapback for smart thermostat programs.

We’ve used this approach to implement winter DR programs for utilities in varying climate zones to extract the most value possible. As shown in the charts below, using this approach for a year-round smart thermostat program helped one utility realize a 45% increase in net present value per device over a 10–year horizon.

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Source: ICF

As winter peaks arrive to historically summer peaking utilities, winter DR will be as essential for grid reliability, affordability, and customer satisfaction as summer DR has proven to be. With the spread of electrification, utilities must embrace innovative solutions—and work collaboratively with implementors to customize winter DR programs for their unique needs—to meet winter demand effectively.

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Meet the authors
  1. Drew Durkee, Director, Flexible Load Management Pilots and Programs
  2. Stephanie Hsiung, Manager, Flexible Load Management Pilots