Demand response has for the past few decades consisted of utilities having direct load control capabilities (the ability to switch off air conditioners, for example, during really hot days) and/or having the ability to call large customers to reduce load on the system. The consumers in these cases received some benefit--a one-time credit for the summer or perhaps a special time of use rate (in the case of large consumers in particular) that reduced the price or issued a credit during curtailment times. In all of these cases, the utility was very much in control of the demand response action and of the monetary benefit accruing to that action. The utility function for demand response programs will not go away and that jurisdiction will remain with the states. But now the consumer has the ability to participate--with or without the utility as the enabler--in the larger wholesale energy markets.
What this means is that a variety of entrepreneurs and technology solutions start-ups will have a chance to create value for their product and consumers will have the ability to make choices in the energy markets. The Order states, "Effective wholesale competition protects customers by, among other things, providing more supply options, encouraging new entry and innovation, and spurring deployment of new technologies." For example, a business with a solar rooftop system and a storage battery can use that energy during high peak demand times, getting credit for production as a generator. Energy efficiency (as negawatts) will have value as generation. And owners of clean (but perhaps dynamic) generation can choose when to consume that clean power, which will appear as 'demand response' to the wholesale grid operator, who will now pay the full wholesale price of generation for that demand response. The Order allows owners of clean tech to fully monetize their investment for the first time.
"Disruptive" technologies--microgrids and electric vehicles, for example--will begin to have value in the energy markets. Buildings will become resources as well as loads. Energy storage becomes even more relevant in the mix. Systems--electric, gas, telephone, water--that need electricity--will become intertwined into one system that can function as a virtual power plant.
In addition to spurring innovation, wholesale demand response will increase reliability, lower the cost of energy production, and increase competition from generators. The Independent System Operators and Regional Transmission Operators have been offering a variety of market tools around demand response for a number of reasons depending on the system; now this Order ensures that innovators and consumers will be adequately and consistently compensated.