Power and renewables

A new dawn for DSM

A new dawn for DSM

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Nick Brod

Nick Brod

Business Line Director, PDI

At the dawn of a new era we will see the rise of a new approach, understanding, and valuation of demand-side resources. While this is exciting, epochs rarely form without turbulence.

Today, I was fortunate enough to talk on the closing plenary at AESP’s 30th annual conference. Aside from framing my view of the next 30 years – always a fun exercise – I was asked to describe the next 30 years in a single word. This was not an easy choice. In the end, I settled on epochal – meaning the forming of a new age. I see us at the dawn of a new era for demand-side management. Over the next decade, we’ll see the rise of a new approach, understanding, and valuation of demand-side resources. While this is exciting, epochs rarely form without turbulence. The other word that I’d considered for this panel was Gordian. The Gordian Knot seems like an equally valid metaphor for an industry grappling with the energy transition and digital revolution. As was true for Alexander the Great, our industry must cut itself out of the intricate web we’ve tied ourselves into over the past 30 years – rendering perceived constraints moot through new methods that better serve customers and the environment. Once freed, I’m sure we’ll be talking about supply and demand-side resources as interchangeable things married by connectivity and control.

At the dawn of this new era, our industry comes to a crossroads, representing four pathways for demand-side management. While regional variations will exist, these are the forces that will largely shape how DSM gets valued as a resource. Our first pathway is business-as-usual. I don’t have to describe this path as its been well-traveled over the past twenty years. Much of what led my mind to Gordian comes from this path; cost-effectiveness testing, net-to-gross, free ridership, declining low-hanging fruit, rising codes etc… While these constraints are justified as necessary to ensure the appropriate use of rate-payer funds, collectively, they have the effect of stifling innovation in a time of exponential change. Mark Darden (DNV GL) and Adam Grant (NV Energy) captured the essence of this Gordian Knot as they spoke about how NV Energy is looking to new approaches to remix its mature C&I portfolio. The past is indeed prologue and while business-as-usual will continue in some form, as a whole, this looks like a declining proposition for our industry.

The most likely future is a change in how DSM resources are valued and the creation of new business models to capture said value. Over roughly the past year, Integrated Demand Side Management has become a hotter topic at AESP conferences. As utilities continue to bring non-dispatchable, variable resources into the supply side mix, demand-side programs will need to adapt methodologies that capture savings at times and places of greatest system need. Greater than technical flexibility, true IDSM program design will require social malleability to balance equity and affordability for all customers while promoting the non-energy value propositions most attractive to end-users. I was intrigued by Amy Glapinski’s presentation on Consumers Energy’s pilot for Network Lighting Controls for Small Business. This pilot hits the trifecta of change that I’ve been getting at; interoperable and connected technology with the potential for autonomous dispatchable capacity; aimed solely at a hard-to-reach market; and producing easily quantifiable benefits that deliver business value for the end-user. While the Consumers Energy pilot is small in scope, it will have an outsized impact as a template should the broader industry continues to revalue DSM to promote flexibility.

The most aspirational pathway ahead is a scaling of environmental electrification programs and a ramping up of decarbonization efforts. While environmental electrification has a strong emotional appeal, early results have had a narrow impact. Sarah Chatterjee of NV Energy eloquently spoke of the challenges of changing the customer mindset regarding EV adoption and the role the utility can play in building out the charging infrastructure. While this pathway will rightly receive considerable press, the pace of change will be too slow for some, while others will continue to oppose outright any effort to speed change in this direction.

Alas, as a mere mortal, I’m not privy to the final pathway – the great unknown. Thirty years is a long time, the pace of change is frantic, and peering into the ether is fraught with peril. And while I may not know the specifics of what lies ahead, I do know that adopting an agile mindset is increasingly necessary to overcoming future hurdles. Daniel Jarvis (DNV GL) did a fantastic job highlighting the challenges of implementing agile methodologies for utility programs while moderating the Data Analytics panel. TVA is a great example of a utility working to actively tear down silos and embrace agile methods for the goal of better-predicting load forecasts. After starting with a few customer clusters, TVA is expanding its analysis to create tighter segments that better serve all customers. Starting small, testing hypotheses, and scaling results based on real-world feedback, like TVA,  will be critical regardless of whatever path the industry ultimately wanders down.

Once again, I’d like to thank the AESP for including me on the closing plenary, and I look forward to working with all stakeholders in actively shaping DSM’s new epoch.

Contact us:

Nick Brod

Nick Brod

Business Line Director, PDI