Institutional and contextual drivers of and barriers to incentive-based demand response: A comparative case study in the Pacific Northwest

Anna Devenish

Utilities Policy, 2023, vol. 84, issue C

Abstract: Despite demand response (DR) having great potential for improving the functioning of the electrical grid, it remains underutilized as a peak-load management strategy in the U.S. electricity sector. This research employs a comparative case study to examine institutional and contextual drivers of and barriers to incentive-based DR development by investor-owned utilities. The results show that state utility regulator rulings facilitated DR within the rate-of-return regulatory framework, which tends to incentivize investment in supply-side resources. This approach represents a case of institutional layering, in which new rules supplement the existing ones rather than replace them. The findings suggest that DR remains a highly technical policy area with limited public awareness. The results show that winter DR programs are a novel challenge, which has important implications as heating becomes increasingly electrified and the need for integrating renewables increases. The study discusses the importance of Information and Communication Technologies and automation in advanced forms of DR but draws attention to the risk of uneven distribution of benefits brought by these technologies. Finally, the study describes the synergistic effects of combining the benefits of energy efficiency and DR programs.

Keywords: Incentive-based demand response; Utility regulation; Institutional change; Electrical grid flexibility; Energy justice (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:84:y:2023:i:c:s0957178723001571

DOI: 10.1016/j.jup.2023.101645

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