The report, prepared by FERC and a small army of consultants, finds that the potential for peak electricity demand reductions across the country is between 38 gigawatts (GW) and 188 GW, up to 20 percent of national peak demand, depending on how extensively demand response is applied. This can reduce the need to operate hundreds of power plants during peak times. In turn, that could eliminate the need for roughly 2,000 peaking power plants, improve system reliability, and reduce greenhouse gas emissions.

The assessment, "A National Assessment of Demand Response Potential" identifies 25 regulatory, technological, and market barriers to achieving the estimated savings. Recommendations to overcome these barriers include customer education, coordination of programs at the wholesale market level, and the development of technical and open communications standards.

Quick take

Watch for some interesting business models and mergers in the year ahead. Demand response has proven to be highly effective in selected utility territories. Today, with few exceptions, demand response is being done in a way that will not penetrate a critical mass of commercial ratepayers, much less the residential or industrial peak loads that utilities would like to manage. This long-awaited report quantifies the potential and makes the data public. It should give hundreds more utilities the evidence they need for rapid adoption of demand response. That, in turn, will add certainty to markets for enabling technologies that make demand response efficient and accepted. Given the need to deploy inherently intermittent energy sources, demand response is a peak load management technique our utilities and ISOs/RTOs must master.

Download the PDF of the report from FERC (15mb)

Read FERC's statement about the report.