Energy Efficiency and Automated Demand Response Program Integration: Time for a Paradigm Shift

Christine Riker, Energy Solutions
Kitty Wang, Energy Solutions
Fred Yoo, Pacific Gas and Electric Company


The practice of Integrated Demand Side Management (IDSM), closely coordinating multiple demand side resources, can offer a more forward-thinking, smarter approach to building energy management, helping customers to maximize cost-effective savings and controls opportunities. While IDSM has been frequently discussed, many utilities are now pursuing innovative approaches to program design that allows for enhanced coordination among energy efficiency (EE) and Demand Response (DR) programs. This paper highlights opportunities, challenges, and lessons learned in implementing the IDSM aspect of the Pacific Gas and Electric (PG&E) Company’s Automated Demand Response (ADR) Program that can be translated to future IDSM utility programs across the country.

As peak demand pricing structures become commonplace, customers stand to benefit significantly from increased controls in their facilities, allowing them to curb load when it’s most expensive. Coupling a DR controls enhancement with an EE measure has the added benefits of (1) making otherwise costly controls, more cost-effective, (2) catering to capital budget timehorizons, and (3) potentially reducing administration complexities associated with separate projects. Unfortunately, barriers such as segregated incentive structures, and unaligned program goals for long term demand reductions versus demand flexibility, persist. The ADR program explored ways to improve program design and overcome these barriers including separate funding mechanisms for IDSM projects, streamlining measures, and facilitating trade ally, customer, and utility program coordination. This paper evaluates the efficacy of these methods and highlights the importance of integrating EE and DR into one incentive program instead of matching an EE program with a DR program.


Integrated Demand Side Management (IDSM) refers to the concept of integrating demand side (DSM) resources such as energy efficiency (EE), energy conservation, demand response (DR), advanced metering, and distributed energy resources such as renewables, distributed generation (DG), and storage. IDSM utility programs promote at least two of these resources instead of traditional utility programs which focus on only one resource at a time, which results in many missed opportunities for greater energy management.

Examples of IDSM Programs
While most utilities across the country are beginning to learn about the benefits of IDSM projects, only a few have moved forward with deploying IDSM programs. There are at least two other utilities besides PG&E that have designed IDSM programs that can also help to guide the design of future IDSM programs. The first is a pilot for the commercial sector by Southern California Edison and the second is a program targeting the residential sector developed by NV Energy.

Southern California Edison: Upstream HVAC and ADR Pilot
Southern California Edison (SCE) is conducting an upstream incentive pilot during 2013- 2014 that integrates automated demand responsive controls with the sale of high efficiency heating, ventilation, and air conditioning equipment. In an upstream program, incentives are provided to equipment suppliers such as HVAC distributors rather than “downstream” end user customers. While upstream incentive programs are not new, the authors are not aware of previous applications to ADR. The pilot will operate as a part of SCE’s current upstream HVAC efficiency program for commercial end use customers. Thus, the pilot is also an IDSM program, since it simultaneously incents energy efficiency and ADR to promote market adoption of qualifying HVAC equipment with ADR controls equipment. Results are pending conclusion of the pilot at the end of 2014. Key activities of the pilot include:

  • Working with existing upstream HVAC distributors and manufacturers to increase the technology availability of ADR-capable, high efficiency HVAC equipment: Qualifying HVAC equipment consists of unitary air conditioners, variable refrigerant flow (VRF) systems, and chiller systems.
  • Providing selected HVAC distributors and contractors with an upfront incentive for installing ADR-enabled HVAC equipment with pre-programmed DR strategies and configured to receive DR event signals from SCE. This incentive is layered on top of the incentive participants receive from selling energy efficient HVAC equipment;
  • Providing HVAC distributors and contractor participants with a bonus incentive payment for successfully enrolling the SCE customer in a qualifying DR program;
  • Providing information, tools, and training on benefits of DR and ADR to upstream market actors;
  • Testing multiple strategies for end user customer engagement and DR program enrollment by distributors and other market actors.

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