Demand Response Can Lower U.S. Peak Demand by 20% If Barriers can be Overcome According to Study Led by the Brattle Group

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Cambridge, MA, June 19, 2009. A report filed today with the U.S. Congress and prepared by a team of economists led by The Brattle Group finds that full-scale deployment of demand response programs can lower U.S. peak demand by 20 percent. The report was commissioned by the Federal Energy Regulatory Commission (FERC).

The report draws upon a variety of data sources to estimate demand response potential for each of the 50 states and the District of Columbia under four scenarios. Overall, it finds that the implementation of demand response can potentially reduce U.S. peak demand by 150,000 megawatts (MW) by 2019, or approximately 20 percent of national peak demand. This would eliminate the need for roughly 2,000 peaking power plants, lowering electricity bills, improving system reliability, and reducing greenhouse gas emissions.

“Demand response is a relatively untapped resource in our nation’s energy portfolio. There are many possible ways in which its potential benefits can be realized. This report provides a useful reference point for decision makers who are currently searching for the best pathway to the future in a resource-constrained world,” said Dr. Ahmad Faruqui, a principal of The Brattle Group and lead economist on the study.

[an error occurred while processing this directive] The report’s state-level findings provide a unique perspective on the geography of demand response and highlight regions that have developed demand response programs and those that have substantial untapped potential for demand response. The report is accompanied by a model that can be used by states, utilities, and other interested parties to design, assess, and refine their demand response policies.

The study also 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.

The report, “A National Assessment of Demand Response Potential,” was prepared for the FERC by The Brattle Group, Freeman, Sullivan & Co., and Global Energy Partners, LLC. The executive summary and full report can be found at www.brattle.com or at www.ferc.gov.

The Brattle Group provides consulting services and expert testimony in economics and finance to corporations, law firms, and public agencies worldwide. Areas of expertise include antitrust and competition, valuation and damages, utility regulatory policy and ratemaking, and regulation and planning in network industries. For more information, please visit www.brattle.com.

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