The US economy is three times larger than China’s, yet when it comes to developing a clean energy industry, China keeps besting us. The US came in second – again – to China this quarter in Ernst & Young’s much-watched renewable energy ranking released February 28.
But there is one clean energy segment where the US leads: demand response.
Demand response comes into play when there is high demand for power straining the electric grid, usually hot summer days. Utilities or grid operators give factories and other businesses a payment in return for decreasing their energy use during these peak periods. As a result, demand response not only averts blackouts, but also saves us money, since it is far cheaper to conserve energy when the grid is strained than it is to generate more power.
An American-grown industry, demand response is now gaining international attention. EnerNOC, a Boston company that provides demand response services, finds itself increasingly explaining the concept abroad, according to Gregg Dixon, senior vice president of marketing and sales. The company now serves about 12,000 businesses, colleges, hospitals and other large energy users, not only in the US, but also in Canada, the United Kingdom, Australia and New Zealand.
Other demand response companies, Comverge, Johnson Controls, Silver Spring Networks, Wipro and Honeywell, also report international expansion, according to Pike Research, which expects the $1.3 billion global market for demand response to see a compound annual growth rate of 37% by 2016.
So demand response is clearly a success story, at least when it comes to reducing use of energy by companies and large institutions. The next frontier for demand response is the homeowner. And unfortunately, that might be a tougher market to crack. The average person shows little interest in taking the time to cut back on energy use during peak periods.
“The concept from an economist’s point of view makes sense. But unless it is managed for us in a very simple way, I just don’t see people using it. And I’m a zealot on this stuff,” Dixon said.
A recent report by the American Council for an Energy-Efficient Economy underscores the problem. It turns out homeowners aren’t saving a lot of energy, even when new energy gadgets give them real-time feedback on the costs.
These home gadgets, which include display monitors, smart meters, and web interfaces, are meant to encourage people to cut back during peak periods, when energy prices are high. But ACEEE found homeowners achieved only a 3.8% overall savings in nine pilot programs it studied. Four of the pilots showed peak period savings of up to 11.3%. The programs were conducted in the US, UK and Ireland.
There is, however, one intriguing exception, a group that does respond. ACEEE isn’t quite sure who they are, but calls them cyber-sensitives. They do not fit into any one demographic box; they are not a certain age or income. But they represent a swath of the population that achieves energy savings of up to 25% when given devices that offer them real-time feedback on their energy use.
Some in the energy industry believe household demand response will never be accepted beyond the cyber-sensitives. Others see this group as a starting point for further study that may reveal what encourage us to save energy, whether it is costs, comforts, green altruism or even an emotional or intuitive response to technology, says ACEEE.
It’s hard not to draw a parallel between these energy information gadgets and the early days of personal computers. At first the computer was viewed as a device that would largely be used in business, much as demand response is today. Then came Steve Jobs and we all know the rest of the story. If demand response companies can capture the attention of households, as they have businesses, maybe the US will find its got its new Apple.
Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.