The grid-saving power of demand response

The article was originally published in FORESIGHT Climate & Energy.‍

The advent of mainstream electric vehicle (EV) adoption brings new sustainability opportunities alongside challenges to the power grid. But, according to Torben Fog from EV charging platform Spirii, there is an innovative—and profitable—solution at the intersection of these conflicting factors

Demand response services are vital to reaching Europe’s net-zero goals

To say there has been a surge in EV popularity over the past years is a bit of an understatement. But alongside its many benefits, we know that such a surge comes with its fair share of challenges. In this case, energy usage.

Right now, we are seeing the largest shift in electricity consumption since the invention of air conditioning more than 100 years ago. Naturally, all this additional power demand presents complications—especially during peak usage periods.

Grid stress and peak power demand issues, while nothing especially new, are now being magnified in the face of this growing EV market. Complicating matters is a simultaneous shift toward renewable energy sources, such as wind and solar power, which brings even more complexities.

Unlike traditional power sources, renewable energy supply is variable, making the task of managing high-demand periods more complex and difficult to predict.

So, we have a complicated junction to navigate—one where user demand, variable energy supply, legislative changes and sustainable intentions are all jostling for position. It is at this junction that demand response offers a potential solution.

STABILISING THE GRID

Demand response is all about balancing supply and demand—with the second of those two words being the most important.

Handling supply and demand in the past has conventionally meant increasing the former to meet the latter, boosting the electricity supply to handle peak needs. But this is a costly and inefficient strategy, and it is how we end up with overinvestment in power plants and other infrastructure that sits idle during off-peak periods.

So, instead of focusing on the supply, demand response programs target the demand side of the equation. They aim to alleviate grid stress and manage peak power demand by incentivizing energy users to adjust their energy loads during high-demand periods.

In the case of EVs, demand response can be leveraged to shift charging to off-peak hours or dynamically adjust consumption based on the grid owner’s demand. This strategy effectively distributes demand, thereby alleviating stress on the grid.

RESPONDING FOR REVENUE

Demand response not only mitigates the stress on the power grid but also circumvents the need for costly upgrades to energy infrastructure.

It is a prime example of how emerging technology can solve age-old problems without requiring vast capital investment.

But there is another upside here: new financial opportunities at pretty much every level of the value chain.

Charge point operators can generate additional revenue by scaling their usage and being compensated for doing so by suppliers, grid operators and government agencies.

And that money can even be passed on to end users. In the example above—where grid operators and utilities ask users to reduce their electricity usage—demand response can enable charge point operators to offer their customers financial incentives or alternative benefits in return.

A WIN-WIN SOLUTION

It is not often in the energy sector that a genuine win-win innovation enters the fray, but the potential benefits of demand response mean it capably fits that bill.

For grid operators and utilities, demand response offers a cost-effective and efficient solution to manage peak power demand and mitigate grid stress, without the need for prohibitive infrastructure upgrades. For charge point operators in the EV space, it offers the opportunity to generate additional revenue, which can also be passed on to the end user.

But things need to accelerate. To align with the International Energy Agency (IEA)’s Net Zero Emissions by 2050 Scenario, we collectively need to ramp up the pace of both policy implementation and technology deployment.

The good news here is that there is notable progress being made. In October 2022, the EU approved a new plan for digitalizing the continent’s energy systems. Demand response readiness—including open access to data and codifying its various procedures—forms a large part of that plan.

STEPPING STONE

But there is still a long way to go. The Net Zero Scenario projects that the market will need to incorporate 500 gigawatts of demand response capacity by 2030, representing a tenfold increase from the deployment levels seen in 2020. This is a lofty aim and things are currently running behind schedule.

The target is possible—we just need to help decision-makers see and unlock the many benefits of the technology.

Ultimately, demand response is more than just a potential energy supply solution; it is a robust stepping stone on our journey toward a more sustainable future.

This future can only come to pass if we work to ensure that renewable energy and EVs coexist without putting undue stress on our power infrastructure. And that coexistence relies on levelling up our energy systems with this new wave of digitally intelligent architecture.