Estimating Demand Response Market Potential Among Large Commercialand Industrial Customers:A Scoping Study

Demand response is increasingly recognized as an essential ingredient to well functioning electricity markets. This growing consensus was formalized in the Energy Policy Act of 2005 (EPACT), which established demand response as an official policy of the U.S. government, and directed states (and their electric utilities) to consider implementing demand response, with a particular focus on price-based mechanisms. The resulting deliberations, along with a variety of state and regional demand response initiatives, are raising important policy questions: for example, How much demand response is enough? How much is available? From what sources? At what cost? The purpose of this scoping study is to examine analytical techniques and data sources to support demand response market assessments that can, in turn, answer the second and third of these questions. We focus on demand response for large (>350 kW), commercial and industrial (C&I) customers, although many of the concepts could equally be applied to similar programs and tariffs for small commercial and residential customers.