Demand response is one of the top challenges currently facing electricity markets, FERC Commissioner Jon Wellinghoff said last Wednesday.

It’s high on his list because “it’s so underutilized and has such great potential” to reduce demand and add flexibility to the power transmission grid, he said at Platts’ Northeast Power Markets Forum in Washington, DC.

“I define demand response very broadly,” going beyond the traditional load-interruption or load-shifting initiatives to include distributed generation and energy efficiency, Wellinghoff said.

Demand response is critical for electricity because, unlike in other energy markets (natural gas, for example), it cannot be stored to meet future demand, he noted. “Natural gas has storage. There are ways to make gas delivery more flexible.” But there are no ways to make electricity delivery more flexible, except for demand response alternatives.

“Demand response in essence is potential storage for the grid,” Wellinghoff said. Effective demand response can provide alternatives to new construction of transmission and power generation facilities.

He believes the barriers to distributed generation — micro-generation that is located at the load source — need to be removed. “What we need to do is break down those types of barriers so that distributed generation can be more pervasive.”

However, Wellinghoff noted that distributed generation falls within the jurisdiction of the states, not FERC. “I personally am very sensitive to state jurisdictions,” and would be “certainly interested in having collaborative discussions with states [on this issue], but I don’t believe in the heavy hand of the federal government,” he said.

To make demand response attractive, “we have to ensure that customers can see the full economic benefits of their actions,” he said. Customers don’t want to interrupt their load now because they don’t seen any economic benefits, he noted.

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.