Demand Side Management

What is Demand Side Management?

Demand Side Management (DSM) is a strategy electric utilities use to control electricity demand by incentivizing customers to modify their energy consumption patterns during peak hours or reduce their overall energy consumption.

A DSM program typically offers the customer a monetary incentive to reduce demand. This could come in the form of subsidies for purchasing energy-efficient equipment such as heat pumps for residential consumers or replacing aging industrial equipment for commercial customers. Incentives also take the form of lowering rates for customers that reduce electricity demand during peak hours by shifting consumption to off peak hours when more electricity is available.

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DSM programs are a win-win-win. They give utilities more flexibility in balancing the supply and demand of energy while financially compensating participating customers for changing energy consumption behavior. And the planet benefits when utilities can avoid building more CO2-emitting power plants and use DSM to compensate for the variabilities in solar- or wind-sourced electricity.

Why is Demand Side Management important?

By managing the timing of demand and reducing demand overall on the customer’s side of the meter, the utility can avoid having to increase supply. Increasing supply is costly — a cost passed on to customers in the form of high rates for peak demand hours — and typically increases CO2 emissions. Utilities can increase supply by purchasing electricity on the open market, activating stand-by generation resources, or investing in grid upgrades.

What is Demand Response and how is it different from Demand Side Management?

Demand Response, also called Demand Side Response, is an energy flexibility program for business and commercial customers that is one tool in the Demand Side Management toolbox. A participating commercial electricity customer agrees to reduce electricity demand when asked to do so, in exchange for some form of compensation. Participants are able to monetize flexible energy use, while utilities gain a more reliable grid, avoid outages, and defer the need to increase electricity generation.

Why is Demand Side Management important in EV charging operations?

The growing adoption of electric vehicles (EVs) and the build-out of EV charging infrastructure introduce a new source of significant electricity demand on the grid. Large-scale EV charge point operations, business and municipal fleet depots, workplaces, multi-dwelling units, and large parking operations that offer EV charging, are significant consumers of electricity. Demand Side Management programs like Demand Side Response offer a way for EV charging providers to reduce costs, monetize flexibility, reduce the impact of peak demand on the grid, and participate in assuring grid stability while supporting environmental strategies and aiding in CO2 reduction.

What role does smart energy management for EV charging play in Demand Response?

Smart energy management software uses advanced algorithms to provide near real-time load balancing to dynamically distribute energy to and from the grid. This helps prevent spikes in demand that can significantly impact costs or trigger demand charges.

The smart EV charging energy management system can receive notifications from the grid operator or utility and moderate the site’s use of electricity to comply with the Demand Response program commitments. It does this by reducing the charging capacity of individual charge points and lengthening the time to charge plugged in vehicles, while making sure that all vehicles get enough charge for planned operations.

The system can also draw on onsite renewable energy sources such as solar panels or onsite batteries, blending these power sources with allowable power from the grid to charge vehicles during peak times when grid power is restricted. These capabilities can be fully automated or managed manually.

Can EVs themselves play a role in Demand Side Management?

With smart energy management and vehicle-to-grid (V2G) capabilities, EVs can act as “batteries on wheels.” Energy stored in EV batteries can be sent back to the grid during peak hours to supplement demand or compensate for variations in solar or wind generation. For example, fleets of school buses are parked during late afternoon/early evening hours when demand spikes as people return home, turn up the heat or air conditioning, and use appliances. They can supply energy to the grid, and then replenish the battery charge overnight while electricity costs are cheaper.

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