Our demand for electricity in the 21st century is ambitious, considering that the current electric grid was designed more than a hundred years ago. Enter the smart grid.
The smart grid is a modernised electrical grid which completely changes the game. It encompasses a variety of operation and energy measures. Demand response (DR) is one of them.
DR provides an opportunity to the consumer to reduce their electricity usage during peak periods and generate energy themselves. This leads to great savings in energy consumption and expenses.
DR programmes are being used to balance supply and demand. These programmes can lower the cost of electricity in wholesale markets consequently leading to lower retail rates.
As it is all about increasing flexibility and savings, advancements in technology are apparent. Technological advances are incorporated in both mass market and commercial & industrial (C&I) demand response programmes.
While developments are happening in both, the C&I market segment contributes to the majority of the total DR capacity.
Let’s look at what the numbers say.
Steady Growth in Investment
The data gathered from our pool of over a million companies in tech & innovation provides valuable insights, and can help predict future trends and support a better understanding of the market.
The DR market is still in the early development phase, especially in the EU, where regulations restrict the growth. However, it’s only going to increase in popularity as we go foreward.
The US market, which has developed the furthest, is expected to reach $18 billion in revenue by 2022. One of the reasons for this success in the US is the Supreme Court ruling in favour of demand response.
The market growth will surely continue as long as further policies and legislations are adopted to support it. Nevertheless, the market has experienced positive growth over the last ten years and is likely to remain on the same trajectory.
We broke the investment profile down into industry verticals to discover more information about the market.
As the energy sector is heavily oil-focused, we decided to exclude companies operating in the oil industry. This diminishes the energy production and storaging verticals a great deal but also gives us a better understanding of the demand response market.
The main industry verticals can be seen below and the top three are: software, energy equipment & electrical equipment.
These three are further discussed after the graphs.
The Three Main Trends in Demand Response
Of the three, this industry vertical gathered the most investment and had the most interesting solutions. This comes as no surprise, as to be able to implement such a complex system, powerful smart software is needed for support.
A variety of different kinds of software is included, such as: realtime energy intelligence, virtual power plants, frequency controls & energy trading platforms.
DR systems rely heavily on consumers. For these systems to function, consumers need to have basic knowledge about the topic. It should also be easily approachable and comprehensible. This is where different software comes into play.
Demand response management systems are critical components for both consumers and electrical utilities. This linkage is necessary for the required synergy between the two.
Power equipment consist of an array of tools that are used to create, manage and distribute energy.
Although software is obvisously important, hardware is also required for DR systems to function. Equipment in this area includes things like: microgrid control systems, electrical conversion systems & grid stability technology.
For DR systems to gain their full potential, consumers need to be able to conveniently control their energy usage. This is possible with the right set of tools.
Although the two might sound similar, the terms power equipment and electrical equipment are not interchangable. They might occasionally overlap but in this context there is a difference.
The electrical equipment used in demand response include things like electronic voltage regulators, plug load control systems & electrical disturbance management.
They are an important part of the puzzle and we are likely to see advancements in the coming years.
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