Forget what you knew about demand-side management

November 30, 2015

By Abby Karp

Global behavioral and analytical DSM spending is expected to grow from $214.7 million in 2015 to $2.5 billion in 2024

— Navigant Research

Demand-side management (DSM), the modification of energy demand through efficiency or conservation measures, covers a wide range of practices. DSM is considered effective if it reduces energy use or shifts energy consumption to occur at off-peak times. Utilities are increasingly willing to pay for DSM programs as an alternative to increasing power plant generation during peak consumption hours. And with peak demand charges accounting for up to 40% of an organization’s utility bill, having an effective DSM strategy is critical.

DSM: The Old Way

Energy efficiency, demand response, and dynamic demand are the most common types of DSM. These categories (respectively) encompass practices like upgrading to Energy Star rated appliances, shifting non-critical energy use from peak use periods, and delaying appliance operating cycles. Each of these traditional categories is faced with unique obstacles. Pursuing energy efficient building retrofits and upgrades is costly and typically associated with a long payback window of 5-10 years or more. Utility demand response programs can be effective, but are working to shake a reputation for unreliability; California’s Flex Alert program in 2013 found no significant reduction in energy use, and an academic article last year found that consumers increased energy use in response to utility calls for conservation broadcast by the media. Dynamic demand will have greater potential if consumers are able to embrace shifting appliance cycles by longer periods of time; in current practice, delays are limited to only a few seconds in order to avoid disrupting the end user.

DSM: The New Way

Two relatively new categories of DSM have recently gained traction in efforts to change energy use: behavioral and analytical demand-side management. Behavioral DSM refers to management of the individual energy behavior of direct consumers, whereas analytical demand-side management focuses on the actions people take to alter energy use as a result of data analysis and equipment monitoring. Spending on behavioral and analytical DSM in 2015 was recorded as just $214.7 million, but a new report by Navigant Research predicts that global spending on these two types of demand-side management will exceed $2.5 billion in 2024.

The exponential growth rate of spending on behavioral and analytical DSM is not going to take place in the traditional spheres of demand response and appliance upgrades. Behavioral DSM, focused on the power of individual action, targets building occupants directly. Behavioral DSM is achieved through consumer education and occupant engagement programs, and thus spending on an organizational level will center on tools to motivate building occupants to save energy. Analytical DSM, on the other hand, targets facilities users. Examples of analytical DSM are using building energy consumption data to identify scheduling inefficiencies or faulty equipment. Spending on analytical DSM will focus on cutting-edge technology that allows building staff to monitor, visualize, and analyze their systems and equipment.

As resource data availability and software analytics become more commonplace and organizations shift from having monthly data to interval (or real-time) data, the opportunity to pursue savings through behavioral and analytical DSM skyrockets. A Fortune 100 Media company and Lucid customer exemplifies the power of data for analytical DSM. A few years ago, their team had little visibility into their buildings' resource data and decided to use BuildingOS to manage their portfolio-wide energy use. The completion of their data integration immediately expanded data visibility from a single person to a cross-departmental team, allowing their facilities team to dig into the performance of their buildings. A closer look into their sub-meter data revealed scheduling inconsistencies in three key buildings. By setting a more narrow, consistent HVAC schedule and adding a temporary control override device to their central building controls, their team reduced energy use in those three buildings by 27%, equivalent to $90,000 worth of savings.

Why Integrated is Better

In today's dynamic energy landscape, focusing one's time and effort on just one type of demand-side management program may not be worthwhile. A strictly behavioral DSM approach may yield single-digit percentage energy savings, but it may be unreliable as well. The same amount of effort can be spent investing in tools that allow one to pursue both avenues of DSM, enabling greater savings with the same investment. Aurora Public Schools demonstrates this comprehensive approach through their use of BuildingOS across their whole organization. Their Energy Manager and Facilities Director use BuildingOS to manage and monitor a portfolio of 66 buildings. Their faculty use it as a curriculum resource, while students use it as an awareness and engagement tool. The same tool allows faculty, students, and staff to identify opportunities for energy savings relevant to their respective roles.

The future of energy efficiency and conservation doesn't lie in a single type of program; rather, it is an integrated approach to demand-side management that will be most successful.

Abby Karp

Abby joined Lucid’s marketing team in 2014 after conducting research on the decision-making processes of environmental behavior. Abby graduated from Middlebury College with a degree in Environmental Studies and Conservation Psychology.