Managing electricity demand

Managing peak electricity demand is one of the biggest challanges for electricity utilities across the world. Massive investments are made in constructing and maintaining peaking power generation plants to meet this peak demand. In the circumstances, one of the primary objectives of recent initiatives like that for a smart grid is to manage peak demand through triggering off demand response in consumers by incentivizing them to reduce their consumption at peak times using variable tariffs.

A French energy demand management company, Voltalis, has come up precisely such a solution and have installed these devices in over 5000 such consumers across the country. Voltalis installs electricity management devices in private homes and businesses and then manages their use for a fee. This will enable consumers minimize their electricity bills, by keeping consumption low when the demand and prices are at their highest, and manage peak demand to the benefit of the grid as a whole. Voltalis says that its "distributive load shedding" technology can save users as much as 10% on their electricity bills and save power producers billions in investments in new plants used only to meet peak demand.

Voltalis’s Bluepod boxes, free to consumers, plug into the home electrical panel and communicate back to the company’s computers by Internet. When, for example, summer demand on the electrical grid nears a peak, the system would automatically turn off air-conditioners for hundreds or thousands of consumers willing to give up the coolers for a short time to avoid the need for additional electrical production to come on line.

However, in a surprise decision, the French Energy Regulatory Commission (CRE), has directed Voltalis to pay generators for the power its actions end up saving instead of being paid by generators for reducing consumption and maintaining supply and demand equilibrium during peak demand times. The CRE ruled that Voltalis should pay the power company because "its service would not be possible without the producer maintaining production".

The decision has been criticised as being an exmaple of how entrenched interests within the sector do not allow newer technologies to emerge. Électricité de France, the leading state-owned generator, has taken tentative steps of its own toward the distributed load shedding technology, and may have forced the regulators hands so as to nip off any competition.