Balancing supply and demand on today’s electric grid is no easy task. With more extreme weather, economic growth, and intermittent renewable energy sources, levels of available power and the need for it can drastically change in an instant. Utilities need as much flexibility as possible to maintain a reliable grid and avoid outages all while global electricity demand is expected to grow by an average of 3.4% annually through 2026.
To overcome these challenges, utilities have implemented a strategy known as demand side management (DSM), which incentivizes customers to shift their energy demand in return for increased grid stability. EV fleet owners, fueling stations, and other charge-point operators (CPOs) have an opportunity to reap financial benefits by participating in these programs but require the right solution to do so. Here’s a closer look at how DSM works and how CPOs can reduce operational expenses and increase revenue by taking advantage of these utility programs.
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What is demand side management?
Demand side management is a critical component of modern energy systems. Through various tactics, utilities encourage customers to modify their level and pattern of energy consumption to reduce peak demand by shifting their usage to off-peak times, thereby enhancing the overall efficiency and reliability of the grid.
DSM encompasses a wide range of activities including load management practices, such as time-of-use (TOU) pricing and peak load shifting. TOU involves implementing pricing structures where electricity costs more during peak periods and less during off-peak times to encourage users to move demand. Peak load shifting asks users to implement energy storage systems and other technologies to shift demand by storing excess energy during low-demand periods and discharging it during peak times. Many utilities offer energy audits of commercial sites to help identify opportunities for energy savings and are willing to work with businesses to implement strategies to reduce peak demand by using battery energy storage systems (BESS) or adjusting electric vehicle charging schedules. Smart energy management systems can also integrate with utility APIs to enhance site electricity use.
DSM helps utilities reduce the need for expensive infrastructure investments in electricity generation, transmission, and distribution by optimizing existing systems to reduce the likelihood of congestion and potential outages. DSM also lowers greenhouse gas emissions and other pollutants by avoiding the need to turn on costly, fossil-fueled peaker plants and making better use of variable renewable energy sources like wind and solar, reducing curtailment. These measures help decrease electricity rates while transitioning to a more sustainable, cost-effective, resilient energy system.
Demand side management markets are expected to continue to expand, with the European market anticipated to grow at a compound annual growth rate of 12.6% through 2032.
How does demand side management differ from demand response?
Demand side management and demand response (DR) are both strategies aimed at optimizing energy consumption, but they differ in scope and focus. DSM encompasses a broad range of activities designed to improve overall energy efficiency, reduce consumption, and shift or lower peak demand through long-term measures. It includes energy efficiency programs, load management, and demand response initiatives, with the goal of achieving sustained reductions in energy use.
Demand response is a component of demand side management that focuses specifically on short-term and real-time adjustments in energy consumption in response to grid conditions or market prices. DR aims to enhance grid reliability by encouraging consumers to reduce or shift their electricity usage during peak demand periods or supply constraints. For example, utilities can adjust electricity prices based on real-time market conditions to incentivize users to lower or avoid grid consumption during high-cost periods or offer payments or incentives to those who reduce their electricity during peak demand events in response to utility requests.
How can demand side management optimize the operation of an EV charging site?
Implementing demand side management can significantly improve EV charging sites by enhancing efficiency, reducing costs, and supporting grid stability.
Energy efficiency
Adding energy-efficient charging equipment and infrastructure (like high-efficiency chargers, LED lighting, and smart thermostats) in EV charging facilities can reduce overall energy consumption. Retrofitting C-stores and other buildings with better insulation, energy-efficient windows, and HVAC systems can further reduce energy usage.
Load management
By offering TOU pricing, CPOs can incentivize EV owners to charge their vehicles during off-peak hours when electricity is cheaper. This helps to smooth out the demand curve and reduce peak load on the grid. Also, implementing smart energy management systems that can schedule EV charging during off-peak times can optimize energy use and lower costs by automatically shifting charging times based on grid conditions and electricity prices.
Demand response
Electric vehicle CPOs can also participate in demand response programs by reducing or shifting your site’s electricity consumption during peak periods in response to signals from the grid operator. This might involve temporarily pausing or slowing down charging during high demand times. By participating in these programs, you can receive financial incentives or payments from utilities or grid operators, which can help offset operating costs and provide additional revenue streams.
Energy storage integration
Integrating battery energy storage systems at EV charging sites allows storing energy during off-peak times and using it during peak periods. This can reduce your reliance on the grid during high demand and lower electricity costs. Furthermore, adding renewable energy sources like solar, along with an energy storage system, enables keeping excess energy generated during the day for use at night or during peak demand times, enhancing sustainability and cost savings.
Ancillary services
With advanced DSM strategies, EV charging sites can provide services to the grid, such as frequency regulation or voltage support, boosting grid stability and reliability. Also, implementing vehicle-to-grid (V2G) technology allows EVs to discharge energy back to the grid when needed, acting as distributed energy resources. This can provide additional flexibility and support for the grid while offering potential revenue for the charge point operator.
How does demand side management benefit EV charge point operators?
DSM allows EV charge point operators to optimize their energy consumption, reduce costs, support grid stability, and enhance sustainability, all while providing reliable and efficient charging services to their customers.
- Cost savings: By optimizing energy use and participating in demand response programs, CPOs can lower their operational costs and benefit from financial incentives.
- Improved grid reliability: Supporting grid stability through load management and ancillary services helps prevent outages and ensures a reliable supply of electricity for EV charging stations.
- Environmental impact: Enhanced energy efficiency and the integration of renewable energy sources contribute to reducing the carbon footprint of your operations and support sustainability goals.
- Customer satisfaction: Offering cost-effective and reliable charging solutions, supported by advanced DSM strategies, can improve customer satisfaction and loyalty.
How can EV charge point operators best leverage demand side management?
Smart energy management systems (SEMS) are crucial for EV charge point operators to effectively leverage demand side management. These systems provide real-time data, automation, and control, enabling operators to optimize energy usage, reduce costs, and support grid stability.
For example, SEMS continuously monitor the energy consumption of charging stations, providing detailed insights into usage patterns and identifying opportunities for efficiency improvements. By analyzing historical data and current trends, SEMS can predict future energy demand and perfect charging schedules accordingly.
SEMS can also automate load management by dynamically balancing the load among multiple charging points, ensuring optimal use of available capacity and preventing overloads. By automatically reducing or shifting charging loads during peak demand periods, SEMS help to lower energy costs and avoid demand charges. Additionally, SEMS can schedule charging sessions based on time-of-use pricing, ensuring that EVs are charged during off-peak hours when electricity rates are lower.
When it comes to demand response programs, SEMS can automatically adjust charging loads in response to signals from the grid operator, participating in DR programs without manual intervention. They can even calculate the financial incentives earned, helping operators maximize their revenue from DR activities.
Smart energy management systems like Sparkion’s empower EV charge point operators to take full advantage of demand side management and maximize efficiency, sustainability, and profitability. Sparkion’s SparkCore™ energy management system for EV chargers can connect with all site assets from electric vehicle stations to renewables, energy storage, and more for automated control and peace of mind for charge point operators.
