How much DSM is really there?: A market perspective

Abstract

Numerous studies over the years have estimated the extent of utility demand-side management (DSM) activities. These estimates have been based on assumptions consistent with a traditional, regulated utility environment. However, with increasing electric utility competition, deregulation, and the disintegration of vertically integrated utilities, it is appropriate to ask, how much of the previously forecast DSM remains. This article explores this question by reviewing recent forecasts of traditional utility DSM and the assumptions on which these projections were based. Our discussion continues by defining market based DSM and how it differs from traditional utility DSM programmes. We then present several forecasts of DSM for the future and discuss why these forecasts differ from past projections of utility DSM. As part of our analysis, we review the manner in which nonutility providers have delivered and continue to deliver energy efficiency services to their customers. We conclude that even though traditional DSM activities will shrink significantly as utility markets become increasingly competitive, the provision of energy efficiency services will be an increasingly important part of competitive retail service.