CEA Demand-Side Management Strategies 4 — Questions and Answers
Question 1: A utility's integrated resource plan (IRP) treats DSM as a resource equivalent to supply-side generation primarily because:
- DSM programs are always cheaper than new power plants
- Negawatts from DSM can defer or replace capacity additions (Correct answer)
- Regulators require DSM budgets equal to capital budgets
- DSM eliminates the need for spinning reserves
Correct answer: Negawatts from DSM can defer or replace capacity additions
IRP treats DSM as a 'negawatt' resource because avoided demand can defer or eliminate the need to build new generation or T&D capacity.
Question 2: Which pricing structure charges customers based on their individual contribution to the system's highest peak demand period?
- Time-of-use pricing
- Coincident peak demand pricing (Correct answer)
- Critical peak pricing
- Inclining block rate pricing
Correct answer: Coincident peak demand pricing
Coincident peak demand charges are based on a customer's demand during the utility system's highest peak hours, directly pricing their share of capacity costs.
Question 3: Demand-side management programs for industrial customers most commonly target which end-use?
- Compressed air systems and motor drives (Correct answer)
- Office lighting systems
- Plug loads and electronics
- Domestic hot water heating
Correct answer: Compressed air systems and motor drives
Compressed air systems and variable-speed motor drives represent the largest electricity-consuming end-uses in industrial facilities and offer significant DSM potential.
Question 4: Under an energy efficiency portfolio standard (EEPS), utilities are required to:
- Install smart meters for all customers
- Achieve a specified percentage reduction in electricity sales through DSM (Correct answer)
- Procure a set amount of renewable energy
- Offset carbon emissions through efficiency credits
Correct answer: Achieve a specified percentage reduction in electricity sales through DSM
An EEPS mandates that utilities achieve a defined percentage reduction in electricity demand or sales through energy efficiency programs.
Question 5: When calculating gross savings from a DSM program, an evaluator should use which baseline?
- The customer's energy use before program participation
- What the customer's energy use would have been without the program (Correct answer)
- The building energy code minimum performance level
- Industry average energy intensity for the sector
Correct answer: What the customer's energy use would have been without the program
Gross savings are measured against a counterfactual baseline representing what consumption would have been absent the program intervention.
Question 6: Which of the following is a key limitation of real-time pricing (RTP) as a DSM strategy?
- RTP only applies to industrial customers
- Customers must have smart meters and the ability to respond to price signals (Correct answer)
- RTP always increases average bills for all participants
- RTP cannot achieve demand reductions greater than 5%
Correct answer: Customers must have smart meters and the ability to respond to price signals
RTP requires advanced metering infrastructure and customer automation or engagement to respond to volatile price signals, limiting its applicability.
Question 7: The 'rebound effect' (or takeback effect) in energy efficiency programs occurs when:
- Customers switch back to inefficient equipment after rebates expire
- Improved efficiency lowers operating costs, encouraging greater energy use (Correct answer)
- Utility rates increase after DSM programs reduce sales
- Efficient equipment degrades faster than standard equipment
Correct answer: Improved efficiency lowers operating costs, encouraging greater energy use
The rebound effect occurs when energy cost savings from efficiency improvements lead customers to increase their service consumption, partially offsetting the savings.
CEA Demand-Side Management Strategies 4
A utility's integrated resource plan (IRP) treats DSM as a resource equivalent to supply-side generation primarily because: