Mind the Gap: Coordinating Energy Efficiency and Demand Response

Updated abstract for my work with Kyle Cattani and Owen Wu:

Traditionally, energy demand-side management techniques, such as energy efficiency and demand response, are each evaluated in isolation. In this paper, we examine the interactions between long-term energy efficiency upgrades and daily demand response participation at an industrial firm. We find that energy efficiency and demand response act as substitutes in terms of reduction of peak electricity demand, and the long-studied energy efficiency gap between firm-optimal and societal-optimal levels of energy efficiency is smaller when demand response is considered. Using a representative model of the firm’s production and the society’s energy generation, we derive insights into the optimal choices of energy efficiency installation and demand response participation from both the firm’s and societal perspectives. We suggest three approaches to reducing the energy efficiency gap, including an original suggestion that relies upon the interactions between energy efficiency and demand response.

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