In the biggest consumer energy story of the day, and perhaps the decade, the U.S. Supreme Court today upheld FERC’s jurisdictional authority in FERC Order 745. Read the Decision here (PDF). The so called Demand Response Rule permits consumer energy products and services, such as demand response, to participate in wholesale energy markets, and to receive full compensation for that participation at a level equal to traditional generators. So as Amory Lovins always maintained, a megawatt should be equal to a megawatt. Now that this principle has been firmly established in Federal law for the first time, the impact for consumers will be massive (hundreds of billions of dollars over the next 20 years) – for two reasons.
First, consumers will now have an opportunity to receive more value from the new energy technology they put into their homes and businesses. This is because a smart thermostat not only will lower your bills by more precisely controlling the amount of heating or cooling energy you use; it will also provide you revenue by being able to participate in demand response programs in the wholesale energy markets. This also applies to all other controls for appliances in the home, to solar PV systems on the roof, to batteries and even plug-in electric vehicles. And it applies not only to consumers in their homes, but businesses too. Large commercial and industrial (C&I) customers with the ability to bid demand response into the wholesale market are now assured the ability to do so, which will benefit the C&I customer and the system as a whole.
So the ruling today will be a tremendous boon for consumer side energy technology expanding opportunities for digital controls, solar PV, and battery storage. Making those technologies more valuable and therefore more affordable. And of course it is also a boon for providers of consumer side energy resource or distributed energy resources (DERs) like demand response companies and distributors of solar PV systems and the manufacturers of such products. Just look at EnerNOC’s stock, a demand response and DERs service company. Their stock shot up over 70% just today alone on the announcement of the Supreme Court decision.
The second consumer benefit today’s Court decision makes possible is the promise of significantly increased competition for both fossil fuel and other traditional central station generators from consumer side DER assets like demand response and distributed generation and battery storage. The introduction of these assets into wholesale markets will significantly drive down wholesale energy prices by billions of dollars each year. The wholesale energy market region in the Mid-Atlantic of PJM alone had estimated that demand response saved consumers in their market as much as $12 billion annually. Thus all consumers will benefit from the Supreme Court decision today. Not just those who can afford to install new energy technology. And globally, today’s ruling will also mean the expansion of more clean distributed resources and the reduction of carbon emissions from fossil fuel generation from central station power plants.