Activating electricity system demand response for commercial and industrial organisations

ABSTRACT

With the rapid uptake of renewable energy generation and increasing price volatility, there are multiple opportunities emerging for businesses to earn additional revenue and reduce electricity bills by implementing demand response. However, commercial and industrial consumer implementation of demand response is not well understood and largely absent in energy management guidelines, which focus on reducing energy consumption and driving energy efficiency. Based on interviews with managers from 24 commercial and industrial businesses, we describe a practical implementation framework for demand response. The framework identifies unique implementation features for demand response - the activation steps. Energy management guidelines may have underemphasised approaches to demand response and inclusion of its unique features for businesses because benefits to be gained from demand response have focussed on benefits for the utilities in the electricity system, not benefits for individual businesses. The article concludes there is an opportunity for market operators to encourage organisations who produce energy management guidelines to include demand response, to promote awareness of the opportunities for businesses and provide practical guidance for implementation, therefore providing support for greater renewable energy penetration and reduced energy costs for businesses.

KEYWORDS:

• Demand response
• flexible demand
• demand management
• commercial andindustrial consumers
• energy management

Introduction

Electricity systems are currently undergoing disruption as societies seek to decarbonise in line with required action against climate change. Increased investment in renewable energy is challenging the reliability and security of electricity systems due to the variable nature of electricity generated through renewable sources (EU 2013; REN21 2020). This variability makes increased system flexibility critical to balancing changes in supply and consumer demands (AEMO 2020; AER 2020), a situation further challenged by the displacement of fossil fuel generation, the traditional supplier of system flexibility services (Papaefthymiou, Haesen, and Sach 2018). The search for cost competitive sources of flexibility is crucial to maintain system reliability (ECF 2011; IEA 2014).

Consumer demand response is one option for maintaining system reliability by balancing demand and supply (ECF 2011; IEA 2023). Demand response involves consumers changing their electricity consumption in response to an external signal, such as price or notification from a retailer, aggregator, or utility (Pinson and Madsen 2014; Siano 2014). Consumers can elect, or not, to change their electricity consumption by increasing or curtailing use of plant, equipment, or appliances, or by using onsite generation or storage e.g. solar photovoltaics, generators, or batteries. Significant benefits arise for all consumers through consumer demand response programs including improved system reliability.

Traditionally, demand response has been used by utilities to provide balancing services helping to avoid forced load shedding during peak demand periods where demand exceeded supply, and also delaying the need for upgrades to networks to meet peak demand, thereby reducing overall network costs (ACCC 2018; Martínez Ceseña, Good, and Mancarella 2015; Strbac 2008). More recently, with the increase in renewable generation and variable output during different weather conditions, utilities and regulators are recognising the potential to use demand response to balance demand and supply (IEA 2023). In addition to providing benefits for the electricity system and therefore all consumers, consumers participating in programs receive direct financial benefits from incentive payments or savings on electricity bills.

As large consumers of electricity, commercial and industrial (C&I) consumers hold significant potential to provide such services and financially benefit from participation in demand response programs. Although some have been participating in demand response programs to balance supply and demand during peak demand periods (Cappers, Goldman, and Kathan 2010; Torriti, Hassan, and Leach 2010), increased engagement will be required to meet the challenges going forward within a renewable intensive market. Whilst the benefits of demand response are recognised; opportunities are mainly limited to supply of emergency reserves and short term markets (IEA 2020). Therefore opportunities for demand response are increasingly being investigated for C&I consumers, with trials being funded and rule changes investigated, and in some cases implemented, to encourage greater participation. For example, to encourage more demand response providers in the Australian National Electricity Market, a wholesale demand response mechanism was introduced in 2021 to enable C&I businesses to bid into the wholesale market alongside generation. This rule change followed an extensively funded trial, which included C&I focused programs not only to develop capability but also to demonstrate reliability of demand response in providing flexibility services (AER 2020). Another example of changes in markets to encourage demand response participation is in the United States. PJM Interconnection, which operates the electricity market along the east coast, is recognised as a leading regional market for demand response participation (IEA 2020). Since the introduction of demand response to provide emergency reserves in 2000, market rules have been undergoing review and have been refined to enable more participation in wholesale markets (Brown et al. 2019). Policy changes also took place in the European Union in 2019, with changes to the Electricity Directive and Electricity Regulation to facilitate businesses and households to participate in all electricity markets to provide demand response. The changes address a number of barriers including unequal treatment of demand response compared to generation, unclear price signals, the role of aggregators, and data management (Brown et al. 2019; Regulation 2019/943 of the European Parliament and of the Council of the European Union, 2019).

Rule changes and trials are important steps in helping to remove some of the regulatory barriers and in raising the profile of demand response for C&I consumers. However, they do not provide practical guidance that C&I consumers might need to implement demand response within an operational context. A range of guidelines exist to help businesses assess, develop, and improve their energy management practices. While focusing on energy use, consumption, and efficiency, these guidelines fall short of what is needed to strengthen organisations’ engagement in demand response programs.

This research aims to address this gap by empirically examining C&I consumers’ engagement with demand response programs. Specifically, it examines how C&I organisations have implemented demand response. The scope of this research focuses on C&I consumers rather than residential consumers, because C&I consumers have different consumption patterns and equipment which merits research adapted to this consumer segment.

The article presents background research on energy management guidelines and the alignment (or not) of demand response with these guidelines. Next, it presents the results of detailed qualitative research undertaken with 24 C&I organisations. Based on the results of the qualitative research, a framework for implementation in C&I organisations is described, highlighting the activation step. The article concludes with a discussion of the potential opportunities to integrate the unique implementation aspects of demand response within existing guidelines to promote, encourage, and support C&I businesses to participate in demand response programs.

Background

Guidance for C&I organisations implementing demand response

Many aspects of demand response relating to C&I organisations are covered in the literature. This includes identification of motivations and barriers (Aghaei and Alizadeh 2013; Albadi and El-Saadany 2008; Annala et al. 2018; Cappers, Goldman, and Kathan 2010; Cardoso, Torriti, and Lorincz 2020; Good, Ellis, and Mancarella 2017; Nolan and O’Malley 2015; Paterakis, Erdinç, and Catalão 2017; Shafie-khah et al. 2019; Shoreh et al. 2016; Torriti, Hassan, and Leach 2010; Wohlfarth et al. 2019), decision making processes for participation (Alipour, Mohammadi-Ivatloo, and Zare 2014; Mohagheghi and Raji 2012; Sianaki and Masoum 2013; Sun and Li 2014), and modelling C&I demand response participation scenarios that integrate renewable energy sources into electricity systems (Eghbal, Saha, and Mahmoudi-Kohan 2011; Mahmoudi et al. 2017; Nguyen, Zhang, and Zhang 2016; Nikolic, Negnevitsky, and Groot 2016; Qin et al. 2019; Rahman et al. 2016). However, with the exception of one guideline which was identified in the grey literature, published by Better Building Partnership, Sydney, Australia (Better Buildings Partnership 2020), there are no explicit guidelines to assist C&I businesses to implement demand response which the authors are aware of. The Better Building Partnership guideline provides practical information about how to identify and assess opportunities for demand response in commercial buildings located within Sydney, Australia.

Guidance for C&I organisations implementing energy management

In the absence of such guidelines appearing in the literature, the search was broadened to guidelines relating to implementing energy management. Schulze et al. (2016) defined energy management in industrial businesses as ‘comprising the systematic activities, procedures and routines within an industrial company including the elements of planning, implementation, controlling, organisation and culture, and involving both production and support processes which aim to continuously reduce the company’s energy consumption and its related energy costs’.

Many governments and non-government organisations promote energy management. Predominantly, there has been a focus on energy efficiency to reduce energy consumption, due to increasing societal pressure for businesses to act more sustainably (J. Yin 2017). In response, a range of guidelines for development, implementation, and assessment of energy management for C&I businesses have been published primarily by non-government organisations and energy academics. Energy management guidelines which include implementation processes have been identified in the peer reviewed and grey literature. These guidelines are summarised into four categories: frameworks and models, standards, accreditation programs, and industrial guidelines and tools.

Frameworks and models

Several energy management frameworks and models for C&I organisations were identified. One of these, an energy management implementation framework for industry, developed by Schulze et al. (2016), was derived from a systematic review of energy management literature. This conceptual framework describes processes for energy management grouped under five themes: strategy/planning, implementation/operation, controlling, organisation and culture.

The literature also revealed a group of models developed by academics, termed energy management maturity models. These models enable organisations to assess their energy management against a set of prescribed criteria and provide a pathway for ongoing improvement (Antunes, Carreira, and Mira da Silva 2014; Benedetti et al. 2019; Finnerty et al. 2017; Introna et al. 2014; Jin et al. 2021; Jovanovic and Filipovic 2016; Ngai et al. 2013). These maturity models can be designed specifically for particular energy sources e.g. compressed air (Benedetti et al. 2019), or for geographic regions e.g. China (Jin et al. 2021), or industry sector types e.g. manufacturing (Jovanovic and Filipovic 2016), or multi-site organisations (Finnerty et al. 2017).

Standards

Voluntary standards provide a framework for the development and implementation of energy management. For example, ISO 50001:2018 (International Organisation for Standardization 2018) and ISO50004:2020 (International Organisation for Standardization 2020), published by the International Standards Organisation and being applicable internationally, are arguably the most recognised. These standards follow a plan-do-check-act framework to prompt businesses to understand their energy use and consumption, and systematically establish processes to improve their energy performance, with a focus on energy efficiency processes. The American National Standards Institute’s ANSI MSE 2000:2008 ‘A Management System for Energy’, focusses on reducing energy consumption. The standard includes the purchase, storage, use and disposal of energy sources, and is also based on the plan-do-check-act model. Another, I.S. 393:2005, ‘Energy Management Systems’ published by Sustainable Energy Ireland (Sustainable Energy Ireland 2006), describes processes for energy management.

In addition to these standards for energy management systems, standards have been developed for manufacturers of devices and appliances, primarily used by residential consumers, to enable these to be remotely activated to participate in demand response programs. Australian Standard 4755 refers to the demand response capability and modes of appliances and smart devices including: on site renewable energy generation (e.g. solar photovoltaics), air conditioners, pool pumps, electric hot water storage heaters, batteries, and electric vehicle supply equipment. The standard requires manufacturers of these appliances to have ‘demand response modes’ that assist in shifting load (AEMO 2022). There has been ongoing controversy associated with the introduction of this standard, with some stakeholders claiming that the requirements of the standard do not support interoperability for the appliances to participate in demand response programs (Gill and Kuiper 2021). Another standard, IEEE 2030.5, sets out requirements for communications between the smart grid and consumers. The standard is built using Internet of Things (IoT) concepts and gives consumers the ability to manage their energy usage and generation. Information that can be exchanged includes pricing, demand response activation notification, and energy usage, enabling the integration of devices such as smart thermostats, metres, batteries, inverters, and appliances. Whilst these standards enable primarily residential and small business consumers to more easily utilise technology to change their demand from appliances and equipment, they do not provide practical guidance for managers within businesses about the steps and issues to consider for establishing and implementing a comprehensive demand response program.

Accreditation programs

Energy Star, developed by the US Environmental Protection Agency, provides an accreditation program as well as a tool for calculating a facility’s energy performance. It also provides supporting guidelines for development of an energy management system based on a seven-step roadmap. The National Australian Built Environment Rating System (NABERS), developed by the New South Wales Department of Planning, Industry and Environment (Department of Planning Industry and Environment 2014, 2015, 2020a, 2020b), and Greenstar, developed by the Green Building Council, are two Australian energy accreditation programs. Both provide ratings for commercial buildings, focused on energy consumption. These include energy efficiency, and also water usage, waste management and indoor environment quality. However, these programs do not provide guidance for building managers on how to design and implement energy management.

Industrial guidelines and tools

These guidelines have been developed to help C&I organisations assess and implement activities to improve energy performance. For example, the Energy Management Matrix and Assessment Tool, developed by Carbon Trust in the UK (Carbon Trust 2015), is a tool to help businesses gauge their level of maturity in respect to energy management. The simple matrix provides high-level assessment of an organisation’s strengths and weaknesses across six areas of energy management. The Assessment Tool provides a more detailed assessment of energy management performance. The Smart Energy Diagnostic Rubric developed by the Environmental Defence Fund Climate Corps in the US (Environmental Defence Fund 2018) was designed to help energy managers assess the health and progress of their energy management programs. The rubric contains practices related to engaging executives, investing in people, accessing capital, managing projects, gathering data, and sharing results. The Practical Guide for Implementing an Energy Management System published by the United Nations Industrial Development Organization (United Nations Industrial Development Organization 2015) presents a set of guidelines, with a focus on small and medium sized businesses to improve their energy performance, based on ISO 50001:2011.

Comparison of energy management guidelines for guidance on demand response

To identify the level of guidance for demand response within energy management guidelines, a representative selection of these documents (n = 18) was first analysed using a word search for specific references to ‘demand response’ or ‘demand side management’ or ‘flexibility’. Another search for references to ‘energy consumption’ and ‘energy efficiency’ was carried out, to compare the amount of signposting and guidance for reducing energy consumption and energy efficiency versus demand response. The documents were then read to ascertain if there was any reference to demand response, and if so, the context and type of guidance provided.

Only three of the documents in the review included demand response, namely the Demand Management Planner for Commercial Buildings (Better Buildings Partnership 2020), ISO 50004:2020 and Australian Standard 4755. The Demand Management Planner was developed specifically to help owners and operators of commercial buildings in Sydney, Australia, to identify and assess opportunities for demand response. Whilst it is the most comprehensive guidance document available, the implementation section is limited to a set of dot points to prompt managers to consider communication requirements, roles and responsibilities, training, and documentation of processes. ISO50004:2020 ‘Guidance for the implementation, maintenance, and improvement’, encourages businesses to consider demand response when procuring electricity agreements, as an opportunity to save on electricity costs. However, the document does not provide guidance on how to implement demand response. Likewise, Australian Standard 4755 does not provide guidance for C&I businesses about how to implement demand. The results of the word search are presented in the supplementary material.

Whereas energy management documents emphasised reducing energy consumption and maximising energy efficiency, no mention of demand response was made. This lack of focus on demand response is interesting, given that demand response actions, like energy efficiency actions, can also help businesses reduce energy costs, which is a key driver for implementing energy management approaches (Schulze et al. 2016).

Methods

To understand implementation of demand response programs within C&I organisations we used a qualitative approach, using semi-structured interviews to enable participants to tell their story in their own words (R. K. Yin 1994). Grounded theory methodology (Charmaz 2006) was used to guide the analysis of data and to facilitate the development of categories and a theoretical framework.

Selection and attributes of participant businesses

Two processes were used to identify suitable businesses. Firstly, businesses participating in a government funded demand response trial coordinated by the Australian Renewable Energy Agency were contacted via their retailer. Secondly, using the researchers’ industry networks, representative bodies and industry experts, introductions were made to businesses which had implemented demand response. Recruitment and interviewing of participants were carried out in accordance with the researchers’ university ethics and research practices, Sub-committee for Human Research Ethics, Approval #2019002136.

Sizes of businesses varied from single site operations to multi-site energy intensive businesses. Business types participating in the study were described as water utilities, processing, manufacturing, and commercial. Thirteen businesses were participating in incentive-based programs, having signed up with a retailer who coordinated the program and paid the businesses for their participation. Five businesses were participating in price-based programs, as they had part or all their business signed up to real time pricing, which meant they pay the price of electricity in the wholesale market at the time of use. Therefore, they were using demand response as part of their own energy management program to mitigate against higher priced periods in the market. One business was using demand response to reduce peak network charges. Five businesses were participating in both incentive and price-based programs.

Semi-structured interviews

Between May 2020 and April 2021, twenty-four semi-structured interviews were conducted by video conference with the person or persons responsible for, or involved with, implementation of demand response. Following ground theory method (Charmaz 2014), the first six participants were asked to describe steps they took to implement demand response within their business. Following analysis of the initial interviews, additional questions were included to explore and elaborate on identified concepts. The next six interviews were conducted and analysed before expanding the questions further to test and consolidate the findings during the final twelve interviews. Participants had a variety of job titles which broadly included energy, environment, operations, and procurement managers or officers, and three were in top management positions. Twenty one of the interviews were with single participants, whereas three interviews were with a principal participant as well as other representatives from the business who had assisted with implementation.

Analysis

In accordance with grounded theory, an iterative process of successive analytic and data collection was carried out (Charmaz 2014). Initial and focussed coding (Saldaña 2016) of the transcripts was carried out by the first author to initially identify, compare, and understand the steps and processes described by participants. Where there were multiple representatives for single business, their responses were combined to reflect a single participant. These codes, categories, and subcategories were recorded in a codebook to enable further comparison and discussion by research team members. As interviews, coding, and identification of subcategories progressed, additional questions were identified and questions were asked to explore, test and elaborate on emerging concepts (Charmaz 2006; 2014).

A visual representation of the analysis process (Gioia, Corley, and Hamilton 2013) i.e. examples of codes identified in the data and the grouping of codes into subcategories and categories, is presented in Figure 1. Axial coding was used to identify the relationships between the processes to produce a diagram of the implementation framework. Finally, the steps and categories identified were compared to steps and categories described in the identified energy management models to ascertain any unique demand response implementation features.

Figure 1. Representation of the analysis process, showing the identification of codes and the development of subcategories and categories used to develop the C&I demand response implementation framework.

Results

Implementation of demand response follows the decision to participate in a program available from a retailer, aggregator, or utility, or to use demand response as part of a business’s own energy management program. The results from the research are presented below, initially focusing on the implementation steps, then the supporting practices.

Implementation framework

Seven key steps and three supporting processes were identified. Whilst there were differences in the way participants described implementation processes, the following processes were consistently mentioned by more than half the participants in all steps, except for ‘measurement’, which was only discussed by one third of the participants. These seven key steps and three supporting processes are presented as a framework in Figure 2. A description of the key actions, issues considered, the reasons for implementing the step, and examples of quotes which illustrate the step and supporting process is in the following sections.

Figure 2. Demand response implementation framework for C&I businesses (C&I DRIM).

Identification and inclusion of plant and equipment

Businesses described how they reviewed their sites, plant and equipment to decide which parts of their business to include in the demand response program. Ten participants discussed the importance of ‘keeping it simple’ when first starting. For some this meant starting with the plant and equipment that consumed the most energy and at sites or within business units where operations personnel were open to change.

We started with the simple assets, those that can interrupt energy consumption at short notice. #21

We went with three pieces of physical kit we wanted to control, and made sure all that worked, and that's why I suppose it’s been so smooth. #10

We started off in a fairly conservative space and stepped it up from there. #13

We picked the sites which had staff that had the right mindset, we just need to give this a go. #12

This approach reduced perceived risks associated with interruption of production or operations for management and operations personnel. Starting this way helped demonstrate to the rest of the business that it is not too hard to participate successfully in demand response. This ‘start simple’ approach and achieving early wins also generated enthusiasm within the business to expand the program and overcome initial resistance to change.

Trialling and testing

Trials and tests were carried out to demonstrate to the retailer that load could be curtailed by the business and to verify how much load could be provided. Trials and tests were also carried out to build confidence within the business, primarily for operational personnel and management, to demonstrate that plant and equipment could be safely and reliably shut down and restarted during normal operations. The trials also allowed for mistakes to be made in a controlled environment, learnt from, and processes improved, prior to participating in demand response again increasing confidence within the business.

We picked a very specific group of sites to begin small, to understand the process. We made some mistakes, but learnt from it, what was worthwhile and what was not. #22

For sites using onsite diesel generators to run plant and equipment to replace grid sourced electricity for demand response, these trials were considered particularly important for ensuring equipment could be started reliably.

Measurement

Measurement of baseline energy consumption required for participation in incentive-based demand response programs is cited as a barrier to consumer participation (Good, Ellis, and Mancarella 2017; Nolan and O’Malley 2015; Paterakis, Erdinç, and Catalão 2017; Shafie-khah et al. 2019; Shoreh et al. 2016). However, only one participant raised issues with determining baseline measurements. Participants from three businesses reported that the retailer used existing onsite metering and participants from businesses reported that the retailer supplied and installed additional metering at no cost to the consumer.

Activation process

All participants discussed an activation process. This process is unique to demand response and different from other energy management actions, including those in energy efficiency programs. Activating load curtailment processes requires the organisation to know when and for how long to change their energy use by curtailing load, either by switching off, ramping down, or switching to an alternative onsite energy source. Whilst there was variation in the terminology used, the following four stages were consistently described:

1. Monitoring and assessment of the market

Predicting when and for how long to curtail load depends on the purpose of the demand response program. Businesses were participating in several different programs. These included their own demand response program to avoid high price periods or network critical peak charges, and incentive-based programs coordinated by retailers or the electricity utility to provide balancing services to the market. Therefore, the first step requires monitoring of the electricity market and, depending on the purpose of the demand response program, inputs such as weather conditions, to assess and predict the potential for activation e.g. when demand is likely to outstrip supply and wholesale prices increase exponentially. These monitoring and assessment activities were carried out by the business or a third-party specialist on their behalf if using demand response as part of their own program, or by the retailer or electricity utility if participating in an incentive-based program.

2.	Notification

The nominated business representative received an initial notification of the day, time, and duration for activation via SMS, phone and/or email. This initial notification period varied between two hours and one week depending on the program and the arrangements between retailer or electricity utility and the business, or the business's own internal notification requirements. Often multiple notifications would be received providing progressive updates on the likelihood of activation and duration, as activation drew closer. Notifications also included cancelling activation.

3.	Decision on whether to activate.

The business representative must confirm their intention to activate, as participation is voluntary. Only one business reported using an opt out process, because in their specific case, the activation process was remotely controlled by a third party. In some cases, this was a simple decision made by one person. In other cases, the decision was made by a team, or team members followed a documented protocol which included risk assessment of operational factors to provide confirmation of their intention to activate. Depending on the business and its requirements, the decision to activate included external factors such as customer requirements and internal factors such as staff availability, maintenance schedules, and inventory levels.

4.	Confirming or cancelling activation

Once the business representative confirmed their intention to activate, a final notification was provided by the retailer or third party to confirm the time and duration or cancel activation. At this time, businesses commenced implementation processes.

Implementation processes

Eighteen participants discussed processes and actions implemented following confirmation of the activation start time. These were in relation to safely shutting down and restarting plant and equipment or the use of alternate on-site generation.

Initially it was a very manual process and that was reflected in our work instruction. Step one, fire up the generator …  … #25

Participants in processing and manufacturing businesses discussed the adaptation of standard operating practices, procedures, and control logic for shutting down and restarting plant and equipment, including identification of roles and responsibilities and required communication. This was described as requiring a change of mindset for operational personnel, as demand response was a planned shutdown for the purposes of making revenue or saving on energy costs mid-operation rather than for planned maintenance or signifying the end of a shift.

Some participants in water utility businesses described additional complexity for demand response implementation. The complexity related to the type of plant and equipment which was being included in the program. If plant and equipment used for pumping and storage of water were included, the process was described more simply with the updating of standard procedures or control systems. However, if the plant and equipment involved biological processes for water treatment, these processes were deemed to be more complex, because such processes are not normally shut down due to impacts on upstream and downstream processes. To mitigate any negative consequences, additional controls such as maximum shut down times were needed to ensure the ongoing ability to treat water to required standards.

Participants responsible for managing buildings also discussed levels of complexity in developing implementation processes, as there was often a need for a tailored approach, because each building had different plant and equipment and customer requirements. Once these requirements were understood, implementation generally involved updating the Building Management System control logic or schedules by the building manager or maintenance engineers to initiate the response.

Automation

Fourteen of the participants also discussed different levels of automation employed. Two participants noted that no automation was currently used or needed but may be considered in the future. Nine participants discussed how plant and equipment could be remotely activated by an operator from a control panel or computer once a decision to activate had been confirmed during the activation process. Two participants discussed how plant and equipment is remotely activated by the retailer once confirmation is provided or, in one case, opted out from. The most mature level of automation, discussed by one participant, was the remote activation of plant and equipment by a computer program with an algorithm that monitors various inputs and adjusts plant and equipment in accordance with set parameters.

Monitoring and feedback

Monitoring of performance and feedback to the business was discussed by twelve participants, who presented a range of different feedback mechanisms. Monitoring of performance primarily included either savings on electricity costs or revenue earned by participation. One participant also included how much revenue was lost from opting out of activation. At the most informal level of reporting, performance was discussed between business units but not included in any formal reporting. Internal reports were the most common form of performance reporting, where reports were provided to participating business units and various levels of management. No participants reported demand response in external business reports, such as corporate annual reports or sustainability reports, except for one organisation.

I would send out an email to everyone, we saved $x by switching off, well done to everyone involved …  … ., including them in the program to show them the benefits of what they are doing. #11

In addition to formal reporting, five participants described the indirect linking of demand response performance with key business performance indicators. Revenue earned or savings in electricity costs from participating in demand response activation were allocated back to the participating business units or sites which contributed to improving operational budgets. These in turn, were directly linked to employee performance payments. Two participants described recognition in internal newsletters and at business awards nights, for activation where savings could not be allocated back to the participating business unit.

Improvements and expansion

Fifteen participants discussed improvements made to their program following implementation, which included actual or planned expansion of the program to include more sites and/or plant and equipment. There was a range of improvements described, including improved energy reporting and collection of data, and better understanding of plant and equipment capabilities to increase available curtailable loads and improve shutdown and restart times. More complex improvements included the automation of plant and equipment to enable remote activation and development of programs to monitor market conditions. Attention to continuous improvement was discussed by all participants whose businesses were participating in price-based demand response programs.

I think what we’ve realised is the opportunity is a lot bigger than we have got now. I mean potentially this could be for US a multimillion-dollar opportunity, I think we’ve only scratched the surface. #8

Three participants described optimisation as an improvement process. Optimisation involved determining the optimal price for activation of demand response from plant and equipment and utilisation of available onsite generation and storage to maximise revenue and reduce energy costs, balanced against other operational factors. These included the plant and equipment operating requirements, production schedules, or customer comfort requirements, as well as the interactions with upstream and downstream processes.

Supporting processes

Communication

Twelve participants highlighted communication processes as being essential during the activation process to clearly articulate who was contacted, when and how. Communication processes were reported as increasing in complexity if a business had many sites involved and/or was participating in multiple programs.

We have layers of communication in place as well. So you've got the alarm, you have the phone calls, but we've also got email alerts for certain people, SMS alerts to certain people and the management team online chat functions. #18

Engagement

Engagement was viewed as more than communication and involved gaining buy-in from operations personnel who had responsibility for implementation. Operations personnel were viewed as key stakeholders in the success of any demand response program.

… you have to have buy-in from an operational level. You need executive approval, internal stakeholders who have signed off on it, and you need operational people at least neutral on things, because if they want to, they will stop it happening #3

Sixteen participants discussed ways to engage with operations personnel. These included one on one conversations, education, awareness training, and roadshows providing the reasons for participating in demand response. Including operations teams in the identification of opportunities for load curtailment and associated risks and mitigation actions was deemed particularly effective, as these operations teams took ownership of the activation and implementation processes. Participants also empowered their operations teams to make decisions within the activation process. This responsibility gave them a sense of control and reduced concerns about perceived risks to operations. Importantly, these operations teams consistently made the decision to activate.

We will leave it up to the operators to make the decision on whether they respond or not. #7

Three participants discussed difficulties encountered with engagement of operations personnel. This was because while some operating personnel were quick to engage with changes, others saw demand response as more of a burden, being ‘just another thing to do’ #6

Leadership

Twenty three of the 24 primary participants interviewed were responsible for overseeing or directly managing implementation. Leadership was discussed in two ways. The first was having the support of top management and the second related to the leadership demonstrated by the participant via their commitment to guide and coordinate the business to develop and roll out steps and processes described in this implementation framework. Three of the participants were part of their businesses’ top management and acknowledged that their position made it easier to implement the required changes. Another eight participants discussed having visible top management support for implementation and the effect this had in overcoming resistance to change in the business. Others discussed a bottom-up leadership approach working with operations personnel, and utilising previous personal and/or business experiences in energy efficiency or renewable energy projects to demonstrate that changes could be made successfully without negatively impacting the business.

Discussion

Frameworks and models for implementing change processes are a useful tool as they provide users with a set of steps which can guide those tasked with implementing programs like demand response (Day 1999). The C&I DRIF presented in Figure 2 describes the steps and processes followed by C&I businesses after their decision to participate in a demand response program.

With the exception of the BBP Demand Management Guideline, energy management guidelines used by businesses to assess, develop, implement, and improve energy management have not provided businesses with sets of steps to guide those tasked with implementing demand response. This seems problematic as the activation process is unique to demand response and arguably the most difficult to implement. Activation requires coordination between the retailer, aggregator, or electricity utility, which can be either internal or external to the business, to decide activation timing. Whilst technology is improving and standards such as AS4755 continue to encourage manufacturers to develop technology that can activate plant and equipment for the purposes of participating in demand response programs, managers in C&I businesses would still benefit from guidance to understand this critical step. The decision to activate and timing of activation depends on many variables, some within the control of the business (e.g. production schedules) and others outside the business’s control (e.g. weather). The guidance provided in the C&I DRIF activation step contributes to improving this awareness and understanding of the necessary requirements and trade-offs involved in deciding to participate in demand response options.

The omission of demand response from energy management guidelines may also be contributing to a lack of awareness by C&I consumers about demand response opportunities and the contribution they can make to electricity system efficiency as well as their flow on benefits. One of the reasons for this oversight may lie within the definition of energy management (Schulze et al. 2016), which emphasises reducing organisations’ energy consumption and its related costs. Demand response actions will not necessarily reduce energy consumption but will reduce energy costs. Therefore, the focus on reducing energy consumption and costs may have led to an oversight about inclusion of demand response. In a similar vein, ISO50001:2018 encourages businesses to focus on measurement of energy efficiency and energy consumption. Nevertheless, demand response is specifically referred to twice in the supporting guidelines, ISO 50004:2020 (International Organisation for Standardization 2020), in relation to procurement of energy and opportunity for cost savings. This 2020 publication may reflect the growing awareness and recognition of the opportunities for businesses. Another contributing factor to the omission of demand response within energy management guidelines may be that traditionally demand response has been considered a tool that utilities use to change customers’ energy use, using price-based demand response tariffs and incentive programs to better match their load requirements (Gellings 1996; Gellings and Samotyj 2013). Motivations for demand response are also framed as benefits for electricity system efficiency (Aryandoust and Lilliestam 2017; Dupuy and Linvill 2019; Paterakis, Erdinç, and Catalão 2017; Pinson and Madsen 2014) and overlook or downplay the direct and indirect benefits that can be attributed to an individual consumer’s participation, which is providing more flexible capacity and therefore enabling more renewable generation for C&I consumers with renewable generation behind the metre, not to mention for the whole of the electricity system. These benefits from the consumers’ actions could also be promoted within energy management guidelines to raise awareness for participation in demand response and to highlight the societal and environmental benefits. For example, participation can help their community by preventing blackouts during times of energy scarcity and by providing balancing services to facilitate more reliable renewable energy generation.

There are benefits for having stand-alone industry-specific demand response implementation guidelines to provide industry and business with examples and details relevant to them; however, integration of demand response into broader energy management frameworks is still needed. By including the benefits, steps, and processes for demand response within existing energy management guidelines, demand response will reach a wider audience already familiar with and using existing guidelines. Further, such integration of demand response within most energy management guidelines will be relatively simple due to the plan-do-check-act framework.

Given that demand response benefits the market or network by reducing the wholesale price of electricity, providing capacity for balancing services, or improving the efficient use of the network by reducing peak demand, it is incumbent on regulators to encourage and promote demand response to businesses through these existing and supported energy management guidelines. Energy management accreditation schemes, which focus solely on reducing energy use, might consider and develop a rating system for demand response capacity (i.e. the ability and/or availability to shift loads or use an alternative energy source for markets or network requirements). The use of an alternative energy source such as diesel generators will also need to be addressed, as increasing the use of diesel to enable demand response participation will result in increased carbon emissions which does not align with the goal of decarbonisation – a key motivator for these schemes.

Whilst a range of business types and sizes were included in this study, there may be additional and/or different processes being used to implement programs in businesses which were not interviewed. However, the description of similar steps by over half the participants interviewed for each step does provide a level of confidence that the steps and processes can be generalised to other business types. Also, advances in technology, particularly automation of processes and activation signals, may change the description of process within the steps required for demand response and by default require updating of this framework. However, monitoring and evaluation of the overall program should be a cornerstone of any new program to ensure the most up to date information is shared.

Conclusions

The C&I DRIF provides a starting point for managers considering implementing demand response. It identifies seven key steps and three supporting processes that businesses can follow to successfully implement demand response opportunities into their daily operations. The step-by-step nature of the proposed framework makes it easy for C&I organisations, both with and without formal energy management systems, to use. Similarly, the framework is applicable at the point of time a business makes the decision to participate in a program -either one offered by a retailer or aggregator or to use demand response to reduce electricity costs as part of their own energy management program. Further research could test and extend this proposed framework to develop a prescriptive model. The development of detailed checklists and guidelines for general or industry specific application would provide practical guidance for managers seeking to implement demand response and is likely to reduce the perceptions of risk involved in implementing such steps.

To date, existing energy management guidelines, which include standards, tools, and models, have not explicitly included demand response in the same way energy efficiency has been included. The omission of demand response from energy management guidelines may have been due to the way demand response has been portrayed within the literature as a tool for electricity utilities i.e. market operators, networks, and retailers to use to manage demand, as opposed to the direct and indirect benefits for consumers. However, it is clear from those who have participated that benefits for consumers include cost savings and/or earning additional revenue, not to mention providing services to assist with power system reliability for all consumers when integrating more renewable energy sources into the system.

Further, the inclusion of signposting to demand response, and its unique features and benefits, could be readily accommodated within energy management guidelines as the steps for demand response follow the same overarching plan-do-check-act framework. For example, given that the activation step is unique to demand response, businesses could benefit from clearer guidance on when to activate demand response measures. Therefore highlighting this step would be very beneficial for all users interested in undertaking demand response. However, demand response integration for building energy accreditation programs will need further consideration of appropriate rating mechanisms. The current rating mechanisms for energy consumption provides a simple way for consumers to compare energy consumption between buildings. However demand response may negatively impact energy consumption at the same time as reducing energy costs and supporting the efficient use of electricity within the electricity system.

To improve C&I businesses’ awareness of the benefits of demand response, there is a need for increased communication about the opportunities demand response presents as an energy management practice for use by consumers, rather than just a tool for utilities. Explicit inclusion and signposting in existing energy management guidelines will improve awareness and promote opportunities and benefits for consumers. Awareness could be further promoted by leveraging existing energy efficiency programs, which are generally well established, to include demand response benefits and opportunities. Increasing awareness will empower business to be part of the solution to system reliability by implementing demand response and at the same time reducing their electricity costs.

Disclosure statement

No potential conflict of interest was reported by the author(s).