Today we highlight the Quadrennial Energy Review’s (“QER”) focus on the barriers facing demand response and energy efficiency projects. Part I of our “Transforming the Nation’s Electricity System” series reviews the QER recommendations to improve procedures for transmission project development, permitting, and system operations. Part II focuses on the barriers facing renewable generation development and what can be done to improve project financing, access, and the siting process.

Demand Response

QER 1.2 proposes to improve energy management and demand response in buildings and industry through a joint DOE-EPA initiative to accelerate deployment of communications-capable control systems. The joint initiative would be targeted at residential customers, small to medium commercial customers, and comparable industrial customers. QER 1.2 discusses demand response aggregation as a wholesale energy service that helps to lower prices in Federal energy markets, increase reliability, and integrate wind and solar resources. Additionally, QER 1.2 advocates for the timely development of common interoperability standards for grid-connected devices to accommodate large-scale growth in grid connectivity.

Energy Efficiency

Energy efficiency faces regulatory and physical challenges. QER 1.2 emphasizes the importance of aligning energy codes and ratepayer-funded efficiency programs, and ensuring adequate funding for efficiency programs. QER 1.2 recommends that Congress increase Federal support for low-income home weatherization through DOE’s Weatherization Assistance Program (“WAP”). It suggests a weatherization goal of 100,000 homes per year over the next 5 years. It further recommends that Congress should create a mandatory contingency funding mechanism for the Low Income Home Energy Assistance Program (“LIHEAP”), which helps families manage energy costs.

The review calls for stronger incentives for public housing authorities to invest in energy efficiency. For example, it recommends that the USDA develop and implement a strategy to remove barriers to participation in the Rural Utility Service (“RUS”) energy efficiency financing program. RUS programs are available for certain residential, commercial, and industrial customers in rural areas of the United States. Additionally, it recommends a joint DOE-EIA initiative to improve the efficiency of miscellaneous electric loads through R&D, testing, labeling, targeted incentives, and minimum standards. Miscellaneous electric loads are electric loads that are “broad, rapidly growing, and poorly understood group of end users[.]”

Distributed Energy Resources and Storage

The review recommends that Congress amend Public Utility Regulatory Policy Act of 1978 (“PURPA”) to require state public utility commissions and non-regulated utilities to consider the following: (1) the costs and benefits of DERs and alternatives in rate design and integrated resource planning; (2) stable funding for public purpose programs; (3) energy efficiency resource standards; and (4) emerging risks in integrated resource or reliability planning. It goes on to recommend financial incentives to reduce the cost and increase deployment of non-emitting energy storage. Non-emitting energy storage includes equipment that uses the following technologies to receive, store, and deliver energy: batteries, compressed air, hydrogen storage (including hydrolysis), thermal energy storage, regenerative fuel cells, flywheels, capacitors, or superconducting magnets.