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Commercial & Industrial Demand Response 2019-2025 – EXECUTIVE SUMMARY Free Download

Commercial and Industrial Demand Response to hit 188 GW by 2025, worth $12.1bn

Rethink Technology Research finds that there is still 5x more potential growth if favorable government regulation comes into play alongside strong adoption of battery storage

The Commercial and Industrial (C&I) Demand Response (DR) market is poised to reach 188 GW of capacity by 2025, as the largest energy customers on the utilities’ books begin to realize the potential revenue stream of participating in DR programs. However, the achievable market is estimated to be five-times larger, and there is still a lot of money being left on the table. By 2025, our research shows that the C&I DR market will be worth $12.1bn globally, but our data suggests that it would be over $60bn if the governments and major stakeholders collectively change tack.

The USA and Western Europe still lead the market, with Australia also doing well. Of course, China swings the APAC region to global relevance, but there are few countries within the region that are actually mature C&I markets. Globally, the technology is ready, and utilities are exploring how to work with specialist DR aggregators, but the biggest hurdles are corporate enthusiasm and regulatory barriers. Through the period, as climate change awareness and consequent consumer and voter pressure increases, companies and governments will become more willing to adopt DR.

Utilities and governments are embracing DR as an easy win, when tackling climate change goals. DR can remove the need to build new energy generation resources, avoiding new gas peaker plants being built to deal with the peaks in demand. Using DR, these peaks can be time-shifted; moved to a more optimal schedule in exchange for cash or rebates for this function.

DR also helps to integrate more renewables into a country’s energy mix. Due to the variable output of wind and solar, DR can help accommodate the C&I power requirements, if sufficient volumes of equipment and processes are connected via IoT technologies. For instance, the deep cleaning of tanks in breweries could be automatically scheduled at the best time for the local grid, with the brewery operator retaining enough control to ensure that these tanks are ready in time for the next production run.

There are a near infinite number of possible combinations or examples to share here, but the short version is that any business process that uses energy is a candidate for DR integrations. Existing equipment can be retrofitted with the measurement and actuation controls needed for DR program participation, and newer IoT-capable processes can be controlled simply via cloud applications.

There are two main approaches to C&I DR. The industrial and utility equipment providers are one side, with huge presence in the market that can be brought to bear on the problem, with the other main channel being specialist DR aggregators – companies that focus on adding aftermarket DR capabilities to machinery or processes, and then integrating them into the utility or local regulator DR schemes.

As new equipment is installed in C&I facilities, the chances of it being IoT-enabled grows with time, and so there is a looming tipping point where an equipment provider can make a direct play in the DR market, providing it as a service to these equipment customers. For the smaller DR aggregators, a plethora of hardware and software options mean that any business process is a candidate for DR. However, for both of these approaches, the hard parts are convincing customers of the benefit of embracing DR, and accommodating the very different regulatory approaches to DR in each country.

The growth of battery storage in C&I environments is going to drive a lot of the DR adoption, as these new microgrid and battery suites will enable many more aggregator opportunities. Combined with the adoption of DER at C&I facilities, primarily rooftop solar, these battery systems will start out as strategic business assets, before being signed up as secondary cash-generators via aggregators and utilities.

Globally, regions with larger Tertiary (Service) economies have a larger stake in Commercial DR, while those more involved in Industry have a consequent advantage in Industrial DR. The two are usually discussed as one distinct trend, but there are certainly valid arguments to considering them separately.

Rethink recently published its related forecast for Residential Demand Response (RDR), which is being enabled by smart home technologies. This sector will see utility control of DR slip from 98% in 2019 to around 76%, as smart home based approaches sideline the utilities. However, the utilities will partner with smart home platforms, and cohort of startups are already carving out slices of the market for themselves.

For some context, RDR is expected to reach 212mn homes by 2025, accounting for 366 GW of potential DR capacity. Our expectation is that C&I DR does not outpace RDR, owing mostly to the ease with which a house can be enrolled in a DR program. Any house with smart speaker assistants is an opportunity, and smart meters are not prerequisites for participation. As smart homes get more complex, the type of DR functions that can be achieved get much more sophisticated.

IoT technologies are the primary enablers for DR, and in time, will enable much more advanced use cases. Both RDR and C&I DR go a long way towards solving the headaches that come with integrating distributed energy resources (DERs). The variable generation output of DERs can be accommodated by adjusting the demand-side load of the utility customers, treating them as an aggregated battery or a grid-scale frequency response tool.

Who should read this report and what will they get out of it?

This report is for anyone at C-Suite and strategy level that is trying to improve profit margins on operational equipment in the Commercial and Industrial sector. It is aimed at anyone looking to sell their demand response services into this market, whether you are a major energy provider looking to expand or a specialist DR aggregator.

The data contained within this report, and the wealth of additional information you will find in the Riot Research and Riot archives, will enrich your understanding of the IoT technologies at play here, and the wider ecosystem in which they exist. Nearly every utility can use such understanding to slow capital expenditure, saving millions of dollars.

This report should be read by C-Suite individuals in power companies, electrical utilities, those in the energy transmission business, and power generation and technology and software suppliers to all of the above. Government regulators, lobbying firms, and strategic decision makers should all study the data contained.

This report includes;

• Numbers you can drop straight into your business case

• An expectation of the number of advanced C&I adopters that may buy into these new energy applications

• And a clear understanding of what energy utilities can change and what they can’t, in customer behavior.

Companies mentioned in this report:

ABB, Aclara Technologies, Akuacom, Ameresco, AutoGrid Systems, Centrica, Comverge, Cooper Industries, CPower, Demand Response Partners, Direct Energy, DXC Technology, Eaton, eCap Networks, EDF, Elster, Enel, energy2market, EnergyConnect, EnerNOC, Engie, First Energy, Flexitricity, General Electric, Honeywell, Itron, Johnson Controls, Kiwi Power, Landis+Gyr, Limejump, Lockheed Martin, LS Power, McNees, National Grid, Nexant, NRG Energy, OATI, Oracle, Reactive Technologies, Restore NV, Schneider Electric, Shell, Siemens, Tantalus, Trilliant, Voltus.

For more information contact:

Natalia Szczepanek (Client Relations and Marketing Manager): [email protected]

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Contents 2
Graphs 3
Introduction & Top-Level View 4
Commercial & Industrial Demand Response 6
Industrial DR—Graphs 10
Commercial DR—Graphs 12
Demand Response – The Concept 14
C&I Demand Response – The Technology 17
C&I Demand Response – The Market 19
Methodology 21
About Rethink 22

Money on the Table (GW) 4
Total C&I DR Footprint (GW) 7
Total Potential C&I DR Footprint (GW) 7
Total C&I DR (GW)—By Region 8
Annual Additions C&I DR(GW)—By Region 8
Annual Installation Revenue C&I DR ($)—By Region 8
Annual Operational Revenue C&I DR ($) – By Region 9
Market Value ($) C&I DR—By Region 9
Total Potential C&I DR (GW)—By Region 9
Industrial DR in 2019—By Region 10
Industrial DR in 2025—By Region 10
Total Industrial DR (GW) – By Region 11
Total Potential Industrial DR (GW) – By Region 11
Commercial DR in 2019 (GW) – By Region 12
Commercial DR in 2025 (GW) – By Region 12
Total Commercial DR (GW) – By Region 13
Total Potential Commercial DR (GW) – By Region 13