Ruling Against FERC Order Could Cost US Demand Response Market $4.4B in Revenue

BOSTON - Sept. 18, 2014 - PRLog -- According to the latest report from GTM Research, U.S. Demand Response Markets Outlook 2014 (http://www.greentechmedia.com/research/report/u.s.-demand-response-market-outlook-2014), a recent ruling by the U.S. Court of Appeals could cost the American demand response market $4.4 billion in unrealized revenue opportunity over the next ten years. The market is large and will continue to grow, but not at its full potential.

Originally approved in 2012, FERC Order 745 was a boon for the demand response (DR) market, ensuring grid operators paid full market price to economic demand response resources. More recently, the U.S. Court of Appeals ruled against Order 745, stating that FERC had overstepped its jurisdiction when enacting the measure.

Without Order 745, the market will still grow at an annual rate of 4.9 percent on average, reaching $2.2 billion in 2023. If the order is reinstated, GTM Research forecasts the market to grow at nearly 8 percent per year, reaching $2.9 billion in 2023. The cumulative difference between these two outcomes is $4.4 billion in unrealized revenue.

FIGURE: U.S. Demand Response Forecast, With and Without FERC Order 745, 2014-2023
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Source:  U.S. Demand Response Markets Outlook 2014 (http://www.greentechmedia.com/research/report/u.s.-demand...)

“Business models will have to adapt to the recent regulatory overhaul,” said report co-author Geoff Wyatt. “With more policy decisions being made at the state level, the fragmentation of the demand response market will only be exacerbated.”

The report cites technology innovation as a key way for vendors to stay relevant in the rapidly evolving market.

"The way we think about demand response is fundamentally shifting,” said report co-author Mei Shibata. “The adoption of new DR technologies and distributed energy resources is creating unprecedented opportunities – as well as uncertainties – around demand optimization.”

The report notes that the next decade of the U.S. demand response marketplace will be more “dynamic than the previous 30 years” combined.

“There will be big winners and losers in the DR market over the next ten years,” added Wyatt.

GTM Research expects the U.S. demand response market to reach $1.4 billion by the end of 2014.

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For more information on the report, visithttp://www.greentechmedia.com/research/report/u.s.-demand-response-market-outlook-2014.