Meeting the Need for Gas Demand Response

Demand response (DR) is a tried and true methodology for residential demand management. DR also shows similar promise for the natural gas industry and it couldn’t come at a better time.

Winter is Coming and So Are Gas Supply Challenges

Natural gas prices are at a 14-year high, causing skyrocketing electricity costs and supply interruptions. Summer heatwaves, the Ukrainian Conflict, low domestic inventory levels, and heavy reliance on natural gas for peak demand generation are brewing up a perfect storm, just in time for winter. While some may look to renewables to save consumers, they are not a sure bet, and consumers face the threat of being left out in the cold – literally and figuratively.

So utilities are faced with a choice: create more capacity (an expensive and time-consuming effort), or use load reduction strategies like gas DR.

What is Gas DR and What Makes It Special 🤔

Gas DR is similar to electric in its use case, but the similarities mostly end there.

• Gas travels differently. Unlike electricity, supply must not meet the demand nearly instantaneously. Natural gas travels slower and is easier to store for short and long-term durations (in depleted gas reservoirs, aquifers, or mined salt caverns).
• Market procurement impacts pricing. Most utilities procure gas through long-term contracts, whereas electricity is procured in near real-time, depending on the market.
• Peak events are longer and less frequent. Utilities face longer constraint periods if storage is unavailable and supply is scarce, at least 24 hours up to several days. So the typical four-hour event window of electric DR cannot meet the duration needs of a peak gas event. Additionally, these events happen only a few times yearly compared to more frequent electric DR events.
• Gas Advanced Metering Infrastructure (AMI) is behind electric. Even though measurement and verification are possible using device telemetry, the lack of AMI limits evaluation approaches.
• Time-of-Use (TOU) Rates are tough. Whereas hourly price signals are available for electricity, the time difference between procurement and delivery of gas makes TOU rates difficult to implement.

Early Pilots Show Promise

Many utility pilots, including a Midwest pilot managed by Uplight, show that customers are ready and willing participate in gas DR. In the Uplight pilot, we intended to create a non-pipes alternative using four and twenty-four hour gas events. These events were located in areas experiencing pipeline constraints, while ensuring that these customers’ dwellings were kept within their temperature comfort bands. The result of the pilot was the successful curtailing of gas usage (enough to support system constraints) with zero customer opt-outs.

To ensure a successful gas DR program, utilities can do several things:

•  Leverage high value communication channels such as Home Energy Reports and High Usage Alerts to promote gas DR programs to target customers.
• Bundle enrollment with other kinds of customer offerings
• Segment outreach based on usage and geographic location relative to pipeline constraints.

The Road Ahead

While gas utilities can drive deeper engagement with their customer in the near-term through energy efficiency, some geographic areas (New England and California) are better positioned to require interventions like gas DR sooner rather than later.

As the gas industry looks even further to decarbonize with investments in technologies such as green hydrogen, gas DR – when coupled with other energy efficiency measures – could play the interim role of bringing greater flexibility to gas networks and mitigating pipeline emergencies, all while saving customers money.