Renewable energy is on the rise in the U.S. Additional efforts will be required to integrate intermittent and decentralized sources of energy into the electrical grid. Given that storing large amounts of electricity is not yet available at a reasonable cost, electric grid operators must match supply and demand at every moment. Thus, the time at which electricity is used becomes ever-more important. Demand response (DR) allows shifts in customer load profiles and thus creates the potential for reductions in peak load demand through changes in electricity consumption by energy end-users at specific times reflecting the system needs. These shifts increase the reliability of the electric power grid, reduce transmission constraints, lower price volatility in wholesale electricity markets, help integrate renewable and distributed energy sources, and reduce CO2 emissions.
Although DR is of great importance to the functioning of the electrical grid, it remains an insignificant player in the U.S. electricity sector. The objective of this dissertation is to employ a convergent parallel mixed methods design approach that combines quantitative and qualitative data to examine both barriers to and facilitators of demand response development by U.S. investor-owned electric utilities. First, I conduct a comparative case-study analysis based on interviews with a panel of stakeholders and the examination of relevant regulatory documents. Second, I employ an Ordinary Least Squares estimator to analyze data in 49 states between 2010 and 2018 (Nebraska was excluded because no investor-owned utilities operate in the state). This study utilizes a unique data set assembled with the help of publicly available information from a variety of sources, including the Energy Information Administration and the Federal Energy Regulatory Commission.
Both qualitative and quantitative data show that state-level policy decisions appear to be a crucial determinant of higher levels of demand response development. The dissertation concludes with some insight for future research and provides several policy recommendations for mitigating barriers and increasing the potential for expanding demand response programs.