From: Environmental Law & Policy Center Blog
Written by: Karsten Neumeister
Electricity demand is rising in ways no one predicted a few years ago. Data centers, electrification, and expanding digital infrastructure are driving sharp increases in usage that utilities can’t easily forecast or meet. This surge is already showing up in higher electricity bills, and it is breathing life into fossil fuels.
The typical response to this problem is to build more power plants. While new power plants add supply, they are expensive to build, time-consuming, and often delayed by permitting and construction challenges. Relying solely on new plants locks us into these high costs and long, often uncertain, timelines.
If Midwest leaders want to keep our electricity prices stable without sacrificing public health, we need solutions now—not years from now. Luckily, we have solutions at hand.
Good Energy Policy Manages Supply and Demand
A smarter—and often overlooked—approach to today’s challenges is to reduce demand, especially during peak periods when the grid is nearest its capacity. As they say, the cheapest kilowatt-hour is the one you don’t use.
Reducing demand is faster, cheaper, and cleaner than building new supply. It lowers customer bills, reduces the need for costly grid upgrades, and limits reliance on fossil fuels. Best of all, demand reduction programs can be implemented in as little as one-to-two years, while a gas plant, for example, typically takes at least five.
What Is Demand Response?
One of the most powerful tools for reducing peak demand is demand response (DR).
Demand response programs incentivize customers—from homeowners to large industrial users—to temporarily reduce or shift electricity use during periods of high demand. A data center might pause nonessential computing tasks, while a manufacturer could delay energy-intensive processes until off-peak hours. A residential customer would just turn the thermostat back a few degrees during peak hours. In return for voluntary participation, customers receive bill credits or direct payments.
For the grid, demand response means improved reliability from less strain during critical hours and reduced need for additional generation. For customers, it means lower costs and greater control over energy use. For the environment, it means less dependence on “peaker” gas plants, those that run only during peak events. These power plants are not only the most expensive, they are also the most polluting.