When developing Demand Response strategies, we talk about knowing why you are embarking on such a journey, deciding what services you will introduce and how you will introduce them. We need to also talk about the timing and when these services will be scaled out. I hypothesise that to be successful, incumbent distributors and retailers in Australia cannot wait for all the pieces of the jigsaw to come together to scale out. They need to stop the small-scale pilots and make the bold decision to ‘go big’ now.

Deciding when to scale out demand response is often influenced by several factors such as current regulatory policy and expected direction, technology maturity and adoption, as well as consumer awareness and willingness to participate in demand response programs.  

Answering the question of when to scale out demand response is not easy.  The reason why you are exploring Demand Response is likely to remain relatively constant over time, but what services you introduce and how you introduce them can be heavily influenced by a range of factors, such as those described above and can lead to a ‘wait and see’ approach.

The concern I have with waiting for all of these pieces to fall into place before you scale out demand response is that you could be leaving your run too late. Let us consider two scenarios over the next few years:

  1. The market will become very crowded, very quickly.  Retailers and distributors will want to get in on the act, and so will energy aggregators and start-ups offering services we have not considered yet. Consumers will suddenly be exposed to a lot of choice. How will you stand out from the crowd?
  2. Consumers do not want to think about electricity.  If retail competition in Australia has taught us anything, it is consumers will complain about price and service, but the majority stay with the same retailer.  Once a consumer signs up to demand response, especially if it includes physically connecting their home device to their service provider, do we honestly expect consumers to churn in high numbers?

I believe to be successful with demand response in Australia, a lot will come down to first-mover advantage. So, while pilots are interesting, I feel the focus needs to be on raising awareness of demand response to your target consumers, getting those target consumers to trust you and getting them to sign-up to your services early.  

Can you afford to take a ‘wait and see’ approach with demand response?

 

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