Dive Brief:
- The U.S. Court of Appeals decision to overturn FERC Order 745 this summer has slashed the annual growth rate of the demand response industry, a new report finds, dropping it from 8% down to 4.9% annually through 2023.
- While the industry is still growing, the court's ruling against Order 745, which ensured demand response resources were paid full market price in the wholesale markets, is projected to cost the U.S. demand response market $4.4 billion in lost revenue.
- Demand response was on pace to be a $2.9 billion industry by 2023, according to the report from Greentech Media, but will now only reach $2.3 billion.
The growth of the U.S. demand response market with and without FERC Order 745
Dive Insight:
FERC's Order 745 was a boon to the demand response industry, ensuring that those resources competed on par with power plants in the marketplace. But a May decision by the U.S. Court of Appeals for the D.C. circuit vacated the order and, according to a new report, slashed the industry's growth rate nearly in half.
The market will still grow at a "moderate pace," the report concluded, but will be faced with new challenges. The industry will need to reconsider what technology and system works best in different market areas. “With more policy decisions being made at the state level, the fragmentation of the demand response market will only be exacerbated,” Geoff Wyatt, report co-author, told Greentech Media.
