Demand Response (DR) programs offer incentives for electric utility customers to reduce their energy use during peak demand which reduces the need for generation and helps offset market purchases during times of peak cost. TVA is expanding its portfolio and plans to invest more than $1.5 billion in its Energy Efficiency and DR programs from fiscal year (FY) 2024 through FY 2028. Due to the risk of TVA’s investment not meeting the anticipated reduction in energy needs, we performed an evaluation to determine if TVA's investment in DR programs was delivering intended benefits.
While the Demand Management (DM) organization increased the DR curtailment capacity, they did not meet the targets for FY 2024 or FY 2025. The curtailment capacity achieved was 27 percent less than planned in FY 2024 and 23 percent less than planned in FY 2025. We identified two contributing causes for not achieving the DR program targets for curtailment capacity: (1) the planned increases in DR capacity were set before some new and redesigned programs were completed, which resulted in inaccurate estimates; and (2) there were challenges with implementation and adoption of new and redesigned DR programs that impacted achievement of the goal. Not achieving the planned curtailment capacity could result in increased cost to TVA. Planned curtailment capacity is included in TVA’s strategy to meet demand. If DM does not achieve its goals, TVA could be required to meet the demand with purchased power. Since DR programs are mainly used when demand and therefore prices are the highest, purchasing the necessary capacity can be costly.
