The Concept of Demand-Side Management

Abstract

The pattern of electricity consumption varies in the course of a day, typically reflecting the patterns of human activity — high during the day and low at night. This simple fact has fundamental implications on the electric utilities business. Adequate generating capacity has to be available to serve the demand during the peak periods, even though much of this capacity is idle during the periods of low demand (off-peak). In order to cost-effectively serve this varying demand, with both diurnal and seasonal variations, the utilities use three types of generating facilities: baseload, intermediate load, and peak load plants. Baseload plants serve the portion of the demand which is present most of the time and, as such, they are designed to operate at a constant level for most of the year and use low-cost fuels, such as coal and nuclear, resulting in low operating cost. The capital cost of these plants is, however, high. On the other hand, peaking plants that serve the peak portion of the load and operate for only about 10% of the time, have low capital but high operating costs. They rely primarily on oil- or natural gas-powered units to provide quick start capabilities. Intermediate plants meet the portion of the load that varies daily and, as implied by the term “intermediate,” their sizes and costs fall between those of baseload and peaking units.