Q&A: European Advancements in Demand Response
- Aug 20, 2014
Dennis Quinn, COO of Joule Assets, spoke with editorial director Suzann D. Silverman about the financing market for demand response projects. Joule works with energy equipment contractors to help finance rollout of their technology in commercial properties, so the property owner can realize the benefits of the technology far sooner. Their conversation appears in the September 2014 issue of Commercial Property Executive. Here, Quinn comments on the European market for demand response.
Q: Europe has historically led the U.S. in sustainable efforts. But in this case, it seems to be the opposite. What is the situation there, and how do you see that market opening up?
A: Europe has taken, for many years, a strong lead on sustainability. It created a carbon market, carbon offset market, as a basis for investment. Energy efficiency has been a kind of an engine there for some time. It’s almost a nuance, is the component that we see as the extra increment that allows for this kind of innovative financing, that comes from the load response demand reduction market. Those are markets that are developed and quite mature in the U.S. over the course of the last 10 years. In Europe, they’re just now putting the rules in place for kind of a pan-European demand response. What are the rules of engagement for demand response? How does demand response participate in the marketplace in Europe?
We benefit in the U.S. from having a single regulatory body, the Federal Energy Regulatory Commission, drive to create regulatory structures to allow demand response to participate. In Europe, there is an overarching European Union directive, but each country and its regulatory bodies then have to adopt this. So the process is a long one. We participate very strongly in an organization called the Smart Energy Demand Coalition. We’re founding members of that. It’s a great collaboration of industry, of utilities, of government that is working to create the rules for demand response.
What we see coming there, maybe in the next two to four years, is an emerging demand response market. Some of them are already moving. The UK has a market that’s a bit more active than some of the others. France’s is quite active. It’s more pockets right now. But what we see is, as they adopt common rules for participation across Europe–and all the transmission service operators, which are kind of like our independent system operators here, adopt those–then you will see a much more active market picking up.
When that market picks up and we can actually get access to those revenues from demand response, then the kind of model that we have here will take off much more quickly. There’s a little bit of activity we’re looking at on early investments there. But we see that still as a couple of years off.