IEEE Technology and Society Magazine - September 2019 - 48

company can signal DR customers to reduce their electricity use. This action is called by some a "virtual power
plant." Demand response programs can lower the cost
of electricity by deferring generator/transmission capital
investment and lowering peak demand that probably
would require the dispatch of a high-cost generating
unit. Reducing the demand in a system using DR programs saves money by not dispatching a high-cost peak
generation unit. DR techniques can help the electric utility maintain reliability by not overloading distribution
feeders, transformers, and transmission lines.
As shown in Table 1, DR programs are commonly
classified as price-based or incentive-based [11]. In pricebased programs customers see a variation in the market
electricity price at different times of the day. The price
differences encourage customers to adjust their energy
use. Examples include time-of-use, peak load, and realtime pricing [30]. Incentive-based programs entice customers to adjust their energy use through benefits
beyond a particular electricity rate. Examples include
interruptible load, direct control, emergency response,
and rebate programs. Incentive-based programs are specific contracts between particular end users and a grid
operator, or an entity that aggregates DR participants.
Each type of DR has advantages, and in general both
can reduce price volatility and overall system costs.
Incentive-based programs, based on rewards rather than
on punishment, could lead to higher elasticity [30]. On
the other hand, price-based programs might be better
for residential and small commercial customers [11].

Solar Communities and Microgrids
Community energy projects are common in Europe.
There are diverse definitions of community energy
depending on a government's energy policies to support
distributed energy resources [12] and also depending on

TABLE 1. Comparison of Demand Response
Classifications.

48

Incentive-Based

Price-Based

Useful for ancillary services.

Useful for energy efficiency,
managing peak demand.

High cost due to the
automation infrastructure if
based on demand load control.

May only require a smart
meter.

Motivate users to reduce
energy consumption.

Motivate users to minimize
energy consumption.

May or may not increase
awareness of consumption.

Make users aware of their
consumption.

Notable examples: Dynamic
demand, peak time rebate

Notable examples: Time of
use; real time pricing

the social, cultural, and political contexts and energy
market designs [13]. Denmark and Germany are pioneers in community energy generation. Denmark has
had community-owned generation (mostly wind) since
the 1970s, reaching its peak in 2013 with 70 to 80% of
wind turbines owned by communities. In Germany 50%
of renewable generation was community owned in 2014
[13]. In the U.K. community energy refers to community
initiatives focused on reducing energy use, managing
energy better, generating energy, or purchasing energy.
These projects or initiatives provide a model that can be
followed elsewhere, especially in relation to their
emphasis on community ownership, leadership, or control where the community benefits [14].
The U.S. lags behind in community energy initiatives
as compared to Europe, except in renewable-friendly
states such as Hawaii and California. The most common
community energy projects in the U.S. are solar PV systems that serve communities under diverse names,
such as community solar, "shared solar," or "solar gardens." It is important to distinguish between "community shared solar" programs (a community sharing the
benefits of one large or multiple small systems) and programs such as "Community Solar NY" in which citizens
join to make a combined purchase of equipment but for
individual systems. The solar community model is a tool
for local socio-economic development through technology, citizen empowerment, and environmental and
social justice aligned to sustainable energy principles.
Developers seem to prefer a model in which one large
system is shared by members of the community
because it seems easier to implement and manage.
However, the spirit of true community might be better
reflected if multiple rooftop systems are used. For
example, in Delaware a combination of individual systems "behind the meter" is allowed in a shared renewables program in the state. Massachusetts also allows
individual systems to be considered a solar community
if at least 10 individual clients are under a net metering program.
Since each U.S. state has its own rules and regulations regarding these types of projects, a comparative
analysis is difficult. However, there are guidelines and
publications that strive to provide general guidance. For
example, the U.S. Interstate Renewable Energy Council
(IREC) suggests that rules and regulations for solar communities should be flexible and based on a policy of
maximizing the use of local energy resources. Solar
communities should be established electrically close to
the point of use in order to diminish losses and facilitate demand response programs. Another IREC suggestion is that benefits should be tied to electric bill credits.
The power company, the community, or a third party
can manage the solar community program. However,

IEEE TECHNOLOGY AND SOCIETY MAGAZINE

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SEPTEMBER 2019



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