Washington (Platts)--26Feb2013/449 pm EST/2149 GMT

The ability to manage energy use better is an area where the federal government should lead by example, and progress is being made on that front, but there is large potential that is unmet in the demand response sector, several speakers said Tuesday at a White House event.

The ability of government buildings to be used as energy resources -- by reducing power usage during peak demand periods or storing electricity to aid power grid operators dealing with fluctuating load and generation -- is underutilized in the US, and federal agencies should view demand response programs in regions with independent system operators as market opportunities, said Federal Energy Regulatory Commission Chairman Jon Wellinghoff.

Having such buildings participate in demand response markets cannot only improve the efficiency of the power grid, but it can provide revenue for agencies by getting paid for being able to provide energy, ancillary services or capacity in some ISO markets, Wellinghoff said at the event, which was held by the White House Council on Environmental Quality.

Representatives from the Department of Energy, General Services Administration, the Department of Defense and CEQ highlighted the potential for federal building managers to take part in demand response markets while also noting several challenges. ISOs do not cover many states and the Defense Department takes a long time to make decisions, meaning that responding to price signals is difficult for many military installations, said John Conger, acting deputy secretary for installations and equipment at DOD.

With 300,000 buildings in the US and an annual utility bill of $4 billion, DOD is taking part in demand response activities on a limited basis, producing $14 million in savings over the past year, Conger said.

GSA, which owns or acts as landlord for many US government buildings, the agency's participating in demand response markets at this point is "limited, but promising," said Dorothy Robyn, commissioner of public building services at GSA.

Investing in automated systems at government buildings that can reduce energy usage is something GSA is working on, Robyn said, and others mentioned that automation and simplicity will be keys for greater demand response participation.

Because the federal government is the largest energy user in the US, CEQ held the event to determine ways that the government can try and "lead by example" and learn from the private sector, said Nancy Sutley, chairwoman of the CEQ. The Obama administration wants to tap the potential of demand response markets and the event should help "bring to light innovative ways we can cost-effectively reduce peak demand for energy," Sutley said.

Private sector representatives mentioned the growth of demand response markets and how the US is viewed as the world leader in demand response policies and technologies, unlike other clean energy markets where the US is behind other countries. Hundreds of companies specializing in energy efficiency and enhanced energy management for retail customers are attracting attention from venture capitalists and countries around the world looking to bring that expertise to Japan, Singapore and South Africa, said Tim Healy, CEO of demand response firm Enernoc.

PJM Interconnection has seen a seven-fold increase in demand response resources taking part in PJM's forward auctions over the past five years, with last year's auction procuring more than 14,000 MW of those resources on top of 923 MW of energy efficiency resources, said Terry Boston, PJM's CEO. Boston touted the revenue stream allowed by PJM's capacity market, where customers receive payment from PJM for being available to reduce load, as being a key component driving the growth of demand response in PJM.

The ability to store electricity with batteries, water heaters, electric vehicles or other devices also will go a long way toward enhancing customers willingness to participate in demand response markets, Boston said.

Even with the huge growth of demand response in organized markets, it is "just the tip of the iceberg" as companies look to tap energy usage data in new ways and save money, Healy said. The government's Green Button Initiative and other measures to enhance energy usage will help companies take millions of points of data and turn them into "actionable business intelligence," he said.

That Green Button effort has gained commitments from more than 35 utilities, which provide consumers with online access to their own energy usage data with the click of a button.

Data analytics is growing within the energy sector just as it is in other businesses, and keeping energy data secure and available for use in different energy-saving applications is a growing field, Healy said.

--Tom Tiernan, tom_tiernan@platts.com --Edited by Valarie Jackson, valarie_jackson@platts.com