Energy Demand, A Marketing Problem
2020 made abundantly clear the importance of compelling communication strategies in the face of exceptional circumstances. This truth extends across many events and movements that dominated American news streams—and the Californian rolling blackouts were no exception. On August 14th, power was cut for nearly 500,000 Californians and, the following day, over 300,000 customers lost power. Californians hadn’t experienced an event like this in 20 years and, as such, an extensive investigation was conducted jointly by the California Independent System Operator (CAISO), the California Public Utilities Commission (CPUC), and the California Energy Commission (CEC). Ultimately, the conclusion outlined why supply channels were unable to match demand:
The extreme, climate change-induced heat storm resulted in electricity demand exceeding supply.
Resource planners have not kept pace with the rapid rise of solar and wind power on the grid, resulting in insufficient supply to meet the high demand in the early evening in extreme conditions.
Some practices in the day-ahead energy market exacerbate supply challenges when the grid is under high stress.
Source: 2020 Integrated Energy Policy Report, Update Volume III
Supply and demand management is a tricky and often underappreciated challenge. On the supply side, Independent System Operators want to produce as much energy as a community needs, but not much more than that. While peaker power plants can be activated in supply deficits, they are generally avoided due to high costs and emissions. So what happens when demand exceeds all of a territory’s production assets—including peaker plants and supply imports? The August 2020 Rolling Blackouts can answer that question. The energy economy enters a supply deficit and entire communities will lose power—with potentially devastating impacts to households, hospitals, schools, etc. In this case, an extraordinary climate change-induced heat storm across multiple Western states contributed to the deficit.
Typically, once situations like these are in motion, options to increase supply are exhausted because power plants cannot be added in a moment’s notice and all available supply imports have already been procured. At this point, the challenge becomes one of energy demand management—and that is a marketing problem. Energy utilities and suppliers need to effectively market Demand Response programs and Time-of-Use habits that help manage energy demand during peak periods, especially in the case of an extreme heat storm. The real challenge then becomes marketing these energy-saving programs to an unengaged audience that expects reliability without having to change their behavior. That’s where marketing strategy becomes a solution capable of raising awareness of demand reduction needs, motivating consumers to change their behaviors, and providing the information and tools necessary to sustain those changes for the next event.
We should only expect more climate-related emergencies in the years to come; that is no longer in our control for the immediate future. How our energy economy reacts to those emergencies, however, is. This is why marketing strategy—how we go about positioning demand-side solutions—becomes critical as a proactive solution to balancing energy demand for future supply-demand deficit occurrences.
