Forecasting market potential and market penetration of residential water heater load control programs

Abstract

This paper presents a model which estimates market potential and forecasts market penetration for one demand-side management (DSM) programwater heater load controlin the service territory of Virginia Power Corporation, a large electric utility in the south-eastern United States. Water heater load control is a voluntary program where customers are paid a monthly incentive to allow the utility to shut off power to their electric water heaters during periods of peak demand. Reducing the level of peak demand through DSM programs is one way for utilities to avoid building new power plants. The current total energy (or demand) impact due to a load control program is the sum of the changes in energy (or demand) for all program participants. The projected energy and demand impact due to a load control program is the average change per participant multiplied by the number of participants or adopters of the program. While it is reasonably straightforward to measure the energy savings resulting from shutting off power to a water heater, the more difficult task for planning purposes is forecasting the number of customers who will actually join the program (i.e. the market penetration) for a given incentive. The customer decision process is divided into three stages: eligibility, awareness, and adoption. The responsiveness of market penetration to changes in advertising and incentive amounts is demonstrated. In addition, the impact of changing advertising and incentive amounts on the percentage of aware customers who adopt the program and on that of eligible customers who become aware of the program is estimated. This model can be used by utility planners and managers to forecast the market penetration of both new and existing load control programs. In addition, it can be employed to estimate the impact of various promotion and marketing schemes on both market potential and market penetration.