an overview of demand response in california
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1
An Overview ofDemand Response
in California
July 2011
What is Demand Response (DR)?
2
DR is set of action taken to reduce electric loads when:
Contingencies, such as emergencies or congestion, occur that threaten the supply-demand balance
-OR-
Market Conditions occur that raise electric supply costs
The goals are to improve electric grid reliability and lower use of electricity during peak demand
DR is high priority electricity – second only to Energy Efficiency in the Energy Action Plan’s “loading order”
Evolution of Demand Response Until 2005, most of the demand response (DR) was provided by Large
Industrial customers in response to a California Independent System Operator (CAISO) emergency
After the 2006 summer heat wave, the CPUC expanded the DR customer base to provide price-responsive DR before a CAISO emergency:
Utilities offered a wide variety of DR programs such as Air Conditioning (AC) cycling, programs providing energy payments only, and programs that provide both capacity and energy payments
Beginning in 2007, several established third-party aggregators were allowed to participate directly in the utility programs and through bi-lateral DR contracts with the utilities
Beginning in 2009, the CAISO started considering DR as a generation resource similar to a Combustion Turbine (CT) and developed specific products in the wholesale markets suitable for DR which are still waiting approval from FERC
As early as 2012, a limited roll-out for HAN devices are expected to enable additional DR options for residential customers
3
Demand Response Rulemaking
CPUC instituted four phases for R.07-01-041: Phase 1: Load Impact Protocols (D.08-04-
050) Phase 2: Cost-Effectiveness Protocols (D.10-
12-024) Phase 3: Transition of Emergency-triggered
programs to Price-responsive programs (Settlement: D.10-06-034)
Phase 4: Direct participation of DR in the CAISO’s wholesale markets (Open)
4
Examples of DR Triggers
CAISO or IOU forecasts indicate that the CAISO system load will meet or exceed certain MW threshold (e.g., 43,000 MW for PG&E)
CAISO issues - or IOU expects the CAISO to issue - a Stage 2 or Stage 3 emergency or local transmission emergency
IOU expects to require the dispatch generation facilities with heat rates of 15,000 BTU/kWh or greater for the day-ahead or hour-ahead market
An actual or anticipated localized emergency (e.g., loss of generation or transmission resources)
Average forecasted peak temperature of San Jose, Concord, Redding, Sacramento, and Fresno meets or exceeds 94 degrees Fahrenheit on a program day (example for PG&E territory)
5
Load Duration Curve During
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
1
262
523
784
1,04
5
1,30
6
1,56
7
1,82
8
2,08
9
2,35
0
2,61
1
2,87
2
3,13
3
3,39
4
3,65
5
3,91
6
4,17
7
4,43
8
4,69
9
4,96
0
5,22
1
5,48
2
5,74
3
6,00
4
6,26
5
6,52
6
6,78
7
7,04
8
7,30
9
7,57
0
7,83
1
8,09
2
8,35
3
8,61
4
Hour
Hou
rly A
ve. D
eman
d
50,085 MW Peak 7/24/06
Greater than 45,000 MW 57 hours or 0.65%
Winter Peak 33,275 MW 12/14/05
6
2006 Heat Wave: September 2005 to September 2006
Types of Demand Response Load response for reliability purposes:
Direct load control, partial, or curtailable load reductions (e.g., Air Conditioning Cycling)
Complete load interruptions Use of AutoDR technologies
Price response by end-use customers: Time Varied Rates: Real-Time Pricing (RTP), Critical Peak
Pricing (CPP), Time-of-Use rates (TOU) Demand Bidding Programs Capacity Bidding Programs Aggregator Managed Programs
Programs that bid directly in the CAISO’s wholesale markets
7
Potential Penalties for Non-compliance
Time-Varied Rates No penalty, just pay higher cost for energy during
peak
Interruptible Tariffs Capacity payment and penalty for non-compliance
Incentive-Based Programs Price-responsive
If no capacity payment – no penalty With capacity payment – penalty for non-compliance
Emergency-triggered Capacity payment and penalty for non-compliance
8
Ex Ante Load Impact for Utility Demand Response Programs
2012(MWs)
2013(MWs)
2014(MWs)
5% DR Goal
(MWs)
Emergency-triggered Programs 869 900 933 N/A
Price-Responsive Programs 2,281 2,467 2,410 2,5001
Total 3,150 3,367 3,343 N/A
[1] 5% of an assumed 50,000 MWs of system peak demand – illustration purposes only.
9
10
DR Budget Request 2012-2014 Cycle
(a) Total authorized funding from DR cycle and SmartAC proceedings
(b) Includes SCE request to apply $20M in unspent funds approved in 2009-2011 DR cycle
IOU Budget Request for 2012-2014
Authorized Budget for 2009-2011
Increase In Budget Request
PG&E $228.0M $186.9Ma 22.0%
SCE $249.0Mb $233.6M 6.6%
SDG&E $68.1M $ 55.1M 23.6%
Total $545.1M $475.6M 14.6%
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