energy efficiency and demand response: separate efforts or two ends of a continuum? a presentation...

Energy Efficiencyand

Demand Response:

Separate Efforts or Two Ends of a Continuum?

A Presentation to: Association of Edison Illuminating Companies

Reno, NevadaSeptember 12, 2006

Susie E. Sides, San Diego Gas & ElectricCraig Williamson, Energy Insights

September 12, 20062

What are we talking about?

Energy Efficiency

Demand Response

Peak Load Management

September 12, 20063

What are they?

Energy Efficiency•Permanent load reduction•many hours•no reduction or shift in customer value, comfort, or output

Demand Response (critical peak management•Temporary load reduction•Very few hours•May involve a reduction in customer value, comfort, or output.

Peak Load Management•peak shift or reduction on many days•change in customer load profile•shift or transfer of customer value or output

September 12, 20064

The problem with the separate view Regulatory context and pricing

Different proceedings for EE and DR Funding is applied discretely to customer programs Savings targets may compete Appropriate price signals must support customer

investment Utility Implementation

A silo effect of efforts at the utility Determining program value can be difficult - Customers

respond with a mix of strategies across the continuum Customer perspective

Confusion from multiple messages and programs “If I do one program, I can’t contribute to the other” “I already did my part with that other program”

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How can integration be applied?

Energy Efficiency


Demand Response

September 12, 20066

It’s a continuum

Energy Efficiency Demand Response


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Why a Continuum?

CUSTOMER

SYSTEMSOCIETY

SWEET SPOT

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Whole can be greater than the sum of the parts Diversity of benefits

Don’t penalize a program or a customer for providing multiple benefits

Awareness and benefits increase with participation in multiple programs

California SPP, considered primarily demand response, EE: Conservation effect (daily reduction) of 3.24% PLM: Non-critical peak day reduction of 4.25% during peak

periods with an increase of 1.80% during off-peak periods DR: Critical peak day peak period reduction of 11.96%

Pricing impacts results across the continuum Interrelationship of effects can change over time

September 12, 20069

An hypothetical example of the interaction

Scenario 1: Residential Customer

Customer is billed on a TOU rate tariff with CPP option

Differential between daily on-peak charges and non-peak charges

Larger differential between non-critical and critical peak days

Customer is new to the program Receives communicating thermostat from utility Starting out, customer doesn’t take time to learn to

program it

September 12, 200610

Example – first year – only DR impact

0

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Baseline

With Control

Begin Event

End event


DR Savings

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Hour

kW S

avin

gs

Initial DR


Over time, the customer learnsFirst, the customer learns to program the thermostat,

adjusting it on all weekdays. This adds a PLM effect May reduce DR effect a bit (setting increase from higher set

point)

After a year, because of the program, the customer decides to replace their 15-year-old Central AC unit with a new high-efficiency unit

Customer saves much more across all hours that the AC is on

Customer reduces load more during critical peak hours, compared with original baseline – but most of that is really EE. Actual load reduction during critical peak is less

Second Year: Less DR, much more EE


Example – ultimate savings – all types

0

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Hour of Day

kW D

eman

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fied

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Original Baseline

New CAC

With programming

New Event Day

Begin event

End event


Savings – second year

Note: Some of EE could be considered PLM

-0.1

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avin

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New DR

PLM

EE


A balancing act

Energy Efficiency

Demand response


Effects in this example

Customer invests in EE, Peak Load and DR technologies, all in response to a DR program

EE: High-efficiency air conditioner Reduces overall energy consumption (kWh) when operating

PLM: Programmable thermostat Adjusts temperature during on-peak periods

DR: Communications device within the thermostat Controlled by utility during critical peak events

Trying to measure separate impacts can also be a challenge, because of the interaction


DR customers will do EE and PLM

Percentage of online customers

Totals add up to more than 100% because respondents could check all that apply

Source: Energy Insights Customer Strategies 2006 Residential Market Survey

70%

64%

32%29%

26%23%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Turned offlights

Changedthermostat

setting

Weatherizedhome

Unpluggedappliances

Purchasedefficient

appiances

Lowered temp.on hot water

heater

Stopped usingcertain

appliances

Customer actions taken in an effort to use less energy

86% of online customers reported taking at least one of these actions in the last year in an effort to use less energy


So…Why Should We Care?

Benefits can be significantly increased through integration Long-term energy (kWh) savings through Energy Efficiency Long-term system (kWh/kW) savings through Peak Load

Management Long-term capacity (kW) savings through Demand Response

Customer benefits are realized sooner Incremental investments results in larger savings

Utility cost savings Save on program costs, number of interactions Long-term capital investment savings

Increase customer satisfaction Decrease customer annoyance Provide comprehensive solution


Not everyone is in the same regulatory environment

Utility profitability can be an issue Under traditional regulation, DR has more

appeal, since it does not result in much revenue erosion.

But if DR programs result in EE, that can hurt profitability (especially under rate freezes)

Careful incentive regulation and rate base rules help


What impact does this have on load researchers?

Measuring impacts with interactions and cross-effects can be a real challenge Working with the right baseline is critical Consider all effects when modeling impact

More generally, be an advocate for the concept of comprehensive approach, especially as you are asked to estimate impacts


Contact information

Susie E. SidesMarket Planning & Analysis Manager

San Diego Gas & ElectricSouthern California Gas Company

[email protected](858) 654-1186

Craig WilliamsonProgram Director, Energy End Use Research

Energy [email protected]

(303) 385-0342

energy efficiency and demand response: separate efforts or two ends of a continuum? a presentation...

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