[PPT] - Demand Response Programs: Demand Response Programs: Lessons from PowerPoint Presentation

SLIDE 1

Demand Response Programs: Demand Response Programs: Lessons from the Northeast Lessons from the Northeast

Charles Goldman

E. O. Lawrence Berkeley National Laboratory

CAGoldman@lbl.gov

Mid Atlantic Demand Response Initiative Meeting

Baltimore MD December 10, 2004

SLIDE 2

Energy Analysis Department

Overview of Talk Overview of Talk

DR strategies and design principles in

wholesale markets

Elements of a “successful” DR program
Lessons Learned
ISO DR programs/markets
Related actions needed to support regional

DR programs

SLIDE 3

Energy Analysis Department

Wholesale Markets and DR Resources: Wholesale Markets and DR Resources: Objectives, Design Principles, Key Issues Objectives, Design Principles, Key Issues

Wholesale Market/ DR Strategy DR Program Objectives Design Principles and/or Key Issues Day-Ahead Energy Market (DADRP)

Increase competition

among suppliers

Put downward

pressure on day-ahead market clearing price

Ensure equitable treatment of supply and

demand-side resources while recognizing that Customer Loads are not Generators

Degree of Integration into ISO scheduling &

settlement processes “Emergency

Resources” (EDRP)

Restore system

security to design levels and help avoid load shedding

Resource value/pricing related to customers’

value of lost load Real-time Energy Market (RT Price Response Program)

Put downward

pressure on real-time market clearing price

Customers willingness/ability to respond with

limited notice

Degree of integration into ISO Scheduling

process Targeted Load Response for Constrained Area

Lower locational

market clearing price

Preserve transmission

grid reliability

Consider offering higher incentives to reflect

value of congestion relief

SLIDE 4

Energy Analysis Department

Defining “Success” in the Defining “Success” in the DR World DR World

Improve electric system reliability during

system contingencies: Potential & Actual performance

Improve efficiency of wholesale electricity

markets - demand-responsiveness

Broad portfolio of participating loads & program

types

High Penetration Rates in Target Markets
Effective coordination between ISO & retail

markets (LSE,PUC)

SLIDE 5

Energy Analysis Department

NEDRI Public Meetings: What do NEDRI Public Meetings: What do customers want in DR programs? customers want in DR programs?

Timely and certain payments for performance
Minimal downside risks (e.g. performance

penalties)

Relatively certain stream of benefits in order to

make “business case” for investment

Easy to enroll and participate (Low “hassle

factor)

Useful “toys”: enabling technology that can be

used to manage energy costs

Customized, tailored service offerings
Clear program goals that align with their

business interests or priorities

SLIDE 6

Energy Analysis Department

Characteristics of Innovative Utility Characteristics of Innovative Utility DR Programs DR Programs

Substantial customer response at high
ffer prices
Multiple program options & features
ffered under a single “brand”
LSE/customer share benefits (often not

transparent to customer)

Lots of customer care & education
Use of customer-specific baselines
Variety of forward contracting options
Motivated or “incented” LSEs

SLIDE 7

Energy Analysis Department

Real Real-

Time “Emergency” DR Programs

Time “Emergency” DR Programs

NEDRI recommendations on ISO-NE
higher minimum floor payments for called resources

(higher of RT LMP or $500/MWh minimum for 30 minute notice or $350/MWh for 2 hour notice)

reduce entry barriers for Demand Response

Providers ($500 annual fee)

a longer-term commitment to DR programs (3 years

starting with SMD; with option to extend)

Impact
Doubling of MW enrolled in ISO-NE “emergency” DR

program from 2002 to 2003 (112 to 260 MW)

Aug. 15, 2003: ~75 MW load reduction in SW CT for

10 hours

SLIDE 8

Energy Analysis Department

NYISO: Curtailment Potential (PPI) by NYISO: Curtailment Potential (PPI) by Business Type and Curtailment Strategy Business Type and Curtailment Strategy

60% 0% 10% 20% 30% 40% 50%

Educ. Gov/ Utility Health Mfg. Multi- Fam Office Bldg. Recr/ Casino Trade Unclassified

PPI Load/Gen Gen Load 9 90 13 502 3 5 2 13 246

Subscribed MW Active Participants

SLIDE 9

Energy Analysis Department

Capacity Market needed to provide Capacity Market needed to provide longer longer-

term signals for DR investment

term signals for DR investment

DR resources provide system capacity

and reliability benefits

Reflected in current ICAP markets to limited

extent

Reservation payments help build

sustainable DR business model for load aggregators

NEDRI Recommendation
ISO-NE implement an effective, location-

based ICAP resource credit ASAP

SLIDE 10

Energy Analysis Department

ICAP Payments for 1 MW in Summer ICAP Payments for 1 MW in Summer 2001 2001

SLIDE 11

Energy Analysis Department

Facilitating Load participation in Day Facilitating Load participation in Day-

Ahead

Ahead Energy Markets: Challenges Energy Markets: Challenges

NYISO
Decent enrollment (~400 MW); few

accepted bids (~10 MW)

Location, location, location – most enrolled

participants upstate; highest need in NYC

NEDRI Recommendations for ISO-NE:
ISO-NE commit to developing an

“economic, price-driven” day-ahead market DR program by summer 2004, which draws upon “best practices”

SLIDE 12

Energy Analysis Department

NYISO Day NYISO Day-

Ahead Market DR Program:

Ahead Market DR Program: Low Participation and Bidding Activity Low Participation and Bidding Activity

200 400 600 800 1000 1200 1 6

J

u l 2 9

J

u l 1

A

u g 2

A

u g 4

S

e p 2 1

S

e p 9

O

c t 3

O

c t 1 6

N
v

1 3

D

e c 2 3

D

e c 1

J

a n 2 4

J

a n 1 5

F

e b 2 7

F

e b 3 1

M

a r 2 4

A

p r 1 4

M

a y 2 4

M

a y 7

J

u n 2 1

J

u n 5

J

u l 1 9

J

u l 2

A

u g 1 6

A

u g 1 9

S

e p MWh MWh Offered MWh Accepted

2001 2002

SLIDE 13

Energy Analysis Department

Primary Stated Reason for Not Primary Stated Reason for Not Participating in NYISO DADRP Participating in NYISO DADRP

30% 6% 5% 36% 6% 17% Potential Benefits Don’t Justify Risk

Penalty is too severe Payments are too low Unable to shift usage Conflict with contract or rate Inadequate knowledge

Base = 63, No response = 81

Potential benefits don’t justify risks (30%),
Operational constraints (36%)
Inadequate knowledge of program requirements (17%)
Other factors
Low program awareness levels (~35%)
High bid price thresholds (~median value is $0.50/kWh)

SLIDE 14

Energy Analysis Department

Role of regulated utilities in delivering Role of regulated utilities in delivering ISO DR Programs ISO DR Programs

Policy and market implications to how ISO

payments are shared between providers and customers

NEDRI Recommendation
State PUCs adopt retail tariffs that support delivery
f ISO-NE DR Programs
70% of ISO incentive payment for load curtailment

show flow to customer; 30% to be retained by regulated service provider

NY
90% of payment passed on to customer

SLIDE 15

Energy Analysis Department

Public benefit/ratepayer funding to Public benefit/ratepayer funding to

vercome DR market barriers
vercome DR market barriers
Significant market and institutional barriers limit

customer load participation in wholesale markets

Experience in selected states (NY, CT, CA) suggests

that small amount of SBC funds ($1-3M/yr or ~<5%) can increase DR infrastructure deployment significantly

NEDRI Recommendation
Additional funds to support DR enabling infrastructure,

technical assistance, and customer education/information. Funds should preferably be incremental to existing SBC funds, come from regional or state sources and be relatively small in amount

Enabling infrastructure includes: web-enabled EIS; advanced

Metering, communication and notification tech.; load control devices

SLIDE 16

Energy Analysis Department

Public Benefits Programs Support DR Public Benefits Programs Support DR Enabling Technology Enabling Technology

State Program Budget (2001) Eligible Enabling Technologies

CA CEC Demand Responsive Building Systems & Real-time Metering Program $44 M $35M

EMCS
Web-enabled Communication
Load Control Devices
Interval Meters

NY NYSERDA Peak Load Reduction Program (PON 577) $11 M

Short Duration Load Curtailment
Permanent Demand Reduction
Dispatchable Emergency

Generators

Interval Meters

NY NYSERDA Enabling Technologies for Price Sensitive Load Management (PON 585) $1 M

Real-time communications and

metering (mandatory)

Real-time price forecasting
Automated load curtailment

and/or generator operation

Web-enabled technology

SLIDE 17

Energy Analysis Department

Monitor and Limit Environmental Impacts of Monitor and Limit Environmental Impacts of DR Programs DR Programs

Issue: more frequent use of high-polluting

back-up generation

NEDRI Recommendations
Adopt output-based technology-neutral standards for

new onsite generators

Update state regulations for existing generators
Provide information base for envr. Analysis of DR

program impacts

2003 ISO-NE Programs

Air regulators work with Demand Response providers

to develop user-friendly interface and process to expedite processing of permits and waivers

ISO-NE make info on actual load response events

available to air regulators to evaluate envr. impacts

SLIDE 18

Energy Analysis Department

Conduct independent DR evaluation Conduct independent DR evaluation and market assessment and market assessment

NEDRI Recommendation for 2003 DR

Program

establish DR program targets and a

timetable to achieve them

barriers to participation by customers and

market participants,

assessment magnitude of price-responsive

loads

impact on market prices and system

reliability

recommendations on proposed DR program