Transcript Demand Response: What It is and Why It’s Important

Demand Response:
What It Is and Why It’s Important
2007 APPA National Conference
San Antonio, Texas
June 26, 2007 11:00 a.m. to Noon
Glenn M. Wilson
Director of Utilities
295 Meridian Street
Groton, CT 06340
860-446-4000
The Three Pillars
• Energy Efficiency – Managing energy
consumption and energy assets
• Demand Response – Managing load
shape
• Supply Management – Managing the
supplier relationship and risk
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What is Demand Response?
• Customers reducing their electricity
consumption in response to either:
– high wholesale prices or
– system reliability events
• Customers being paid for performance
based on wholesale market prices
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Why is Demand Response Important?
• Reliability Benefits
– Resource available to help “keep the lights on”
during extreme emergency conditions
• Capacity Resource
– Can be implemented quickly, where needed
– Can be used to satisfy a capacity obligation
• Customer Benefits
– Paid for performance and improve load shape
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Program Types
• Reliability (Demand) Programs
– Customers respond to System Reliability
Conditions as determined by ISO Control
Room
• Price Programs
– Customers respond to Wholesale Prices as
determined by the Market
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Discussion Topics
• Why is demand participation in the electricity market
needed?
• What is the Forward Capacity Market (FCM) and
how does it work?
• What has been the interest in participating in the
Forward Capacity Auction?
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Demand Participation in Markets is Needed
• The load factor of the New England electricity system has
been steadily declining over time resulting in:
– peaky loads, higher energy and capacity costs, and higher
average rates.
• A small amount of demand participation in markets can go a
long way in mitigating peaks, lowering costs, and ultimately
lowering electricity prices to final consumers.
• “Markets are the most efficient way to encourage the
development of cost-effective Demand Resources.” (Henry
Yoshimura, ISO-New England)
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ISO-NE Summer Peak Load Factors
History 1980-2006, Forecast 2007-2016
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Why Should Demand Resources Participate In
the FCM? New England Load Duration Curve (2006)
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Forward Capacity Market Background
• The Forward Capacity Market (FCM) will be used to procure
capacity to meet New England’s forecasted demand and
reserve requirements three years into the future.
– The design of the FCM resulted from a Settlement
Agreement signed on March 6, 2006.
• FERC approved the Settlement Agreement on June 16, 2006.
–
Detailed FCM Rules were filed with the FERC on
February 15, 2007.
• FERC approved the qualification and auction process on April
16, 2007.
• Generation and Demand Resources may participate in the
FCM.
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Eligible Resources
• Supply Resources
– Traditional Generation
(Oil, Coal, Natural Gas)
– Intermittent/Renewable
Generation (Hydro, Wind,
Solar)
• Demand Resources
– Energy Efficiency
– Load Management
– Distributed Generation
– Demand Response
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Forward Capacity Auction Objectives
• The FCM uses a competitive Forward Capacity Auction
(FCA) process to determine which resources to buy, how
much to buy, and how much to pay.
• The FCA will be used to select a portfolio of Generation and
Demand Resources to meet Installed Capacity Requirements.
• All resources that clear the auction are paid the marketclearing price ($/kW-month), subject to performance
incentives and penalties.
• To encourage investment, new resources can receive a longterm commitment (up to 5 years).
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Show of Interest Results
• To participate in the first FCA (scheduled for February 2008),
Project Sponsors had to submit an application called a “Show
of Interest” form.
• ISO New England received more than 400 Show of Interest
forms from new Generation and Demand Resources totaling
over 12,400 MW.
– Over 10,000 MW from new Generation Resources.
– Over 2,400 MW from new Demand Resources, including
energy efficiency, load management, distributed generation
and demand response.
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Demand Resources Show of Interest
MW by State and Resource Type
80% of the proposed MWs are from non-utility suppliers such
as energy services companies, third-party energy suppliers,
equipment vendors and retail customers.
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Early Observations:
• Significant potential for Demand Resources
to participate in the Wholesale Electricity
Markets
– The strong showing with regards to the New Demand
Resource Show of Interest is very encouraging.
– Not all the projects that submitted Show of Interest forms
will qualify, clear and perform.
– However, the level of interest demonstrates the
effectiveness of the Forward Capacity Market to attract
investors and bring about the development of the most
cost-effective capacity resources.
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How Can Customers Participate?
• Reduce Electricity Consumption
– Shut down a manufacturing process
– Turn off discretionary lighting, motors, etc.
– Raise HVAC temperatures
– Use Lighting Controls (i.e., Dimming)
– Use an Energy Management System
• Start Emergency Generator
– Transfer load from the Grid to an Emergency Generator
• Combination
– Start up Emergency Generator and reduce load at the same
time (Real Time Demand Response only).
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Demand Response
(continued)
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Demand Response
(Continued)
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Real-Time Demand Response
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Real-Time Price Response
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Day-Ahead Option
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DR Program Enrollments 2/2006 – 2/2007
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Typical Emergency Generator Configuration
Operating during System Reliability Events (OP4 Action 12)
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Distributed Resources
• Energy Independence Act (Public Act 05-01)
– Distributed Generation
• Qualifying Projects
– Combined Heat and Power
– Peak Shaving
– Installed and Operating after July 21, 2005
• Incentives
– $450 or $500 per kW
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Distributed Resources
• Energy Independence Act (Public Act 05-01)
• Emergency Generation
– $250/kW Southwest Connecticut*
– $200/kW Remainder of Connecticut
– Must enroll in ISO-NE Demand Response Program
Additional $50/kW only available for
units operational before April 30, 2008
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Enrollment Process – Who’s Involved
• Retail Customer
• Enrolling Participant
– Local Utility
– Competitive Supplier
– Demand Response Provider
• Internet Based Communication Service (IBCS)
Provider
• ISO New England
– ISO New England issues payments to Enrolling
Participants and Demand Response Providers, not Retail
Customers directly
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ISO-NE Load Response
Qualifying Projects
•
•
•
•
≥ 100 kW curtailable load (single site or in aggregation)
Demand Response Program (mandatory)
Price Response Program
Enrollment through utility or other curtailment service
provider
Curtailment Methods
• Manual
• Automatic
• Emergency Generation
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ISO-NE Load Response
(continued)
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ISO-NE Load Response
(continued)
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Peak Demand Savings Available from
CEEF and EIA Programs (in kW)
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Lost C&LM Summer Peak Savings Unless C&LM Funding is Restored
Future C&LM Peak Demand Savings (MW) That Would Be Lost, Annual and Cumulative
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