What is Demand Response?

Transcription

1 Demand Response Programs in Indiana: Opportunity or Hassle? John Haselden IP&L Jason Stephenson Barnes & Thornburg LLP What is Demand Response? End-use customers reducing their use of electricity during periods of high demand. 1

2 What is the value of demand response? Electric providers plan for peak usage. Providing for peak usage is expensive. The ability to reliably reduce peak usage brings value. Strategies for reducing demand. Large-Sized Customers Switch to internal generation Delay energy intensive production Slow production Small- and Medium- Sized Customers Strategies to combine load of several participants for a meaningful reduction. Air-conditioning load management Shutting off lights 2

3 Demand Response A New Idea? Demand response is not a new idea. Electric utilities have long had interruptible tariffs, which are essentially a form of demand response. Impact of computing and communications technologies Smaller customers can aggregate load Communicating with more customers is now possible Obstacles to Demand Response Comfort Competition Convenience Lost Production Just In Time Delivery Valuing Demand Response 3

4 Trends Influencing Demand Response Regional Transmission Organization interest in demand response marketing price Availability of markets enable aggregation of businesses to help retail users with demand response by combining load diversity Uncertainty in electric planning RTO Demand Response Programs MISO and PJM have adopted programs enabling retail customers to offer their load reductions into the respective energy markets. Pursuant to Indiana Utility Regulatory Commission order, Indiana retail customers must participate through retail electric provider. 4

5 MISO Demand Response Program Payments based on prevailing energy price for electricity not used. MISO dispatches resources through Indiana utilities. Participants must bid their reduction into the market. Options for Participation DRR Type 1 DRR Type 2 DRR Type 1 and 2 Type 1 is capable of supplying a specific quantity of energy, contingency reserve or capacity through physical load interruption. Type 2 is capable of supplying a range of energy and/or operating reserve, at the choice of the market participant, to the energy and operating reserve market through behind the meter generation and/or controllable load. 5

6 Interest in MISO Demand Response Type MW as of June Down from MW in Growing negative impact of EPA emissions restrictions on distributed generation Type 2 75 MW as of June Level has been steady since PJM Demand Response Payments based on prevailing energy price for electricity not used. PJM dispatches customers through Indiana utilities. 6

7 PJM Options for Participation Is Demand Response Right For Your Business? What programs are available? What costs or inconveniences can my business bear? Does the value outweigh the cost? 7

8 Programs available in Indiana Investor Owned Utilities Duke Energy Indiana Indiana Michigan Power Company Indianapolis Power & Light Vectren Energy Delivery of Indiana, Inc. Municipal and Electric Cooperatives Duke Energy Indiana Rider No Time of Use Service Rider No Time of Use Service Rider No. 19 Non-Firm Service Rider No. 22 Market Based Demand Response 8

9 Duke Energy Service Time of Use Available to customers that agree to move load from the on-peak hours to the off-peak hours. Incentives Lower per kw charge during off-peak billing periods No KVar Charges during off-peak periods Duke Energy Non-Firm Service Requires 5 MW of Customer s total electrical load must be subject to nonfirm service. Requires a written contract with Duke Energy reflecting the individual operating characteristics. Maximum capacity is 300 MW. 9

10 Duke Energy Market Based Demand Response Rider Must comply with Midwest Independent Transmission System Operator energy consumption reduction. Cannot participate in other curtailment programs for the same load. I&M Rider R.P.R. Residential Peak Reduction Rider Tariff RTP Experimental Real Time Pricing Tariff C.S.-IRP2 Contract Service Interruptible Power PJM Demand Response Rider DRS 1, 2 and 3 10

11 I&M Residential Peak Reduction Rider Residential customers qualify by permitting I&M to install load control equipment. Customers receive an $8 monthly billing credit from May through September. I&M Experimental Real Time Pricing Customer pays real time pricing on energy consumed in excess of amount designated. Incentivizes customer to reduce load during peak periods when the price is high. Is this demand response? 11

12 I&M Contract Service Interruptible Power Customer agrees to mandatory capacity and discretionary energy reductions. Rate terms are negotiated in the contract. I&M PJM Demand Response Programs Permits I&M customers to participate in certain PJM Demand Response Programs. PJM dispatches I&M who provides instructions to customers. 12

13 IPL Rider No. 13: Air-Conditioning Load Management Rider No. 14: Interruptible Power Rider No. 15 Load Displacement Rider No. 17 Curtailment Energy Rider No. 23: Market Based Demand Response Rider IPL Air-Conditioning Load Management Enables IPL to cycle air conditioner during periods of peak demand. Credit is $5 per month during June-September for residential customers (less for half cycle). Commercial and Industrial receive $5 credit per ton of cooling capacity. 13

14 IPL Interruptible Power Customer must enter into 5 year contract for interruptible power. Minimum interruptible demand of 1,500 kw Cap of 100 MW Maximum hours of interruptions Customer receives a capacity credit and an interruptible credit calculation. IPL Load Displacement Customer must have at least 250 KW of generating capability to displace their own load. Customer must operate generation facilities when called upon by IPL. Customers receive a monthly capacity and energy credit during a load displacement period. 14

15 IPL Curtailment Power Customer must agree to curtail a portion of its electric load upon request. Credits are afforded to customers based on two options depending on customers discretion in not complying with curtailment. IPL Market Based Demand Response Rider Very similar to Duke Energy s program Permits customers to participate in MISO Demand Response programs as DRR Type 1 or EDR through IPL. 15

16 Vectren South Interruptible Power Service Rider IC Rider IO MISO Demand Response Rider DR Direct Load Control Rider DLC Vectren Interruptible Power Rider IC Customer must provide at least 1000 kva of interruptible demand during peak periods. Customer receives a capacity credit equal to 90% of the capacity payment to a qualifying facility in effect in its Rate CSP. Penalties for failing to interrupt. Rider IO Customer must be willing to interrupt at least 250 kwh during periods of request from the Company. Customer receives a capacity credit equal to 80% of the capacity payment to a qualifying facility in effect in its Rate CSP. 16

17 Vectren MISO Demand Response Rider Allows customer to participate in MISO Demand Response Programs through Vectren. Operates similar to Duke Energy s Demand Response Rider. Vectren Direct Load Control Rider Direct Load Control switch must be installed on customer s electric cooling units and water heaters. Cycles off the cooling units and water heaters for a few minutes each half hour. Billing credit from June through September 17