Opportunities for Demand Response in the National Electricity Market

Transcription

1 Opportunities for Demand Response in the National Electricity Market Dr David Crossley Managing Director Energy Futures Australia Pty Ltd Embedded Generation and Demand Side Responses Seminar Sydney, 27 July

2 Presentation Topics What is demand response? Why demand response? How does demand response work? Enabling technologies for demand response Benefits of demand response Barriers to demand response Opportunities for demand response Information resources 2

3 What is Demand Response? 3

4 What is Demand Response? Demand response is a particular type of demand management (DM) measure Demand response refers to actions taken by end-use customers to reduce their demand for electricity in response to: problems on the electricity network; and/or high prices in the electricity market 4

5 Focus of Demand Response Demand response focusses on when and where electricity is used and how much it costs: when short term (minutes or hours) when network problems occur or prices are high where at locations where load reductions can relieve network constraints how much high electricity prices relative to the average price 5

6 Demand Response and Energy Efficiency Demand Response Energy Efficiency Energy efficiency programs treat all energy usage equally and are not concerned with when and where energy is used and how much it costs 6

7 Origins of Demand Response Demand response is the successor to generations of load management programs in Australia, Asia, Europe and North America, eg: utility direct load control of customer equipment and appliances (water heaters, air conditioners, pumps and some industrial equipment) interruptible and curtailable tariffs for commercial and industrial customers 7

8 Why Demand Response? 8

9 Why Demand Response? (1) Sydney West Bulk Supply Point Load Profile 9

10 Why Demand Response? (2) Predominantly Residential Load Profile 10

11 Why Demand Response? (3) 11

12 Why Demand Response? (4) Hours per year peak price > $1,000/MWh Source: NEMMCO 12

13 How Does Demand Response Work? 13

14 Basics of DR Programs Demand response programs require end-use customers to reduce their electricity use at particular times Customers usually receive reduced electricity tariffs for participating in a demand response program Customers may also receive payments for the availability of demand response and the load reductions actually achieved 14

15 Country Energy Smart Metering Trial (1) Summer 2004 start Australia s first advanced metering system deployment Voluntary participation of customers in Queanbeyan and Jerrabomberra Trial includes: smart metering and communications technologies innovative, cost-reflective tariffs in-house displays to provide customers with real-time information about their electricity use and costs 15

16 Country Energy Smart Metering Trial (2) Ampy Advanced Metering System Smart Meter Home Energy Monitor Source: Cathy Zoi, Bayard Capital 16

17 Country Energy Smart Metering Trial (3) LED Display Push Buttons for energy consumption and cost information LED Lights that display your current energy pricing tariff Source: Country Energy 17

18 Country Energy Smart Metering Trial (4) Designed to test customer response to price signals that reflect system costs Lower off-peak rates, higher on-peak rates, additional critical peak rates occasionally Tariffs structured so utility remains whole financially customers who respond to price signals will be better off financially than now 18

19 Country Energy Smart Metering Trial (5) Off Peak: Shoulder: Peak: 7.03 /kwh 12.7 /kwh /kwh Critical Peak: /kwh Critical Peak may occur a maximum of 12 times per year; customers are given a minimum 2 hours notice. First critical peak pricing event on 15 March 2005 yielded a strong response: 30% reduction in load 19

20 GoodCents Select DR Program (1) The GoodCents Select demand response program, developed by the GoodCents company, has been implemented by Gulf Power in Florida The Florida GoodCents program comprises four interdependent components: an in-home, customer-programmed, automated energy management system a communication gateway which rapidly communicates price changes, critical peak conditions, and other messages to program participants a time-varying design for electricity prices with a near realtime pricing component a means of recording and retrieving the requisite billing data 20

21 GoodCents SELECT Program (2) Major Components SuperStat Communications Gateway RSVP Rate 21

22 GoodCents Select Program (3) In the Gulf Power GoodCents Select program, customers appliances are switched directly from the Gulf Power control room, using a signal sent through the communications gateway Customers use the PriceStat control to set which appliances are switched and the price level at which switching will occur This automated set and forget program provides a much more reliable demand response than programs where customers have to switch appliances themselves every time there is a critical peak event 22

23 GoodCents SELECT Program (4) Residential Service Variable Pricing (RSVP) Rate Schedule Standard Residential Customer Charge applies: $10.00 per month RSVP Participation Charge: $4.95 per month Prices per kwh (includes energy charge, fuel, ECCR, PPCC and ECRC) Low Medium High Critical 4.7 cents/kwh 5.9 cents/kwh 10.5 cents/kwh 31.4 cents/kwh Standard Residential Rate: 6.8 cents/kwh 23

24 GoodCents SELECT Program (5) Residential Service Variable Pricing (RSVP) Rate Percent of Annual Hours in Effect Critical pricing periods are most likely to occur Monday to Friday between 6 am and 10 am (winter) and between 3 pm and 6 pm (summer) Low Medium 59 % 28% 12% 1% High Critical (Maximum) 24

25 GoodCents SELECT Program (6) 1/2/02 No Critical kw Time 25

26 GoodCents SELECT Program (7) 7/18/02 Critical time 2:00 PM to 4:00 PM 6 5 kw Test Group Control Group Time 26

27 California ADRS Pilot (1) California trialed Advanced Demand Response Systems (ADRS) during 2003 and 2004 ADRS systems were trialed in the residential sector and automatically reduced load based on price Participants in the ADRS trial were provided with a full complement of automation technology and real-time access to energy and price information The ADRS enabling technology included: two-way communicating interval meter wireless internet gateway and cable modem smart thermostat(s) load control and monitoring device (LCM) web-enabled user interface and data management software 27

28 California ADRS Trial (2) The technology was programmed to automatically respond to electricity prices Via the Internet, pilot participants could: view real time interval demand and trends in historical consumption set climate control and pool pump runtime preferences program desired response to increased electricity prices change thermostat temperature set point reschedule operation of LCM controlled appliances ADRS continuously displayed current electricity price on the thermostat and the Web 28

29 California ADRS Trial (3) Average Critical Peak Weekday Load Profile Jul to Sep 2004 TOU-ADRS TOU-CPP CPP-ADRS ADRS CPP TOU Source: ADRS Load Impact Presentation 18 Dec

30 Spectrum of Demand Response Options Source: Cathy Zoi, Bayard Capital 30

31 Aggregated DR Programs (1) In the most advanced demand response programs, a third party Aggregator enrols end-use customers in demand response programs and maintains communication with both the system operator and the customers Communication between the system operator, the Aggregator and customers is usually automated Remote meter reading and telemetry enable all parties to see the impact of demand response actions in near real time 31

32 Aggregated DR Programs (2) All parties see impacts from Demand Response in near real time Communications system alerts third party Aggregator to request System Operator initiates request for Demand Response Meter records load every 5 minutes and reports data to all parties Customer receives message from Aggregator and instructs staff to implement load reduction procedures 32

33 Aggregated DR Programs (3) 33

34 Use of Demand Response for Reserve Capacity 34

35 Use of DR for Reserve Capacity Use of demand response to provide reserve capacity is growing Demand response is often cheaper and more flexible than using generation in the ancillary services market to provide: voltage regulation load following frequency response supplemental reserve Some advocates in the United States believe demand response should also be used to provide spinning reserve 35

36 DR for Reserve Capacity in Australia (1) In late 1997, the Victorian Power Exchange (VPX) initiated a Capacity Support Program to provide reserve capacity against a potential shortfall of some 700 MW across Victoria and South Australia VPX tendered for supply of reserve capacity and demand-side options to ensure system reliability over the 1997/98 summer At the close of tenders in October 1997, approximately 150 MW of demand-side resource (of which 58 MW was considered firm load, the balance being non-firm ) had been contracted for dispatch by VPX This was about 1.5% of the forecast maximum demand 36

37 DR for Reserve Capacity in Australia (2) The VPX Capacity Support Program made available three levels of payment: availability payments, which participants received for nominating a demand-side resource that they could make available; pre-notification payments, which participants received if the system operator told them to stand by; and dispatch payments, which participants received if they actually shed load in response to a request. Failure to deliver the minimum amounts of load reduction that had been bid resulted in financial penalties Two retailers received an availability payment, but were not required to reduce demand because the supply system capacity was sufficient to meet demand over the summer 37

38 DR for Reserve Capacity in the US (1) Source: Reports by North American Electric Reliability Council and United States Energy Information Administration cited by Grayson Heffner 38

39 DR for Reserve Capacity in the US (2) NERC Regions ECAR - East Central Area Reliability Coordination Agreement ERCOT- Electric Reliability Council of Texas FRCC - Florida Reliability Coordinating Council MAAC - Mid-Atlantic Area Council MAIN - Mid-America Interconnected Network MRO - Midwest Reliability Organization NPCC - Northeast Power Coordinating Council SERC - Southeastern Electric Reliability Council SPP - Southwest Power Pool WECC - Western Electricity Coordinating Council 39

40 ISO New England DR Program (1) Electricity customers in the service area of the New England Independent System Operator (ISO-NE) can participate in demand response programs Customers participate through an Enrolling Participant which can be a NEPOOL member (such as a local utility or energy supplier) or a Demand Response Provider DR Providers are companies that provide technology and services to help customers participate in the demand response programs Enrolling Participants are responsible for helping customers identify the demand response program that is most suitable for their operation and enrolling them with ISO-NE ISO-NE makes incentive payments to Enrolling Participants who then share the incentives with their customers. Enrolling Participants may also offer other incentives and services 40

41 ISO New England DR Program (2) Actions Undertaken if Asked to Curtail 60% 50% Reliability Programs (N=28) Non-Participant (N=11) Price Response (N=49) 40% 30% 20% 10% 0% Reduced lighting Adjusted HVAC temps Adjusted refrig equip Turned off Turned off office equip fans/pumps Turned off elevators Operated generator Shift mfg processes Other action taken 41

42 :00 11:05 11:10 11:15 11:20 11:25 11:30 11:35 11:40 11:45 11:50 11:55 12:00 12:05 12:10 12:15 12:20 12:25 12:30 12:35 12:40 12:45 12:50 12:55 13:00 13:05 13:10 13:15 13:20 13:25 ISO New England DR Program (3) Test Performance 20 August 2004 All Resources Notice sent at 10:45 a.m. Event Started at 11 a.m. Resources had 30 Minutes to Respond Event ended at 1:30 p.m Time Reduction MW Enrolled MW 42 MW

43 :00 11:05 11:10 11:15 11:20 11:25 11:30 11:35 11:40 11:45 11:50 11:55 12:00 12:05 12:10 12:15 12:20 12:25 12:30 12:35 12:40 12:45 12:50 12:55 13:00 13:05 13:10 13:15 13:20 13:25 ISO New England DR Program (4) Test Performance 20 August 2004 Generation Only Time Reduction MW Enrolled MW 43 MW

44 11:00 11:05 11:10 11:15 11:20 11:25 11:30 11:35 11:40 11:45 11:50 11:55 12:00 12:05 12:10 12:15 12:20 12:25 12:30 12:35 12:40 12:45 12:50 12:55 13:00 13:05 13:10 13:15 13:20 13: ISO New England DR Program (5) Test Performance 20 August 2004 Load Reduction Only Time Reduction MW Enrolled MW 44 MW

45 Enabling Technologies for Demand Response 45

46 Enabling Technologies for DR (1) Enabling technologies for demand response programs generally fall into three categories: automation, monitoring and communication Automation already occurs in direct load control programs; but for demand response programs more sophisticated technology with multiple control points is required Monitoring and communication are newer innovations that: enable more efficient operation in a dynamic environment; allow the Aggregator and customers to play more active roles 46

47 Enabling Technologies for DR (2) Interval metering Energy Information Tools Communications/ Notification Backup Generation Direct Load Control 47

48 Energy Smart Home Wiring Platform (1) Source: Copper Development Centre 48

49 Energy Smart Home Wiring Platform (2) The Energy Smart wiring platform will enable: an energy provider to send a signal to a home appliance when maximum demand is approached; service companies to monitor and service appliances on-line; householders to have greater access to, and control of, appliance operation in the home 49

50 Energy Smart Home Wiring Platform (3) Source: Copper Development Centre 50

51 Benefits of Demand Response 51

52 Benefits of Demand Response (1) Many parties receive benefits from demand response programs: end-use customers who participate in DR programs electricity retailers and network owners electricity system/market operators electricity regulators and policy makers 52

53 Benefits of Demand Response (2) For electricity retailers and network owners, DR programs provide: a physical insurance hedge against energy market volatility cost savings from lower market clearing prices and increased operating flexibility, system efficiency and asset utilisation improved reliability during periods of generation shortages or network congestion deferral of costly (and difficult to site) new generation or network capacity a dampening effect on lumpy, asset-intensive and thus inherently cyclical energy markets 53

54 Benefits of Demand Response (3) Impact of Demand Response on Market Clearing Price Source: Grayson Heffner 54

55 Benefits of Demand Response (4) For end-use customers, DR programs provide: access to the same or similar price signals provided to supply-side producers payments for availability and actual demand reductions as well as reduced electricity tariffs improved understanding and control of day to day electricity use (with investment in enabling technologies such as interval metering, energy management technology and energy information tools) increased customer choice in relation to dealing with high electricity prices 55

56 Benefits of Demand Response (5) Annual Value of 100 hours of Demand Response based on Wholesale Market Prices Source: Grayson Heffner 56

57 Barriers to Demand Response 57

58 Barriers to Demand Response Most customers on retail tariffs never see wholesale electricity market prices and are therefore unaware of the value of demand response Most small customers never see their load profile, because installing interval metering without subsidies is too costly Participating in a DR program can be complex (though this may be mitigated by a third part Aggregator) End-use customers must typically make additional investments in enabling technology to maximise responsiveness 58

59 Opportunities for Demand Response 59

60 Opportunities for Demand Response Levels of Demand Response in the NEM, 2004 MW Source: NEMMCO 60

61 Information Resources 61

62 Information Resources (1) David Crossley: Reviews of documents on demand management in Australia are available at my company s website: Energy Response Pty Ltd is the only demand response aggregator currently operating in Australia: 62

63 Information Resources (2) The International Energy Agency DSM Programme carries out multi-national research projects on demand management. Website for information about the IEA DSM Programme: The IEA DSM Programme has recently initiated two research projects on demand response and network-driven DSM. Website for information about participating in these IEA projects: 63