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A National Perspective On Demand Response
Ahmad Faruqui, Ph.D.
March 3, 2008
California Energy Commission
Sacramento, California
2California Energy Commission
DR is widely deployed across the country but it is mostly triggered during emergencies
• According to a FERC survey, 234 US electric utilities offer DR programs
• A DOE study suggests that some type of DR program exists in 42 of 50 states:
Source: DOE Federal Energy Management Program Website. http://www1.eere.energy.gov/femp/program/utility/utilityman_energymanage.html
EE and DR Programs
EE Programs Only
DR Programs Only
No Energy Management Programs
3California Energy Commission
NERC has quantified the impact of emergency-triggered DR by region
4California Energy Commission
NERC acknowledges that these self-reported DR estimates may overstate actual capability
Source: 2007 NERC Summer Assessment, 2007 FERC Assessment of DR & Advanced Metering
Demand Response by NERC Region
5California Energy Commission
FERC data shows that the DR mix is heavily tilted toward emergency-triggered programs
0%
20%
40%
60%
80%
100%
NE
NY
PJM
MIS
O
SP
P
ER
CO
T
CA
ISO
Economic
Emergency
Percentage of DR by Type
6California Energy Commission
California dispatched the most DR during the heat storm of 2006
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
NE NY PJM MISO SPP TX CA
% of peak
Peak Reduction from DR in 2006
7California Energy Commission
Additional DR comes from dynamic pricing programs aimed at customers > 500 kW
• This amounts to approximately 1 percent of US peak demand which
► When added to DR coming from reliability-triggered programs, this amounts to some 3.5% of US peak demand
• Much of the price-responsive DR originates in the regions east of the Mississippi River
► Duke Energy► Georgia Power Company► Tennessee Valley Authority
• There is additional DR in restructured power markets in Texas, New York, New England and PJM that feature hourly pricing as the default service
► Customers can opt to energy service providers for hedged pricing products
8California Energy Commission
A forthcoming EPRI-EEI study suggests that DR can lower peak demands by 10%
Source: EPRI/EEI National EE and DR Potentials Study: Preliminary Results
Maximum Achievable Potential Peak Reduction From DR
0
200
400
600
800
1,000
1,200
1,400
2005 2010 2015 2020 2025 2030
Year
Fo
reca
sted
US
Pea
k D
eman
d (
GW
)
10% reduction in peak
US demand forecast (no DR)
US demand forecast (with DR)
3.5% reduction in peak
9California Energy Commission
Dynamic pricing will soon be offered in mass market, as AMI spreads nationwide
Source: UtiliPoint International, 2007 FERC Assessment of DR & Advanced Metering
Number of Utilities Announcing AMI Deployments
10California Energy Commission
To assess AMI economics, several dynamic pricing pilots are being carried out
11California Energy Commission
Across these pilots, there is compelling evidence of strong demand response potential
Percentage Reduction Estimates from Reviewed TOU Pilot Programs
0%
5%
10%
15%
20%
25%
30%
35%
Ontario- 1 Ontario- 2 SPP PSEG PSEG ADRS- 04 ADRS- 05 Gulf Power-1
Pilot Program
% R
edu
ctio
n i
n L
oa
d
TOU TOU w/ Tech
12California Energy Commission
Higher impacts are observed for dynamic pricing rates than for TOU rates
Percentage Reduction Estimates from Reviewed CPP/PTR Pilot Programs
0%
10%
20%
30%
40%
50%
60%
Pilot Program
% R
edu
ctio
n i
n L
oa
d
CPP PTR CPP w/ Tech
13California Energy Commission
Multiple barriers are impeding the wider deployment of price-responsive DR
• Lack of state-federal regulatory coordination • Disconnect between retail and wholesale power
markets• Retail rate freezes and wholesale price caps• Lack of AMI and enabling technology• Customer fear of price volatility• Unimaginative program designs• Aggregators not allowed into the market
14California Energy Commission
How does California compare with the rest of the country?
• ISO/RTO based reliability-triggered programs► California is on par with the rest of the US
• Price responsive retail and wholesale DR► California lags the country
• Dynamic pricing for large power customers► California lags the country
• Dynamic pricing for the mass market► California has conducted the most comprehensive pricing
pilot in the country► It is moving faster than the nation with AMI deployment