FERC’s new rule on compensation for demand resources tips the market balance toward negawatts. Arguably the commission’s economic analysis is flawed, and the rule represents a covert policy...
Demand Response: The Green Effect
How demand response programs contribute to energy efficiency and environmental quality.
to acknowledge that some DR is enabled by back-up generators. For years, customers have participated in interruptible-type tariffs and programs by utilizing such generators, which may be fossil-based. Obviously, when a customer leaves the grid in a DR exercise involving such distributed generation (DG), there are emissions in play even if there is a net kWh and emissions reduction from resources on the grid.
This should not be seen, however, as reason to dismiss DG-based DR out of hand. First, the use of DG units in DR programs has not escaped the notice of state environmental regulators. Second, as DR grows as a business, the efficiency and cleanliness of the DG units deployed in DR programs will improve, in order to improve the economics and competitiveness of such DR resources. Just as more efficient and cleaner generation has been seen by many in the environmental community as something to support, the same will increasingly hold true for generation used in DR. Third, it is important to look at the forest as well as the trees. Modeling done on the New England region shows that even with DG in a regional DR scenario, there can be net benefits.
Furthermore, by shifting consumption from peak to off-peak, DR can shift plant utilization and fuel type with attendant environmental consequences. This effect, while potentially dramatic, is challenging to measure or even model since it is both utility/ISO-specific as well as time-of-day and season-specific. Therefore, many combinations of generation fuel-switching and individual unit-shifting exist. And, as always, DR doesn’t just shift consumption (and therefore generation), but usually reduces it. But emissions tracking and measurement will continue to develop in the years to come and will allow better analysis of this issue.
At the heart of this issue is the magnitude of the DR-driven shift and the difference in environmental performance between the units less utilized and those more utilized. Furthermore, it is marginal performance that counts: The number of shifted megawatts alone will understate the avoided particulate emissions if, for example, the shift avoids cold-starting a diesel generator at peak. And a given shift may worsen one environmental problem while simultaneously moderating another or shifting its location with regard to a population center or an environmentally sensitive area.
While system-specific factors make it impossible to generalize, many systems use open-cycle natural-gas plants at peak and coal or nuclear for baseload. Therefore, a shift from peak to off-peak is likely to decrease the use of gas and likely to increase coal use (assuming that nuclear utilization does not fluctuate with demand). This scenario leads to an increase in CO 2 emissions and mixed changes in other emissions. Once again, however, the magnitude of the increase is low due to the low number of kilowatt-hours that are “in play.”
The shift in generation and emissions from peak to off-peak times also may improve air quality modestly because certain pollutants are sunlight and temperature sensitive. DR can shift the emission of the precursors of ground-level ozone and smog (NOx, SOx, and particulates) from very hot summer afternoon peaks to