Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

DR Distortion

Are subsidies the best way to achieve smart grid goals?

Fortnightly Magazine - November 2010

generation. However, engaging DR that already counts as capacity (thus already having displaced some generation capacity) in the energy market could reduce volatility.

12. Price-responsive demand would have to be able to set prices in both day-ahead and real-time energy markets in order for energy prices to reflect willingness-to-pay. Currently, very little price-responsive demand or DR is able to set prices.

13. This was the assumed market penetration rate of dynamic pricing in the Achievable Participation scenario of A National Assessment of Demand Response Potential. Additionally, a small fraction of non-participants in dynamic pricing were assumed to participate in non-pricing demand response programs in that scenario.

14. Robert Earle, Sam Newell, Ahmad Faruqui, Attila Hajos, and Ryan Hledik, “Fostering Economic Demand Response in the Midwest ISO,” prepared for the Midwest ISO, Dec. 31, 2008, Figure 6.

15. This has been the case in PJM since the introduction of RPM in 2007. In 2008, capacity payments accounted for more than 80 percent of DR’s wholesale market revenues in 2008. In 2009, capacity payments accounted for more 98 percent of DR’s market revenues. Source: Figure 2-23, 2009 State of the Market Report for PJM , by Monitoring Analytics, LLC, March 11, 2010.

16. See, for example, ISO New England Inc. , Docket No. ER08-538-000; Filing of Changes to Day-Ahead Load Response Program; Feb. 5, 2008.

17. “Reply Comments Of The Electric Power Supply Association,” Docket No. RM10-17-000 (filed June 30, 2010)

18. Ryan Hledik, “How Green is the Smart Grid?” The Electricity Journal, April 2009, page 39. The article finds that a portfolio of smart-grid programs could lead to CO 2 emissions reductions. However, with respect to DR alone, it finds that there’s little or no impact (and indicates that there could potentially be an increase in emissions).

19. See also Stephen P. Holland and Erin T. Mansur, “Is Real-Time Pricing Green?: The Environmental Impacts of Electricity Demand Variance,” Center for the Study of Energy Markets, University of California Energy Institute, Sept. 21, 2006, available here.

20. Chang, Judy et al. , “Renewable Integration Model and Analysis,” Proceedings of Transmission and Distribution Conference and Exposition, 2010 IEEE PES, pp. 1-8. See also The National Renewable Energy Laboratory, “Eastern Wind Integration and Transmission Study,” January 2010.

21. The National Renewable Energy Laboratory, “Western Wind and Solar Integration Study,” May 2010

22. ERCOT has over 2,200 MW of Load Acting as a Resource (LaaRs) registered and qualified to provide ancillary services. LaaRs typically provide up to half of ERCOT’s hourly requirement for 2,300 MW of Responsive Reserves. Furthermore, ERCOT has used LaaRs to manage sudden drops in wind output. See ERCOT Press Release, “Demand Response Helps Restore Frequency Following Grid Event,” Feb. 27, 2008.

23. “Demand Response in the Midwest ISO: An Evaluation of Wholesale Market Design,” by Samuel A. Newell and Attila Hajos, The Brattle Group, Inc., Jan. 29, 2010.

24. Karen Ehrhardt-Martinez, Kat A. Donnelly, and John A. “Skip” Laitner, “Advanced Metering Initiatives and Residential Feedback Programs: A Meta-Review for Household Electricity-Saving Opportunities,” report by the American Council for an Energy-Efficient Economy, June