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...
Planning for Efficiency
Forecasting the geographic distribution of demand reductions. Copyright © 2011 Consolidated Edison Company of New York, Inc.
reinforcement projects based on the promise that expected efficiency gains will materialize when and where they are needed, is indeed a significant paradigm shift.
We’re not aware of other utilities that attempt to forecast the geographic variability of energy efficiency-driven load reductions within their electric distribution grids for capital planning purposes, but this might become a more routine activity in the future as regulators attempt to squeeze ever-greater benefits from energy efficiency programs.
Con Edison’s DSM forecast is updated annually, in coordination with its peak load forecast, for use in planning the next 10 years of capital spending on load relief and reliability upgrades. The current DSM forecast includes the expected impact of Con Edison’s own suite of efficiency programs, as well as EEPS programs administered by the New York State Energy Research and Development Authority (NYSERDA), and efficiency projects planned by the New York Power Authority (NYPA). The forecasting methodology—which has been evolving for several years and will continue to change as experience is gained—estimates the amount of coincident DSM-based load reductions that will materialize with reasonable certainty in each of Con Edison’s 91 networks and load areas over the next 10 years. 2
System planners are given a top-line peak demand forecast by network and year, and a peak DSM forecast by network and year. The DSM forecast is then subtracted from the top-line forecast to calculate the net forecasted demand. Thus, the contribution of DSM is very obvious to all involved (see Figure 1) . Company engineers only plan and implement load relief and system reinforcement projects where the net forecast exceeds installed capacity. No special contingency is made for a DSM shortfall, just as there is no contingency for unexpected load growth. Of course, the 10-year load relief plan is an important input to rate case proceedings and many other internal planning efforts.
Con Edison first began including DSM its load forecast with the launch of its targeted DSM program in 2003. In fact, the specific purpose of this program was to defer new infrastructure investments by implementing energy efficiency projects in capacity constrained networks. The program acquired peak load reductions through firm contracts with energy service companies (ESCO), and contracted future DSM deliveries were subtracted from the 10-year load forecast. By design there was certainty about where load reductions would occur. In fact, Con Edison only credited ESCOs for efficiency measures installed within contracted networks, and the grid location of each proposed efficiency project was verified in advance.
There was also little uncertainty around the coincidence of the DSM with the local network peak, as Con Edison specified acceptable efficiency measures for each network— e.g., commercial measures in day peaking networks, residential measures in evening peaking networks. This ensured that efficiency measures were routinely in use during the corresponding network peaks. 3 The only real source of uncertainty was whether ESCOs would meet delivery schedules. The risk of ESCO non-performance was dealt with contractually through liquidated damage provisions that compensated Con Edison for the costs of handling last-minute capacity shortfalls.
The arrival of non-targeted, territory-wide EEPS programs