The electricity enterprise has tended through restructuring to become a victim of its historic success in maintaining universal service reliability at ever-lower cost. The essential foundation for...
Dealing With the Duck
Designing markets to accommodate variable resources.
Customer demand for new energy technologies is hitting a brick wall of regulatory systems designed for the last century. This is especially true in the design of power markets.
Renewables and demand-side technologies have some features that will disrupt traditional energy markets as they grow. As a package, they present a very different way of running the grid, with greater efficiency, energy security, and lower emissions. But market designs need to evolve to accommodate innovation and clean energy.
Meet The Duck
The rapid growth of solar power is causing regulators in California to plan for change.
A typical daily demand curve in California rises in the morning as people wake and go to work, it peaks in the afternoon as air conditioners kick in, and it hits a second, highest peak in the early evening, as workers come home to their dinner and TV.
Solar, of course, produces power with the movement of the sun, peaking in the afternoon, and falling toward sunset. A growing solar supply will take an increasingly large bite out of the afternoon power demand, but have a lesser effect on that early evening peak. The California grid operator has projected the “net demand” – the amount of power demand remaining to be met by non-solar sources – through 2020, and came up with a shape that was instantly dubbed The Duck. 1 Picture a demand curve, with its head in the early evening. The more solar grows, the bigger the duck’s belly gets. ( See Figure 1 ).
The duck-shaped evolution of the net demand curve will have a few implications for grid operations. First, the rising net demand in the afternoon will be bigger than it is now, increasing the need for fast-acting generators or demand-side measures, like demand response and energy efficiency. While some see this as a major problem, others aren’t so sure. One participant at a meeting of California regulators remarked, “I could take the head off that duck. Just give me some demand response.”
Markets need to do a better job of shifting value to more flexible resources capable of responding efficiently to these changing conditions. Energy efficiency programs focused on the elements of that evening peak could permanently bring down the head. Dynamic pricing – e.g., power prices that reflect actual real-time market conditions – can provide incentives for consumers (or for innovative companies providing services to consumers) to reduce and shift the demand. Energy storage can be charged up in the middle of the day and deployed in the evening hours. Solar panels can even be pointed more westerly, toward the setting sun.
Winds of Change
While The Duck describes what can happen in a typical day due to solar power, wind power is already causing disruptive impacts in some places.
Denmark is one of those places, with 30 percent of its total electricity from