A comprehensive DR business case quantifies a full range of concurrent benefits.
Dr. Woychik is vice president, regulatory affairs for Comverge Inc.
Electricity load-serving entities (LSEs) face rapid peak demand growth, skyrocketing expansion costs, mounting risks with electricity resource siting, and unprecedented environmental constraints. As a result, the regulatory metric for resource selection has become least-cost, least-risk.
In this context, utilities and regulators increasingly are attracted to the benefits and market potential of new demand-response (DR) capabilities.
DR offers operational flexibility, and emerging third-party DR contracts minimize risks to LSEs and their customers. But after 25 years of using standard practices to evaluate DR’s cost-effectiveness, the primary DR benefits remain poorly defined.In most analysis to date, some of DR’s most important wholesale and retail benefits have been given short shrift, or ignored completely. For example, the reduction in region-wide prices from the use of DR rarely is quantified or included at all.
It is well accepted that fast, dispatchable DR can avoid the capital and operating costs of peaking-power capacity such as combustion turbines (CT). Increasingly DR also is demonstrating its ability to avoid capital costs and energy losses related to transmission and distribution. DR resources can be offered and traded in capacity markets, and scheduled by an ISO/RTO to avoid operating reserves, short-term energy, and congestion costs.