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An Overview of Demand Response in California

An Overview of Demand Response in California. July 2011. What is Demand Response (DR)?. DR is set of action taken to reduce electric loads when: Contingencies, such as emergencies or congestion, occur that threaten the supply-demand balance -OR-

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An Overview of Demand Response in California

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  1. An Overview ofDemand Responsein California July 2011

  2. What is Demand Response (DR)? • DR is set of action taken to reduce electric loads when: • Contingencies, such as emergencies or congestion, occur that threaten the supply-demand balance -OR- • Market Conditions occur that raise electric supply costs • The goals are to improve electric grid reliability and lower use of electricity during peak demand • DR is high priority electricity – second only to Energy Efficiency in the Energy Action Plan’s “loading order” 2

  3. Evolution of Demand Response • Until 2005, most of the demand response (DR) was provided by Large Industrial customers in response to a California Independent System Operator (CAISO) emergency • After the 2006 summer heat wave, the CPUC expanded the DR customer base to provide price-responsive DR before a CAISO emergency: • Utilities offered a wide variety of DR programs such as Air Conditioning (AC) cycling, programs providing energy payments only, and programs that provide both capacity and energy payments • Beginning in 2007, several established third-party aggregators were allowed to participate directly in the utility programs and through bi-lateral DR contracts with the utilities • Beginning in 2009, the CAISO started considering DR as a generation resource similar to a Combustion Turbine (CT) and developed specific products in the wholesale markets suitable for DR which are still waiting approval from FERC • As early as 2012, a limited roll-out for HAN devices are expected to enable additional DR options for residential customers 3

  4. Demand Response Rulemaking CPUC instituted four phases for R.07-01-041: • Phase 1: Load Impact Protocols (D.08-04-050) • Phase 2: Cost-Effectiveness Protocols (D.10-12-024) • Phase 3: Transition of Emergency-triggered programs to Price-responsive programs (Settlement: D.10-06-034) • Phase 4: Direct participation of DR in the CAISO’s wholesale markets (Open) 4

  5. Examples of DR Triggers • CAISO or IOU forecasts indicate that the CAISO system load will meet or exceed certain MW threshold (e.g., 43,000 MW for PG&E) • CAISO issues - or IOU expects the CAISO to issue - a Stage 2 or Stage 3 emergency or local transmission emergency • IOU expects to require the dispatch generation facilities with heat rates of 15,000 BTU/kWh or greater for the day-ahead or hour-ahead market • An actual or anticipated localized emergency (e.g., loss of generation or transmission resources) • Average forecasted peak temperature of San Jose, Concord, Redding, Sacramento, and Fresno meets or exceeds 94 degrees Fahrenheit on a program day (example for PG&E territory) 5

  6. 55,000 50,085 MW Peak 7/24/06 50,000 45,000 Greater than 45,000 MW 57 hours or 0.65% 40,000 Hourly Ave. Demand 35,000 Winter Peak 33,275 MW 12/14/05 30,000 25,000 20,000 15,000 1 262 523 784 7,309 7,570 7,831 8,092 8,353 8,614 7,048 6,526 6,787 6,265 1,045 1,306 1,567 1,828 2,089 2,350 2,611 2,872 3,133 3,394 3,655 3,916 4,177 4,438 4,699 4,960 5,221 5,482 5,743 6,004 Hour Load Duration Curve During 2006 Heat Wave: September 2005 to September 2006 6

  7. Types of Demand Response • Load response for reliability purposes: • Direct load control, partial, or curtailable load reductions (e.g., Air Conditioning Cycling) • Complete load interruptions • Use of AutoDR technologies • Price response by end-use customers: • Time Varied Rates: Real-Time Pricing (RTP), Critical Peak Pricing (CPP), Time-of-Use rates (TOU) • Demand Bidding Programs • Capacity Bidding Programs • Aggregator Managed Programs • Programs that bid directly in the CAISO’s wholesale markets 7

  8. Potential Penalties for Non-compliance • Time-Varied Rates • No penalty, just pay higher cost for energy during peak • Interruptible Tariffs • Capacity payment and penalty for non-compliance • Incentive-Based Programs • Price-responsive • If no capacity payment – no penalty • With capacity payment – penalty for non-compliance • Emergency-triggered • Capacity payment and penalty for non-compliance 8

  9. Ex Ante Load Impact for Utility Demand Response Programs [1] 5% of an assumed 50,000 MWs of system peak demand – illustration purposes only. 9

  10. DR Budget Request 2012-2014 Cycle (a) Total authorized funding from DR cycle and SmartAC proceedings (b) Includes SCE request to apply $20M in unspent funds approved in 2009-2011 DR cycle

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