Batteries, Renewables

Demand Response Invades the Grid and Makes it Smart

Issue 6 and Volume 117.

Phil Davis   By Phil Davis, Senior Manager Smart Grid Solutions, Schneider Electric

The Department of Energy defines Demand Response (DR) as “changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.” The 2005 Energy Policy Act encourages the use of Demand Response and FERC has manifested this in a number of tariffs which grant equivalency between DR and generation in value. But…

What is Demand Response, really? Electrons obey the laws of physics. They travel to ground over the path of least resistance. Our job is to get them to do a little work along the way without wreaking too much havoc, which they like to do.

Demand response is how we do that. Everything about an electron’s intended journey to ground is shaped by someone’s desire (“demand”) to achieve a goal. Those goals are determined by the community of electron users; i.e., customers. They demand power: clean, abundant, cheap, renewable, and efficient. In that sense, DR is everything a utility does.

Now is the time to use DR to meet goals of efficiency and environmental stewardship.

Thirty-one states have renewable energy portfolio standards. Too few of them allow energy efficiency to count toward those goals. If less energy is needed, then it’s simple math that each source of that energy can contribute a larger percent. Similarly, DR is vital both in making renewable electrons behave as well as timing demand so that it peaks when those renewable electrons are most available. It is precisely this attribute that leads the California Independent System Operator (ISO) to predict that by 2020, the traditional fossil fuel supplied afternoon demand peaks will disappear. Local solar and other techniques will move peaks to early evening.

That is a sea change in the way we think about grid planning.

There is a form of Demand Response in commercial production that is analogous to most forms of generation, except perhaps for black-start, but don’t rule that out. Realistically, generation is always necessary, since DR only can free, not generate, electrons. Even that is subject to revision as local solar, batteries and other forms of distributed generation begin to assert themselves on the demand side, responding not only to site needs but also to larger microgrid and macro-grid conditions.

For two years, Massachusetts has been the most energy efficient state. Utilities there have done about all the efficient lighting, weather-stripping, rebating and retrofitting they know how to do. Yet, the legislature demands more. The answer may be to leave the customer site and take the larger view; to examine what we mean by “efficiency”.

The most efficient grid is a steady state grid where demand and supply stay constant and balanced. The rhythms of life prevent that perfect state, but we are well short of what we can do. Local distributed renewable and efficient electric generation, coupled with intelligent and efficient control and use can flatten existing demand curves, but it means that Demand Response must be synonymous with supply chain management. Huh? If an electron is the product, then everything that happens to it is supply chain management.

Supply chain management in other industries is the key to efficiency. That happened when logistics specialists realized that silos of activity allowed massive inefficiencies by masking the true costs and inconsistencies in the way goods moved to market. Like or loathe Amazon and Wal-Mart, that’s where most people go when they want something quickly and at the lowest cost. In other words, the market demanded and the suppliers responded.

That is the key to understanding DR. It is supply chain management, and we’d be well advised to learn to do this well. Today’s customers want green, reliable, efficient, safe, and productive power. Economic productivity and climate sustainability demand it.

In coordinated communities, peaks in one section can fill valleys in another. Energy storage, EV charging and distributed generation are in the mix. Perhaps the future of Integrated Resource Planning should include “Energy Districts” that self-optimize and present a “flattened” profile to the larger grid. Maybe the utility of the future should develop, own and operate those resources. They are expert as asset and financial management.

Clearly, the US has not scratched the surface of efficiency once we get outside the thinking that it must be specific to a customer facility. Efficiency is environmental, but DR is management. It can shape, tune and arrange energy use to respond to opportunities. My father always said to learn a tool well, but then to use the right tool for the job. With respect to efficiency in the US, so far we’ve been using hammers for everything. Enough.

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