DRRC and LBNL's Electricity Markets and Policy Group (EMP) are participating in a number of activities to determine the potential as well as market issues relating to expanding the use of demand response and energy storage for ancillary services and grid reliability. Two key activities are taking place, a California-based evaluation in conjunction with LLNL's Smart Grid Modeling activities, and, as part of a multi-national laboratory effort (NREL, LBNL, ORNL and Sandia), a Western Electricity Coordinating Council (WECC) regional evaluation and a national evaluation.
Demand Response Potential for Ancillary Services
DRRC's evaluation of the potential of commercial, industrial and agricultural demand response to provide energy and ancillary services products to the grid has resulted in the generation of hourly demand response availability profiles at the balancing authority level. These DR availability profiles are supplemented with expectations on constraints for the duration and frequency of the load responses, in order to best represent the expected electricity customer system, such as their willingness and capability (e.g., equipment) to participate in demand response events. With the addition of response characteristics mimicking those of generation, the resulting profiles will help in the valuation of the participation of demand response through production cost modeling, which informs infrastructure and investment planning. A projected theoretical availability is evaluated for full load participation The resulting availability profiles serve as input to NREL's production cost model and LBNL's Smart Grid Model.
Demand Response in Wholesale Markets – Policies and Practices
The use of demand response and energy storage in most wholesale markets across the US remains limited because of a need to change policies and common practices at multiple levels. DRRC and LBNL's Electricity Markets and Policy Group is identifying specific market and policy barriers that have hindered the use of demand response for providing ancillary services in different wholesale and retail environments, with particular emphasis on what is required to aggregate smaller customers to meet minimum size requirements for wholesale transactions.
The initial study focused on utilities in Colorado, New Jersey, Texas, and Wisconsin, each chosen to represent the diversity of market and policy environments in the US. Varying definitions of ancillary services by different regional reliability councils make it difficult for a single demand response architecture to fulfill the need. Balancing authorities for each different Independent System Operator (ISO) define and promulgate rules that set the infrastructure investments and performance attributes of a resource wishing to provide ancillary services in their territory. These rules also determine expected revenue streams which impact the cost effectiveness of these resources. The regulatory compact between utility and state regulators, along with other statutes and decisions by state policymakers, may impact the interest of demand response program providers to pursue these resources as ancillary service providers.