Forum Topics

Activating Responsive Demand and Distributed Energy Resources

The theory of responsive demand proposes to incentivize customers to use power when it is plentiful, and conserve power when it benefits the system to reduce demand. A common conception is to use price signals to direct consumer behavior. These can be as sophisticated as reflecting real-time wholesale prices in retail prices, or as predictable as “time of use” rates which are the same day-to-day. Other options include opt-in demand aggregation, where a collection of facilities or homes agree to be compensated for reducing their power use upon request.

The growth of renewable energy makes a natural case for more demand to respond to generation. The figure below shows that California has reached a level of solar generation that leads to a daily risk of overgeneration in the spring, while requiring the amount of non-solar generation to more than double in less than three hours as the sun sets. This challenge is exacerbated by the growth of distributed energy resources such as rooftop solar, which are not centrally dispatched.

Voluntary or price-based responsive demand could be a low cost and reliable option to resolve this daily challenge, and could help prevent broad and sustained blackouts in long-tail events.

The reference presentations include an overview of responsive demand, current barriers and potential benefits for activating these resources.

The relevant publications feature a summary of Michigan’s approach to DER integration, a paper on DER applications to Texas’s resource adequacy challenges, and several papers exploring pricing and customer values.

This visualization from the California ISO of the decreasing net load (load not served by solar power) at midday and steepening evening ramp as solar generators cease producing power.

Responsive Demand - Slide 4

Activating Demand Response and Distributed Energy Resources

The reference presentations include an overview of responsive demand, current barriers and potential benefits for activating these resources.

Controllable Demand: Promising Approaches for Greater Integration

The presentation explores various models of demand response and their contributions to markets. 

Responsive Demand - Slide 4

Relevant Publications

MI Power Grid Summary

MI Power Grid is a customer- focused, multi-year stakeholder initiative established by Governor Whitmer in collaboration with the Michigan Public Service Commission to maximize the benefits of the transition to clean, distributed energy resources for Michigan residents and businesses.

Resource Adequacy Challenges in Texas: Unleashing Demand-Side Resources in the ERCOT Competitive Market

By Alison Silverstein for the Environmental Defense Fund, May 2020

The Tariffs of Tomorrow

By Ahmad Faruqui and Cecile Bourbonnais, IEEE Power & Energy Magazine, May 2020

Refocusing on the Consumer

By Ahmad Faruqui, Regulation, Cato Institute, Spring 2020


Expert Commentary

These comments are personal opinions and do not represent the official position of an expert’s employer or clients or the Future Power Markets Forum.

Dr. Ake Almgren, formerly with PJM Interconnection

This topic is highly relevant to the future of electricity markets and system operations. With more variable generation resources on the system the need for more variable load will also increase. There is consensus across the industry that dynamic pricing will be a key factor in activating demand response and distributed energy resources

Power Market Structure & Design

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