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Future of Demand Response In ERCOT A Presentation to the Workshop – September 15, 2006. Project Number 32853 Evaluation of Demand-Response Programs in the Competitive Electric Market. Floyd Trefny Director of Product Development. Topics.

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Floyd trefny director of product development

Future of Demand

Response In ERCOT

A Presentation to the Workshop –

September 15, 2006

Project Number 32853

Evaluation of Demand-Response Programs in the Competitive Electric Market

Floyd TrefnyDirector of Product Development


Topics

Topics

  • Market Load Response to Support the Resource Adequacy Rule

  • Market Load Response and Reliability Load Response

  • Amount of Price Responsiveness that is needed

  • Where could it come from?


Market load response to support the resource adequacy rule

Market Load Response to Support the Resource Adequacy Rule

  • Necessary Conditions for a Successful Energy-Only Market Design

    • Adequacy must be able to be treated as a private good

      • Each individual customer must carry the burden for assuring Resource Adequacy

      • Consumers must be willing to pay the energy price for scarcity or interrupt voluntarily so that ERCOT is not forced to de-energize other customers on an involuntary basis

      • Consumers must be charged proportionally with the cost to provide energy

    • Adequate Market Load Response must exist to respond to high prices

      • Free ridership can be overcome if there is sufficient voluntary demand response

      • Market participants must believe regulators can withstand pressure not to mitigate high prices due to scarcity


Characteristics of market load response and reliability load response

Market Load Response

Private Good, individual providers get a benefit only if interrupted

Provided only by Load

Responds to high Market Prices

Amounts needed are determined by a balance of market dynamics of supply and demand

Deployed by individual consumers or by REPs in response to scarcity pricing that is so severe no other alternative is available to maintain supply

Reliability Load Response

Public Good, capacity costs are charged to all retail loads

Generators also may provide and price mitigation rules for generators cap prices paid by retail customers

Amount is specified by ERCOT and procured from qualified suppliers by bid award

Amounts needed are determined by engineering analysis of the reliability consequences of not having supply reserves

Deployed as a matter of routine control of the power grid, e.g. Regulation, Non-Spin, Responsive

Characteristics of Market Load Response and Reliability Load Response

The same Load can not be used for Reliability Load Response at the same time as it is being used for Market Load Response


Required amount of price responsiveness

Required Amount of Price Responsiveness

70,000 -

- 116.7%

Market Reserve – 2,500 Mw or 4.2%

67,500 -

- 112.5%

Reserve for Forced Outages & LF Error – 3,400 Mw or 5.7%

64,100 -

- 106.8%

Ancillary Services – 4,100 Mw or 6.8%

60,000 -

- 100.0%

Reserves for Forced Outages & Load Forecast Error Only 5.7% - 3400 Mw of Capacity

Operating Range

30,000 -

- 50.0%

3400 Mw of Response is needed for 100 - 150 hours a year

0 -

- 0

Peak ERCOT Load


Load response opportunities prepared by dswg september 2006

Load Response OpportunitiesPrepared by DSWG – September 2006

AC Frequency Switch

Hot Water Heaters

Similar to Residential

AC Frequency Switch

Target loads < 1 MW

Back up Diesel

Pumping Loads

AC Frequency Switch

Back up Diesel

LaaR (RRS, NSRS)

RGS and RPRS

Balancing Energy

Tiered FR

RRS from CLRS

On site generation

Boiler management

Pumping Loads

Smart Meters

Critical Peak Pricing

Day Ahead Market

Air Conditioners

Household Devices

Similar to Residential

IDR Meters

Day Ahead Market

IDR Meters

BUL

Back up Diesel

Day Ahead Market

Grid Lighting

Day Ahead Market

Grid Lighting

Chillers and Coolers

Real Time Response

Back Up Diesel

Direct Load Control

Day Ahead Market

Irrigation

Day Ahead Market

Waste Water Pumps

Personnel Hours

Grid lighting

Thermal Storage

Cost of Meter

Sub Metering Issues

Incentives (Landlord)

Inconvenience

Loss of production

Air Permits

Time Response

Notification

Mechanism

Lack of Firm Price

Signals

ISO System

Cost to Implement

Cost of Meter

Forward Pricing

REP or No REP?

Cost of Meter Read

Customer Acquisition

Fractured Value

Chain

Lack of Firm Price

Signals

ISO System

Cost of Meter

Cost of Meter Read

Many tenants lease

Customer Acceptance

Lack of Firm Price

Signals

ISO System Upgrades

Time Response

Notification

Mechanism

Lack of Firm Price

Signals

ISO System

TCEQ Permits

Metering

ERCOT EMS

Lack of Firm Price

Signals

ISO System

Non Specific Profiles

Lack of coordination

Lack of incentive

Focus on efficiency

ISO System

Reliability = Capacity Payments and Firm Obligation to perform

Price Responsive = Energy Payments and Voluntary Performance Requirements


Questions

Questions????


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