The Summer of 2006: Milestone in Demand Response Maturation

1. The Summer of 2006A Milestone in the Ongoing Maturation of Demand Response Charles Goldman E. O. Lawrence Berkeley National Laboratory CAGoldman@lbl.gov Co-authors: N. Hopper, R. Bharvirkar D. Engel (Freeman, Sullivan, & Company) DRCC Webinar July 20, 2007

2. Overview • Motivation and scope of analysis • Performance of DR Programs • Reliability and Economic • Role of DR in system planning • Third-party aggregators • Enabling Technologies • Discussion

3. Motivation • Provide “snapshot” of the state of DR programs in 2006 • 5 years since the last major heat storm in the U.S. • Summer 2006 heat storms set new temperature and electrical peak demand records across the country • ISOs/RTOs and utilities called on DR resources to maintain electric system reliability and mitigate high prices

4. Issues Addressed • How did DR resources perform in 2006? • Was 2006 really a turning point for industry acceptance and integration of DR resources? • Implications for future: • Summer 2007 • Challenges ahead

5. Entities Interviewed

6. ISO/RTO DR Programs in 2006

7. Utility DR Programs in 2006

8. Major DR Events in Summer 2006

9. Performance of Reliability DR Programs • Reliability-based programs performed very well! • Load response as high as 80% of enrolled resources • Despite back-to-back events, few customer complaints • Execution of load reductions was smooth • Several ISOs/RTOs could confirm DR impacts in real-time • Performance varied by zone

10. Impact of Reliability and Economic DR Programs on CAISO System Load

11. NYISO DR Program Performance 2006

12. Performance of Economic DR Programs • Economic DR programs either were not called by some utilities or did not garner much customer response • Limited information on performance and load reductions achieved for time-varying tariffs • However, PJM and ISO-NE report significant impacts from economic DR programs

13. Economic DR Program Activity

14. DR as a resource? • Most respondents indicated that DR has “matured” substantially as a resource in the last 5 years • Certain DR resources counted to offset part of “planning reserve” requirements • More utilities assessing DR resources in their IRP process (e.g. West) • ISO/RTOs allow DR resources to participate in capacity and/or reserves markets • Customers appear to be migrating from voluntary DR programs to capacity-based programs

15. 3rd Party Aggregator Experience • Growing role for 3rd party aggregators (Curtailment Service Providers) • 1) Direct participation in ISO/RTO markets (primarily focused on programs with capacity/reservation payments) • CSPs account for ~90% of the enrolled customers (~75% of the load) in NYISO’s ICAP/SCR market • 2) Contractor providing DR resources to utilities (outsourcing) • Two of the largest CSPs (Comverge and Enernoc) had well-received IPOs in April-May 2007 • Development of operational capabilities allowed aggregators to deploy their DR resources in multiple locations simultaneously • Retailers are viewing DR as a way to manage their price and volume risk

16. Role of Enabling Technologies • Fully automated DR has produced promising pilot results for commercial/institutional customers in California • For mass-market customers: increased deployment of program combinations of smart thermostats, controls, pricing, and information/education • Advanced metering infrastructure is being rolled out or seriously considered in a number of states, which can facilitate participation in dynamic pricing and other DR programs

17. California Auto-DR Pilot: Peak Demand Savings in response to Critical Peak Pricing: • Average reduction was 14% during 3 hour peak period • Technology performed well: continued use during heat wave

18. Automated DR Experiment in CA

19. Implications for future? • For many, 2006 did raise the level of attention to DR issues • Examples, CA, ISO-NE • For some, 2006 not likely to result in changes to their organizations’ load forecasting or resource planning processes • Examples, Southeast, ERCOT • More movement towards integrating DR resources in the capacity and reserves markets • Examples: ISO-NE, PJM, ERCOT, CAISO

20. DR Challenges • Valuation of DR resources in organized markets and in IRP processes • More consistent, standardized methods to verify DR load impacts (NAESB process) • How best to facilitate price-responsive demand? • Dynamic pricing tariffs at retail • ISO/Utility programs that allow direct bidding of load curtailments into wholesale energy markets • Promoting & incorporating DR enabling technologies from PILOTS to “standard practice” in programs • Higher level recognition of and support for DR among utility senior management

21. LBNL Reports on DR Market Potential • “The Summer of 2006: A Milestone in the Ongoing Maturation of Demand Response,” • Hopper, N., C. Goldman, R. Bharvirkar, Lawrence Berkeley National Laboratory; and D. Engel, Freeman, Sullivan & Co. The Electricity Journal, Vol. 20, Issue 5, June 2007, Pages 62-75. LBNL-62754. May 2007 Pre-print version available at: http://eetd.lbl.gov/ea/EMS