Piggybacking on our earlier blog post by Shay Ohrel regarding ERCOT’s (Electric Reliability Council of Texas) concerns about the ability to meet future electricity demand comes an article in the Texas Tribune on the same topic. The article references a report by The Brattle Group, released by ERCOT on Friday, and discusses the confluence of factors that have contributed to the tightening of reserve capacity within ERCOT. In order to incentivize the development of new power plants the Texas Public Utility Commission has proposed an increase in the price cap that generators can charge during peak demand hours (also a recent blog post). The Brattle Group concludes that, at least in the near-term, this will not be enough in and of itself to prevent rolling blackouts and suggests more active incorporation of Demand Response solutions in the ERCOT market.
Currently, most Demand Response solutions are on an emergency-only basis and open only to the largest power users that can shed load on demand, via participation in ERCOT’s Emergency Response Service program. While this program offers significant economic incentives, it’s difficult for small and medium-sized commercial power users to participate. Economic Demand Response could be another powerful tool for utilities, retail electricity providers, and consumers by opening the market to a broader customer segment. Economic DR is a voluntary relationship between customers and their power providers in which load is curtailed based upon market price signals. The negawatts concept – that the cheapest watt is the one that’s never created – has the impact of reducing demand on the grid. Using a combination of building automation/controls/energy management systems and software, the power provider can curtail a customer’s load by a pre-determined amount (written into the contract) when the appropriate market signals are sent. Benefits include:
- Reduces overall grid demand and increases total system stability
- Reduces customer demand, providing both kWh and kW savings
- Provides potential monetization of the load shed in the real-time market, offering revenue stream for customers and their power providers (revenue share model)
Let us know if your business is interested in additional details on Economic DR.
Tags: Demand Response, ERCOT, Green Mountain Energy, Negawatts, Texas, The Brattle Group