Electric utilities can’t operate like other businesses. The typical business can hold excess product in inventory. If demand exceeds supply, they can put customers on a waiting list. With electricity, supply and demand must balance moment by moment. If the system cannot supply the power demanded, a blackout can result. System operators use demand response to help balance the system.
Demand response doesn’t mean that the utility responds to demand for power. That’s so 20th-century! Utilities can now offer various incentives so consumers can reduce their demand at peak periods. Demand, in effect, responds to supply. Or perhaps more accurately, supply and demand communicate to find equilibrium.
Demand response technology
Traditionally, the grid has worked in one direction. Electricity flows. A light bulb or other device gets turned on and off. When it’s on, the electricity flows through it. When it’s off, the electricity flow bypasses it.
Either way, grid operators have to make sure power plants made exactly the amount of electricity that various devices were using.
When demand exceeded the capacity of baseload plants, they have to start peaking plants. Once the excess demand ceases, they turn the peaking plants off.
In a smart grid, devices and the grid will communicate much the same way computers communicate with each other on the Internet. It hasn’t arrived, but parts of it are beginning to come together.
With modern smart grid technology, utilities can offer time-based rates, for example. Older meters, which most consumers still have, require utilities either to price electricity at a flat rate or tiered rate. A tiered rate charges one rate for, say, the first 500 kilowatt hours used in the billing period and a different rate for the next.
Time-based rates are more flexible. Utilities experience peaks in demand at predictable times of day and times of year. Those older meters measure only the accumulation of electric usage. Smart meters can be set to record usage over shorter intervals of time, as little as 15 minutes. They enable utilities to bill on-peak and off-peak usage differently. And so customers can choose to shift some of their usage to off-peak hours.
Even with a traditional meter, consumers can decide to use the dryer or oven at times when the air conditioner isn’t running or isn’t working as hard. Smart meters provide them with timely information to make it easier to adjust their electric usage. Or better still, enable them to decide on settings that will control usage automatically. They also provide utilities the ability to cycle water heaters and air conditioners on and off themselves during peak periods.
Demand response as a regulatory tool
Demand response as a regulatory mechanism dates back to a major energy crisis in California in the first decade of this century.
Despite promises made 30 years earlier, many big power users refused to cooperate with the state grid operator and reduce their demand for electricity when a supply crisis emerged in 2000-2001. Skyrocketing prices for ordinary users contributed to the recall of Gov. Gray Davis.
New state regulations resulted. No longer did grid operators have to beg for help from big users. The new concept of demand response regulations enabled them to offer incentives to reduce usage. Other states quickly instituted similar programs.
The original demand response concept no longer offers sufficient flexibility to grid operators. Both system operators and state regulators must consistently adapt to changing technology.
Increasing penetration of renewable energy, including rooftop solar installations, has contributed to the problem. As long as all the installations interact with the grid as separate units, they contribute to grid instability. Considered as an aggregation, such as a virtual power plant, they become part of the solution. Aggregators who collect and sell excess production have been part of the power business for a long time now. Aggregators of distributed energy resources simply carry on the business with renewable energy instead of power plant output.
Solar panels produce direct current. It takes an inverter to convert it into alternating current in phase with the grid. So far, only California and Hawaii require that residential solar installations include “smart” inverters that enable them to contribute to grid stability.
Demand response as a consumer opportunity
Demand response shifts power usage automatically. Therefore, utilities can generate less power. Less power from centralized plants means less fuel used and less pollution. Especially if it means utilities don’t need to turn on expensive and inefficient peaking plants.
Both homes and businesses can participate in demand response. I have mentioned smart meters. Distributed energy resources and various storage technologies also contribute. Potentially, electric vehicles can play a significant role in storage and demand flexibility. At present, storage options make up the smallest percentage of smart devices “behind the meter,” but they present the potential to make the most rapid growth.
Besides solar installations, many devices now installed in homes can potentially help with demand flexibility but are not yet integrated as grid resources.
Smart thermostats control furnaces and air conditioners. Other meters can control the hot water heater and other appliances. Imagine not having to be home to operate the washing machine. Load it, and it will turn on by itself when grid conditions allow it to operate most economically.
Consumers wouldn’t need to monitor electric usage and decide when to operate certain devices. They could program their smart devices to operate or not by themselves.
Last year, demand response enabled 155 utilities to avoid or defer 18.3 gigawatts of electricity. Consumers using smart thermostats accounted for 1.2 gigawatts of the savings. Most of the utilities did not use solar energy or energy storage to achieve these results, but more than half of the companies responding to a survey indicated interest in moving in that direction.
How aggregated DERs are becoming the new demand response / Herman K. Trabish, Utility Dive. July 20, 2016
How demand response works / Maria Trimarchi, How Stuff Works. November 5, 2008
Solar enables more homes to participate in demand response / Charles W. Thurston, Clean Technica. November 10, 2018
US will have 88 gigawatts of residential demand flexibility by 2023 / Chloe Holden, Greentech Media. October 4, 2018
Tucson power plant. Source unknown
Kearney peaking plant. Public domain from Wikimedia Commons
Solar inverter. Public domain from Wikimedia Commons
Programmable thermostat. Some rights reserved by Advanced Telemetry