Virtual power plants fill supply gaps in heat wave

Faced with brutally hot days and high energy demand last week, grid operators found that dialing down energy with demand response efficiency technology worked as effectively as drawing more juice from power plants.

During a few hours of last week's East Coast heat wave, thousands of megawatts worth of electricity--enough to power hundreds of thousands of homes--were temporarily removed from the grid, a practice grid operators expect to do more often to weather energy supply crunches on the grid.

PJM, which operates the wholesale electricity market in 13 states, on Monday reported that it put into effect an "emergency" demand response program last week, tapping over 2,500 megawatts worth of energy reductions, dispersed over thousands of sites, to ensure that electricity flowed during times of peak demand.

The last time PJM called in these " demand side resources " was an August day three years ago. But automated efficiency technology, particularly dialing back electricity usage during peak times, is becoming one of the most effective smart-grid tools for maintaining the balance between electricity supply and demand.

"In past days, a utility would talk about voluntary appeals to lower usage or using peaking power plants. Now demand-response programs are actually part of the mix," said Dan Delurey, the president of the Demand Response and Smart Grid Coalition. "It's not just one-offs any more--it's part of the new system."

EnerNoc's network operations center in Boston where demand response events are managed.

As demand for electricity crept up Wednesday afternoon, PJM called on contracts it has with demand response technology companies, such as EnerNoc, CPower, and Comverge, to "supply" hundreds of megawatts worth of electricity through efficiency measures.

Those providers have arrangements with their own customers--mostly commercial and industrial businesses which have agreed to reduce electricity use during peak times in exchange for a monthly payment. The actual changes can be relatively minor, say demand response companies. A supermarket could have the lights dimmed, for example, for 15 minutes or so.

In aggregate, though, those changes are significant. PJM said that efficiency through demand response accounted for over 2,500 megawatts for three straight hours on Wednesday. For comparison, a full-size nuclear power plant generates about 1,000 megawatts.

Remote control
Although the heat wave extended into New England, grid operator ISO New England was able to meet supply without having to call in demand response capacity contracts, according to a representative. But demand response is very much part of ISO New England's portfolio of energy "sources."

The region now has about 2,000 megawatts worth of demand side resources in place, up from 500 megawatts in 2006. Efficiency still represents a fraction of the total capacity of 32,700 megawatts, but changes to regulations which went to effect last month are designed to encourage exponential growth in demand side resources to help stabilize the grid.

Demand curve on a hot day: faced with the possibility of not meeting projected demand (orange line), grid operator PJM called in emergency demand response contracts to reduce energy load (blue line). PJM

During a hot day in June, there were a number of failures at power plants and ISO New England had to call in contracts for efficiency services. One of those providers, EnerNoc, said that it lowered electricity demand by 380 megawatts within a few hours. That reduction meant that ISO New England did not have to pay top dollar to purchase the energy needed to supply the region during a time of high demand, EnerNoc said.

For demand response to work technically, customers need to have a control system put in place which creates a communications link between the customer and the demand response provider. In the June incident, EnerNoc said that it did over 1,000 "dispatches" over two and a half hours and managed more than half of a million transactions from its network operations center.

The business models for demand response have become more mature, too. In the case of PJM or ISO New England, demand response companies bid with energy providers in a yearly capacity auction. If a company doesn't meet the megawatts it has committed to, there are financial penalties, just as there are for power generators.

Building for 1 percent of the year
The bulk of automated efficiency steps are done at commercial and industrial sites because they are the biggest users of electricity. But utilities are eager to get consumers involved as well. Meeting demand on the most challenging days is expensive: 10 percent to 20 percent of annual electricity costs are concentrated in 100 hours per year, according to Delurey.

More utilities are starting to institute peak-time pricing plans to create an incentive for people to lower use during peak times. The consumer can, for example, program a thermostat to react to a signal from the utility which could adjust the air-conditioning thermostat in exchange for a discount. New demand response systems allow people to over-ride the setting, too, said Delurey.

Given the hot temperatures last week, utilities and grid operators were still calling on customers to reduce energy usage with common-sense techniques, such as lowering shades to reduce the cooling load. To meet record demand, New York utility Con Ed called on all available resources, including an air conditioner program with 20,000 consumers, and still had trouble meeting demand, leading to brownouts in Brooklyn and some power outages.

But having an automated system, rather than voluntary reductions, allows the system to scale up more reliably. PJM has already held an auction for its 2013 capacity needs and demand response is 6 percent of the total available supply.

"Our goal is to keep everybody using power and not have to cut back but if we need to, we have that tool in our kit to call on," said Ray Dotter, a spokesman from PJM. "This is a heck of a lot better than what we used to do which is have the sales staff call the biggest customers and jawbone them to cut back."

 

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