New England Demand Response Initiative: Demand Supply of Contingency Reserves

1. New England Demand Response Initiative:Demand Supply of Contingency Reserves Brendan Kirby & Eric Hirst Oak Ridge National Laboratory Consulting in Electric-Industry Restructuring 865-576-1768 kirbybj@ornl.gov 360-656-6691 eric@ehirst.com

2. Two NEDRI Draft Papers • Opportunities for Demand Participation in New England Contingency-Reserve Markets • Technical Issues Related to Retail-Load Provision of Ancillary Services General Thesis • Loads can be ideal suppliers of contingency reserves for technical reasons: especially spinning reserve • Actively encourage loads to supply reserves to increase system reliability and reduce costs • Recognize and eliminate technology biases in contingency reserve supply rules • Recognize and accommodate differences in resource capabilities

3. Power System Reliability Events Are Fast, Infrequent and Relatively Short

4. Loads Can Be Ideal Suppliers of Ancillary Services – Especially Contingency Reserves • Fast response • Fast deployment • Redundancy • Distributed throughout the power system • Fewer and shorter interruptions than demand reduction or energy market response • less storage required • less disruption to normal load operations • Complements energy management and price response • Only looking for a small percentage of load to respond

5. Load Response Benefits • Individual load • Money - a service loads can sell • spinning reserve prices were twice as high as non-synchronized 10 minute reserve prices in both California and New York in 2002 • Part of an overall energy management system • Complements energy management and peak shaving • A better match to the load's constraints • less frequent response: 1 or 2 times per month • shorter response: 10 to 30 minutes vs several hours • Other loads • Reduced energy & ancillary services prices • System • Faster response (90 seconds vs 10 minutes in one example) • More reliable response (statistical): redundancy & distributed • Better use of generation: available to serve load and sell energy • Public good • Reduced need for generation & transmission

6. One Example: Spinning Reserve From Residential and Small Commercial Thermostats • Existing Carrier ComfortChoice technology for peak reduction • Faster than generation for spinning reserve • Spinning reserve capability ~3x peak reduction • Significant monitoring in place

7. Communications and Control • Designed for multi-hour peak reduction • Deployment signal <90 seconds • Verification delayed to protect paging system • Grouping by location, type, or any other criteria • Customer override allowed for peak shaving, not for spinning reserve • Control can be duty cycle, set point, or turn off • Monitors temperature, run time, communications • Customer remote monitoring and control web interface

8. Can Provide Spinning Reserve While Providing Peak Reduction

9. Overrides Are a Benefit and a Problem, But Less of a Problem for Spinning Reserve

10. Air Conditioning Load Creates System Peak: Guaranteed Availability When Needed

11. Statistical Response is Better Than Monitored Response Aggregation of many (smaller) individually lower reliability resources still provides higher guaranteed response than fewer (larger) individually higher reliability resources

12. Indoor Temperature Rise LimitsPeak Shaving

13. Shorter Time of Contingency Response Allows GreaterMW Response

14. Metering and Communications Requirements • Givens: • Payment must be tied to actual response • Deployment signals have to be fast • One SCADA monitoring system currently performs three functions • Continuous readiness monitoring • Real-time event monitoring • Performance monitoring • How much monitoring is required? • Statistical resources may not need the individual real-time monitoring that deterministic resources need • Redundancy may be better than observability. • A 5% error in total load forecast can be a problem. A 5% error in reserve response may not be. • Performance monitoring can be slower • What information does the system operator really require in real-time?

15. Communications Requirements Are Asymmetric (This is a Big Benefit) • System-to-load communications are typically broadcast • Resource need – MW of response desired • Price • Deployment – respond Now! • Load-to-system communications are typically individual • Capabilities and price offer • Performance monitoring – conceptually can be slower • Aggregator may help

16. Service Definitions Are Critical • Most generators do not care if they run for 30 minutes or 8 hours • May have minimum run times • May have emissions limits • A load may be able to respond for 10-30 minutes but not 2 hours • Can re-arm immediately if not used frequently • Response capability matches spinning contingency reserve much better than demand relief

17. Desirable Load Characteristics • Storage • product (excess production capacity) • water, liquid, or gas pumping • thermal • Control • may be secondary control • Low cost to shift production • always consider transition costs (pre-cooling, shift work, swing losses, …)

18. Resource Size Is Potentially LargeRequires Further Research To Quantify Residential load in New England is significant New England has less industrial load than other regions

19. Recommendations • Design and open markets for all three contingency-reserve services • Ensure that reliability rules and requirements are truly technology neutral • Publish engineering and economic analyses results used to justify standards and rules • Review metering requirements • Characterize demand resource potential • Encourage loads to provide contingency reserves – work with aggregators • Research forecasting and other tools