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Donald J. Sipe on behalf of the C onsumer D emand R esponse I nitiative

Demonstration of Equivalence Of Behind the Meter Demand Response to Grid Based Demand Response. Donald J. Sipe on behalf of the C onsumer D emand R esponse I nitiative. Structure of the Presentation.

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Donald J. Sipe on behalf of the C onsumer D emand R esponse I nitiative

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  1. Demonstration of Equivalence Of Behind the Meter Demand Response to Grid Based Demand Response Donald J. Sipe on behalf of the Consumer Demand Response Initiative

  2. Structure of the Presentation • All examples assume an accurate baseline as illustrated in the “Before Dispatch” state of the Behind the Meter resource. • All examples assume accurate and separate meters for generation and load Behind the Meter as well as at the retail meter. • All examples assume that dispatch of DR will pass the benefits test and produce savings. • All examples are designed to compare the costs and benefits to grid load of using matched quantities of either grid based generation and DR resources or DR or Generation Resources located Behind the Meter. • Some examples assume system has been dispatched in merit order using all available generation cheaper than the clearing price so there is no additional generation available on the system at lower cost (or it would already have been dispatched). Some examples assume an increase in cheap generation on the grid. If the system has been dispatched properly this is not “realistic”, but is used as a heuristic device to show the equivalent treatment of BTM generation to grid based generation under the settlement formula. • All examples use the following settlement formula described above to calculate payment for demand response: • Demand Response Megawatts equal the net change at the site boundary meter minus the lesser of; 1. Increase in generation; or 2. Total exports; 3. If change at site boundary is 0 or negative (i.e. greater imports) no DR value is given. • All examples pay LMP for all energy produced by any generator that is consumed by grid load.

  3. Structure of the Presentation Cont. • First page of all examples: 1. Shows baseline position before dispatch;. 2. List the actions taken by the grid load/generation or alternatively by Behind the Meter load/generation. • Summarize results on price/MW and savings. • Provide the settlement formula for calculation of DR payment for Behind the Meter DR • Second page of all examples: 1. Shows side by side schemata of bid stacks, loads, and prices for either grid or BTM actions taken. 2. Shows calculations of costs and savings (summarized on first sheet). • All examples are preceded by a sheet describing what the example is designed to demonstrate in terms of equivalence or settlements. • All examples are used to illustrate equivalence, they are not intended to represent likely power prices or system loads or to represent expected DR percentage penetration levels. • Some examples are followed by a sheet discussing issues relevant to the particular results of that example.

  4. Example 1 This example compares dispatching 50MW of DR from load on the grid, to dispatching 50MW of DR Behind the Retail Meter causing a 50MW export of Behind the Meter generation to the grid. With the exception of Billing Unit effects (which always make it better for load to rely on BTM DR) the results and savings to load are identical when paying LMP for both BTM DR and all energy exported and consumed by grid load.

  5. Before Dispatch DispatchAssumptions Supply Stack Load 50MW LSE1 50MW LSE2 50MW LSE3 50MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 • Grid Based: LSE 3 Bids 50MW DR at $2 • Drops Load 50MW • BTM Based; Customer Bids 50MWDR at $2 • Drops Load 50MW RESULTS AFTER DISPATCH 0MW 150 MW Total • Grid Based: • Grid Load Pays: $7.50/MW • Grid Load Saves: $10-$7.50=$2.50MW • BTM Based: • Grid Load Pays: $6.67/MW • Grid Load Saves: $10-$6.67=$3.33MW 150MW Total Meter 50MW BTM GEN 50MW BTM LOAD Grid Load Pays 150 MW x $10 = $1,500 BTM Formula; Customer paid for DR at net change in site boundary (50MW) minus lesser of increase in generation (0MW) or total export (50MW) so: 50MW-0=50MW DR

  6. Demonstration: After Dispatch Grid Based DR BTM Based DR Load Supply Stack Supply Stack Load 50MW Gen2 $5 50MW Gen3 $3 50MW DR $2 50MW LSE1 50MW LSE2 0MW LSE3 50MW Gen2 $5 50MW Gen3 $3 50MW DR $2 50MW LSE 1 50MW LSE 2 50MW LSE 3 0MW 50 MW 150MW Total 100MW Total 150MW Total 200MW Total Meter Meter 50 BTM GEN50 MW BTM Load 50 BTM GEN 0 MW BTM Load Grid Load Pays (150MW x $5)=$750 Grid Load Pays (200MW x $5)= $1,000 Price per MW = ($750 ÷ 100MW) =$7.50/MW Price per MW = ($1000 ÷ 150MW) = $6.67/MW

  7. Observations/Remarks on Example 1 The disparity in MW prices of $7.50 and $6.67 is due to the Billing Unit effect. There is more load to spread cost over using BTM DR. This means there is more load being served more cheaply if BTM DR is used instead of grid based DR. The large disparity here, however, is a function of the low load used and the high % of DR. Using much higher, more realistic load levels and lower DR penetration rates narrows this disparity as we will demonstrate in Example 4. What is clear, however, is that in any case where grid based DR passes the benefits test, BTM DR resulting in an export paid for pursuant to the CDRI formula will pass equally or slightly better.

  8. Example 2 This example compares using 25MW of grid DR and 25MW additional grid generation to having the BTM customer reduce load by 25MW and increase generation by 25MW. Though if dispatch has been done correctly, there would be no “additional” cheap generation from the grid, we increase grid generation by 25MW purely for the heuristic purpose of demonstrating that similar services are compensated similarly. This example shows that the customer cannot get a DR payment and an energy payment for increasing its generation. In this case, even though the export to the grid is the same, the customer only gets 25MW of DR payment because that is all the load it reduced. However, had it not reduced its load by 25MW the export to the grid would have been only 25MW and there would have been less savings.

  9. Before Dispatch DispatchAssumptions Supply Stack Load 50MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 • Grid Based: LSE 3 Bids 25MW DR at $2, G2 ramps up generation 25MW • Drops Load 25MW • Increase in generation 25MW • BTM Based; Customer Bids 25MWDR at $2 • Drops Load 25MW • Increases Generation 25MW 50MW LSE 1 50MW LSE 2 50MW LSE 3 0MW 150MW Total 150MW Total RESULTS AFTER DISPATCH • Grid Based: • Grid Load Pays: $6.00/MW • Grid Load Saves: $10-$6.00=$4.00MW • BTM Based: • Grid Load Pays: $5.84/MW • Grid Load Saves: $10-$5.84=$4.16/MW Meter 50MW BTM GEN 50MW BTM Load Grid Load Pays 150MW x $10= $1,500 BTM Formula; Customer paid for DR at net change in site boundary (50MW) minus lesser of increase in generation (25MW) or total export (50MW) so: 50MW-25=25MW DR

  10. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Load Supply Stack 50MW LSE1 50MW LSE2 50MW LSE3 50MW Gen2 $5 75MW Gen3 $3 25MW DR $2 50MW Gen2 $5 50MW Gen3 $3 25MW DR $2 50MW LSE1 50MW LSE2 25MW LSE3 0MW 50 MW $2 150MW Total 125MW Total 175MW Total 150MW Total Meter Meter 50 BTM GEN 50 MW BTM Load 75 BTM GEN 25 MW BTM Load Grid Load Pays (150MW x $5)=$750 Grid Load Pays (175MW x $5)= $875 Price per MW = ($750 ÷ 125MW) = $6.00/MW Price per MW = ($875 ÷ 150MW) = $5.84/MW

  11. Observations/Remarks on Example 2 The difference in the BTM cases between the $6.67 paid by load in Example 1 and the $5.84 paid in Example 2 is due to the reduction in the DR payment from 50MW to 25MW. This reduction is appropriate because the customer has not departed from its normal baseline usage by more than 25MW and so has only incurred 25MW worth of lost opportunity/productivity/inconvenience. The CDRI formula will only pay DR when 1) it results in a net change at the grid meter and is either; 1) the result of decreasing customer consumption from a valid baseline or 2) is a reduction in load seen by the system at the boundary meter.

  12. Example 3 This example assumes (unrealistically) that there is suddenly 50MW more cheap generation available on the grid that had not been previously dispatched. It makes this unrealistic assumption for the heuristic purpose of comparing the cost to ratepayers under the formula of a 50MW increase in BTM generation that results in an export of 50MW. As can be seen, there is no financial difference to ratepayers under the CDRI formula based on where the cheap generation comes from. The Behind the Meter generator gets paid LMP just like a grid generator would, but there is no DR payment.

  13. Before Dispatch DispatchAssumptions Supply Stack Load • Grid Based: G3 Bids 50MW Gen at $2 • Increases Gen 50 MW • BTM Based; Customer Bids 50 MW Gen at $2 • Increases Gen 50 MW 50MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 50MW LSE1 50MW LSE2 50MW LSE3 RESULTS AFTER DISPATCH 0MW • Grid Based: • Grid Load Pays: $7.50 /MW • Grid Load Saves: $10-$7.50=$2.50/MW • BTM Based: • Grid Load Pays: $7.50/MW • Grid Load Saves: $10-$7.50=$2.50/MW 150MW Total 150MW Total Meter 50MW BTM GEN 50 MW BTM Load BTM Formula; Customer paid for DR at net change in site boundary ( 50 MW) minus lesser of increase in generation (50 MW) or total export ( 50MW) so: 50MW-50MW = 0MW DR Grid Load Pays 150MW x $10= $1,500

  14. Demonstration: After Dispatch Grid Based Gen BTM Based Gen Supply Stack Load Supply Stack Load 50MW LSE1 50MW LSE2 50MW LSE3 50MW Gen2 $5 100MW Gen3 $3 50MW Gen 2 $5 50MW Gen 3 $3 50MW LSE 1 50MW LSE 2 50MW LSE 3 0MW 50 MW $3 150MW Total 150MW Total 150MW Total 150MW Total Meter Meter 50 BTM GEN 50 MW BTM Load 100 BTM GEN 50 MW BTM Load Grid Load Pays (150MW x $5)=$750 Grid Load Pays (150MW x $5)= $750 Price per MW = ($750 ÷ 150MW) = $5.00/MW Price per MW = ($750 ÷ 150MW) = $5.00/MW

  15. Remarks/Observations on Example 3 This example also illustrates that there is no “advantage” given to a BTM generator by the CDRI formula for exports to the grid. The generator is not eligible for any DR payment for such exports but will get paid exactly like a grid generator would. If their costs are less than LMP, then they are passing up revenue by not always exporting. If their costs are higher than LMP, then they will lose money by exporting. This is the same logic that applies to a grid generator.

  16. Example 4 This example is designed to illustrate the diminishing effect of the Billing Unit advantage enjoyed by BTM DR over grid based DR as more representative levels of load and DR penetration are assumed. Given expected levels of load and DR penetration, in most real world situations the Billing Unit “advantage” of BTM DR is likely to be in the rounding error. Thus, for all practical purposes, DR in front of or behind the meter under the CDRI settlement can be considered “equivalent”.

  17. DispatchAssumptions Before Dispatch • Grid Based: LSE 3 Bids 50MW DR at $2 • Drops Load 50W • BTM Based; Customer Bids 50MW DR at $2 • Drops Load 50MW Supply Stack Load 50MW Gen1 $10 1000MW Gen2 $ 5 1000MW Gen3 $ 3 1000MW LSE1 1000MW LSE2 50MW LSE3 RESULTS AFTER DISPATCH • Grid Based: • Grid Load Pays: $ 5.125/MW • Grid Load Saves: $10-$5.125=$4.975/MW • BTM Based: • Grid Load Pays: $5.121/MW • Grid Load Saves: $10-$5.121=$4.979/MW 0MW 2,050MW Total 2,050MW Total Meter 50MW BTM GEN 50 MW BTM LOAD BTM Formula; Customer paid for DR at net change in site boundary (50 MW) minus lesser of increase in generation ( 0MW) or total export ( 50MW) or 50MW-0MW =50 MW DR Grid Load Pays 2050MW x $10 = $20,500

  18. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Load Supply Stack 1000MW LSE 1 1000MW LSE 2 50MW LSE 3 1000MW Gen2 $5 1000MW Gen3 $3 50MW DR $2 1000MW LSE 1 1000MW LSE 2 0MW LSE 3 1000MW Gen2 $5 1000MW Gen3 $3 50MW DR $2 0MW 50 MW $2 2,050MW Total 2,000MW Total 2,100MW Total 2,050MW Total Meter Meter 50 BTM GEN 50 MW BTM Load 50 BTM GEN 0 MW BTM Load Grid Load Pays (2050MW x $5)=$10,250 Grid Load Pays (2,100MW x $5)= $10,500 Price per MW =($10,250 ÷ 2,000MW) =$5.125/MW Price per MW = ($10,500 ÷ 2,050MW) = $5.121/MW

  19. Remarks/Observations on Example 4 As can be seen, changing loads does not change the underlying logic asserted but it does minimize the Billing Unit advantage of BTM DR to relative inconsequence.

  20. Example 5 This example is designed to demonstrate the robustness of the Equivalence Principle under the CDRI settlement formula. As will be seen here and in later examples, regardless of whether the customer baseline is one that normally exports or normally imports, the net change formula will yield financially equivalent results in all circumstances.

  21. Before Dispatch DispatchAssumptions Supply Stack Load 25MW Gen1 $10 50MW Gen2 $ 5 50MW Gen3 $ 3 50MW LSE1 50MW LSE2 50MW LSE3 • Grid Based: LSE 3 Bids 50MW DR at $2 • Drops Load 50MW • BTM Based; Customer Bids 50MW DR at $2 • Drops Load 50 MW RESULTS AFTER DISPATCH 25MW • Grid Based: • Grid Load Pays: $7.50/MW • Grid Load Saves: $10-$7.50=$250/MW • BTM Based: • Grid Load Pays: $6.67.MW • Grid Load Saves: $10-$6.67=$3.33/MW 150MW Total 150MW Total Meter 75MW BTM GEN 50MW BTM Load BTM Formula; Customer paid for DR at net change in site boundary (25MW) minus lesser of increase in generation (0MW) or total export (75MW) so: 50MW-0MW=50MW DR Grid Load Pays 150MW x $10= $1,500

  22. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Supply Stack Load 25MW Gen 2 $5 50MW Gen 3 $3 50MW DR $2 50MW LSE1 50MW LSE2 0 MW LSE3 25MW Gen2 $ 50MW Gen3 $ 50MW DR $ 50MW LSE1 50MW LSE2 50MW LSE3 25MW 75MW 150MW Total 100MW Total 150MW Total 200MW Total Meter Meter 75BTM GEN 50MW BTM Load 75BTM GEN 0MW BTM Load Grid Load Pays (150MW x $5)=$750 Grid Load Pays (200MW x $5)= $1,000 Price per MW =($750 ÷ 100MW) = $7.50/MW Price per MW =($1,000 ÷ 150MW) = $6.67/MW

  23. Observations/Remarks on Example 5 We see precisely the same results here as in example one. Customers are financially indifferent to which generators are in the bid stack or where the load interruption occurs as long as DR is measured from an accurate customer baseline and settled under the CDRI proposed formula.

  24. Example 6 This example illustrates the robustness of the formula in its treatment of Behind the Meter or grid based generation in cases where the generator normally exports. Once again, we make the unrealistic assumption that a cheap generator on the grid suddenly has 25MW more cheap generation to sell. Again, this is for the heuristic purpose of comparing this to a 25MW increase by the BTM generator. Again, we see there is no “advantage” to the BTM generator and no added cost to customers. Customers don’t care where cheap generation comes from. Again, there is no DR payment for increasing generation for export. As will be seen in later examples, if generation is used as a “load reducer”, there is a DR payment, but no energy payment. Since both are at LMP, no generator will be paid more than LMP for increasing its output.

  25. Before Dispatch DispatchAssumptions Supply Stack Load • Grid Based: Gen3 Bids 25 more MW at $3 • Gen3 Delivers 25MW more to the grid • BTM Based • BTM Based; Customer Bids 25MW more Gen at $3 • Customer Delivers 25MW more to the grid. 25MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 50MW LSE1 50MW LSE2 50MW LSE3 25MW RESULTS AFTER DISPATCH 150MW Total 150MW Total • Grid Based: • Grid Load Pays: $5/MW • Grid Load Saves: $10- $5=$5/MW • BTM Based: • Grid Load Pays: $5/MW • Grid Load Saves: $10-$5=$5/MW Meter BTM Formula; Customer paid for DR at net change in site boundary (25MW) minus lesser of increase in generation (25MW) or total export (25MW) so: 25MW-25MW=0MWDR 75MW BTM GEN 50MW BTM Load Grid Load Pays 150MW x $10= $1,500

  26. Demonstration: After Dispatch Grid Based Gen BTM Based Gen Supply Stack Load Supply Stack Load 50MW LSE1 50MW LSE2 50MW LSE3 50MW Gen2 $5 75MW Gen3 $3 0MW DR $ 50MW LSE1 50MW LSE2 50MW LSE3 25MW Gen2 $5 75MW Gen3 $3 0MW DR $ 50MW 25MW 150MW Total 150MW Total 150MW Total 150MW Total Meter Meter 75BTM GEN 50MW BTM Load 100BTM GEN 50MW BTM Load Grid Load Pays (150MW x $5)= $750 Grid Load Pays (150MW x $5)=$750 Price per MW = ($750÷150MW) = $5/MW Price per MW =($750÷150MW) = $5/MW

  27. Remarks/Observations on Example 6 As before if the BTM generator’s costs are lower than LMP they are losing money by not always exporting at the LMP (which will mean their “baseline” would be higher) and if their costs are higher than the LMP they just lose money by exporting. Again, this is the same result as for grid based generation.

  28. Example 7 In this example we once again make the unrealistic assumption that G3 suddenly has 25MW more generation it can offer cheaply. Again, this is done for the heuristic purpose of allowing comparison to the same steps of load reduction and generation increase Behind the Meter. Again, we see that the formula is robust and except for the Billing Unit effects (advantage BTM) the equivalence principle holds. The same “services” are compensated at the same rates and the “export baseline” does not effect the calculations.

  29. Before Dispatch DispatchAssumptions Load Supply Stack • Grid Based: LSE 3 Bids 25MW DR at $2 • and Gen 3 increases generation by 25MW • Drops Load 25MW • Increases Gen by 25MW • BTM Based; Customer Bids 25MW DR at $ • Drops Load 25MW • Increases Gen 25MW 25MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 50MW LSE1 50MW LSE2 50MW LSE3 25MW RESULTS AFTER DISPATCH 150MW Total 150MW Total • Grid Based: • Grid Load Pays: $6/MW • Grid Load Saves: $10- $6=$4/MW • BTM Based: • Grid Load Pays: $5.84/MW • Grid Load Saves: $10-$5=$4.16/MW Meter 75MW BTM GEN 50MW BTM Load BTM Formula; Customer paid for DR at net change in site boundary (50MW) minus lesser of increase in generation (25MW) or total export (75MW) so: 50MW-25MW = 25MWDR Grid Load Pays 150MW x $10= $1,500

  30. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Supply Stack Load 25MW Gen 2 $5 50MW Gen 3 $3 25MW DR $2 50MW LSE1 50MW LSE2 50MW LSE3 25MW Gen2 $5 75MW Gen3 $3 25MW DR $2 50MW LSE1 50MW LSE2 25MW LSE3 25MW 75MW 150MW Total 125MW Total 175MW Total 150MW Total Meter Meter 75BTM GEN 50MW BTM Load 100 BTM GEN 25MW BTM Load Grid Load Pays (150MW x $5)=$750 Grid Load Pays (175MW x $5)= $875 Price per MW =($750 ÷ 125MW) = $6/MW Price per MW =($875÷150MW) = $5.84/MW

  31. Remarks/Observations on Example 7 Load does not care where it gets its cheap generation or its DR. BTM DR provides equivalent service to load and equivalent benefits. Foregoing those benefits based on a refusal to adopt a rational metering scheme is not good public policy.

  32. Example 8 This example is designed to demonstrate that the CDRI proposal has a built in safeguard against paying for any load reduction that does not benefit the grid. The net formula prevents payment unless the reduction leads to a displacement of higher cost generation on the grid. In this case, the customer reduces load but reduces generation by the same amount. For purposes of comparison, we reduce both load and cheap generation on the grid.

  33. Before Dispatch DispatchAssumptions Load Supply Stack • Grid Based: LSE 3 Bids 50MW DR at $2, • but Gen 3 reduces Gen by 50MW to O • Drops Load 50MW • G3 drops 50MW output. • BTM Based; Customer Bids 50MWDR at $2, • but also drops his generation 50MW to 25MW • Drops Load 50MW to 0MW • Drops Gen 50MW to 25MW 25MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 50MW LSE1 50MW LSE2 50MW LSE3 25MW RESULTS AFTER DISPATCH 150MW Total 150MW Total • Grid Based: • Grid Load Pays: $15/MW • Grid Load Saves: $10- $15=$(5)MW • BTM Based: • Grid Load Pays: $10/MW • Grid Load Saves: $10-$10=$0MW Meter 75MW BTM GEN 50MW BTM Load Grid Load Pays 150MW x $10= $1,500 BTM Formula; Customer paid for DR at net change in site boundary (0MW) minus lesser of increase in generation (-50MW) or total export (25MW). Because there was no change at the site meter, customer gets no DR payment.

  34. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Supply Stack Load 50MW LSE1 50MW LSE2 0MW LSE3 25MW Gen1 $10 50MW Gen2 $5 0MW Gen3 $3 50MW DR $2 25MW Gen1 $10 50MW Gen2 $5 50MW Gen3 $3 0MW DR $2 50MW LSE1 50MW LSE2 50MW LSE3 25MW 25MW 150MW Total 100MW Total 150MW Total 150MW Total Meter Meter 75BTM GEN 50MW BTM Load 25BTM GEN 0MW BTM Load Grid Load Pays (150MW x $10)=$1,500 Grid Load Pays (150MW x $10)= $1,500 Price per MW =($1,500÷100MW) = $15/MW Price per MW =($1,500÷150MW) = $10/MW

  35. Remarks/Observations on Example 8 In the case of joint control of load asset and generation on the grid, we presume there will be safeguards in place to prevent the result shown on the grid portion of this example. Our point here is only that the CDRI mechanism already builds in such safeguards in the case of BTM DR.

  36. Example 9 Examples 9 and 10 both apply the CDRI formula to the case of a customer with a baseline that is normally importing power from the grid. Again, the equivalence principle holds.

  37. Before Dispatch DispatchAssumptions Load Supply Stack 25MW Gen1 $10 75MW Gen2 $5 75MW Gen3 $3 50MW LSE1 50MW LSE2 50MW LSE3 • Grid Based: LSE 3 Bids 25MW DR at $2 • Drops Load 25MW • BTM Based; Customer Bids 25MWDR at $2 • Drops Load 25MW RESULTS AFTER DISPATCH 25MW • Grid Based: • Grid Load Pays: $5.84/MW • Grid Load Saves: $10- $5.84=$4.16MW • BTM Based: • Grid Load Pays: $5.84MW • Grid Load Saves: $10-$5.84=$4.16MW 175MW Total 175MW Total Meter 25MW BTM GEN 50MW BTM Load BTM Formula; Customer paid for DR at net change in site boundary (25MW) minus lesser of increase in generation (0MW) or total export (0MW) or 25MW-0MW= 25MW DR Grid Load Pays 175MW x $10= $1,750

  38. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Supply Stack Load 75MW Gen2 $5 75MW Gen3 $3 25MW DR $2 50MW LSE1 50MW LSE2 50MW LSE3 75MW Gen2 $5 75MW Gen3 $3 25MW DR $2 50MW LSE1 50MW LSE2 25MW LSE3 25MW 0MW 175MW Total 150MW Total 175MW Total 150MW Total Meter Meter 25MWBTM GEN 50MW BTM Load 25MW new BTM GEN 25MW New BTM Load Grid Load Pays (175MW x $5)=$875 Grid Load Pays (175MW x $5)= $875 Price per MW =($875÷150MW) = $5.84/MW Price per MW =($875÷150MW) = $5.84/MW

  39. Remarks/Observations on Example 9 In this case, there is no Billing Unit effect because load on the grid is equal and reduced equally in both cases.

  40. Example 10 This example illustrates the equivalence when generation is used as a load reducer under the CDRI formula. As in example 9, there is a 25MW reduction in load on the grid, but it is caused by an increase in generation. There is no energy payment made to the generator but there is a DR payment. Since either payment would be at LMP the distinction may not be important to overall cost, but this example shows there will be only one payment.

  41. Before Dispatch DispatchAssumptions Supply Stack Load 25MW Gen1 $10 75MW Gen2 $5 75MW Gen3 $3 50MW LSE1 50MW LSE2 50MW LSE3 • Grid Based: LSE 3 Bids 25MW DR at $2 • Drops Load 25MW • BTM Based; Customer Bids 50MWDR at $2 • Increases Gen 25 RESULTS AFTER DISPATCH 25MW • Grid Based: • Grid Load Pays: $5.84/MW • Grid Load Saves: $10- $5.84=$4.16/MW • BTM Based: • Grid Load Pays: $5.84/MW • Grid Load Saves: $10-$5.84=$4.16/MW 175MW Total 175MW Total Meter BTM Formula; Customer paid for DR at net change in site boundary (25MW) minus lesser of increase in generation (25MW) or total export (0MW) so: 25MW-0=25MW DR 25MW BTM GEN 50MW BTM Load Grid Load Pays 175MW x $10= $1,750

  42. Demonstration: After Dispatch Grid Based DR BTM Based DR Supply Stack Load Supply Stack Load 75MW Gen2 $5 75MW Gen3 $3 25MW DR $2 50MW LSE1 50MW LSE2 25MW LSE3 75MW Gen2 $5 75MW Gen3 $3 25MW DR $2 50MW LSE1 50MW LSE2 50MW LSE3 25MW 0MW 175MW Total 150MW Total 175MW Total 150MW Total Meter Meter 25BTM GEN 50MW BTM Load 50BTM GEN 50MW BTM Load Grid Load Pays (175MW x $5)=$875 Grid Load Pays (175MW x $5)= $875 Price per MW =($875÷150MW) = $5.84/MW Price per MW =($875÷150MW) = $5.84/MW

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