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Tutorial on Demand Response In Deregulated Electricity Markets: International Experience

Tutorial on Demand Response In Deregulated Electricity Markets: International Experience. Nuria Encinas Redondo Instituto Ingeniería Energética Universidad Politécnica de Valencia. Table of contents. Introduction Actual Status USA DR programs England and Wales NETA Rest of Europe

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Tutorial on Demand Response In Deregulated Electricity Markets: International Experience

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  1. Tutorial on Demand Response In Deregulated Electricity Markets: International Experience Nuria Encinas Redondo Instituto Ingeniería Energética Universidad Politécnica de Valencia

  2. Table of contents • Introduction • Actual Status • USA • DR programs • England and Wales • NETA • Rest of Europe • Current Research Efforts • EUDEEP • IEA DSM, Task XIII, Task XV • Conclusions CLEARWATER, FL

  3. World wide efforts are being done to achieve a massive deployment of DR • Actual status • Research efforts 1.- Introduction • Agents are interested in Demand Response: • Policy Makers And Regulators • Market Operators • Transmission System Operators • Local Network Operators • Traders And Retailers • Customers • There are still barriers to overcome: • Economical • Technical • Structural and Legal • Ignorance • Tradition • Financial CLEARWATER, FL

  4. 2.- Actual status 2.1.- USA FERC: RECOMMENDED ROLE OF ISOS AND RTOS • ISOs should facilitate both emergency load management actions and economic curtailments until market structures and signals are clear. • Many current programs provide subsidies (by necessity) • These indicate barriers or muted incentives to participation • Tools to achieve the goal should include: • Forward contracts for reliability interruptions • Meaningful reward/penalty features • Proper valuation of the capacity represented by interruptions • ISOs/RTOs must work with FERC and state regulators to ensure: • Demand response is a part of the standard market design • Standardized customer baselining practices • Consistent payment approaches CLEARWATER, FL

  5. I- Special pricing options • Provide hourly information to enable customer to modify their consumption according to prices • Small modification from traditional structures • Based on Real Time Pricing • Special Time of Use • Examples • Two part tariff: • usage at the margin=billed at RT price • Encouraging of RT Pricing through incentives: • Technical assistance • Caps during first months • TOU+especial peak days pricing CLEARWATER, FL

  6. II- Programs offering payments for load reductions • Payments credits in exchange of load reductions in particular periods of time • Different types: • Request criteria decided by Program Administrator needs (usually for emergency) • Voluntary load reductions (without penalizations) • Mandatory load reductions (with penalizations) • Tailored programs (for large consumers) • Request criteria by market price • triggered when market price reaches a limit • Day-ahead market • Forecast of Real Time price • Programs without notification • Scheduled event days • total monthly reductions CLEARWATER, FL

  7. III- Payments for DG productions • Payments or services in exchange of generation or load reduction using a separately metered self-generator. • Triggering • Usually for administrators needs • With or without penalizations according to capacity payments • Examples • Rolling Blackout protection • Capacity Incentives • Interruptible service for Stand-by generation CLEARWATER, FL

  8. IV- Programs offering services for participation • Special services for load reductions instead of payments • Technical assistance • Blackout protection • Examples • Optional Bidding Mandatory curtailment • Technical assistance incentives CLEARWATER, FL

  9. V- Programs that promote direct market participation • Interface for customers to present their offers of reduction to markets • Administratos acts as tradding agent in markets: • Energy market (day-ahead, hour-ahead) • Balancing market • Reserves market • Usually designed for large customers • Examples • Participating load program • Balancing up load • Replacement Reserve • Day-ahead Demand Response • Economic Load Response • Hourly ahead Dispachable load CLEARWATER, FL

  10. V- Other Programs • Remote controlled thermostats but with possibility of customer overriding • Energy Smart Thermostat Program • Profiled responses • as market one for aggregators • direct load control for final consumer • Example: • Real-time profiled response CLEARWATER, FL

  11. Participation on programs (I) • Enrollments by type of consumers • Enrollments by consumer size CLEARWATER, FL

  12. Participation on programs (II) CLEARWATER, FL

  13. Participation on programs (III) CLEARWATER, FL

  14. 2.2.- England and Wales: NETA Futures contracts OTC between parties OTC with SO Long-Term Spot Markets Short-term Final Program + Adjustment bids and offers 1 hour ahead Balancing Mechanism After delivery time Settlement Mechanism CLEARWATER, FL

  15. BILATERAL CONTRACTS • Power Exchanges: • Futures contract • Spot Markets • Over-the-counter • Forward markets • Direct contracts • The Most Important Power Exchanges: • UK Power Exchange (UKPX) • Futures Contracts • Spot Market • Automatic Power Exchange (UK APX) • Spot Market • Planned: future contracts • International Petroleum Exchange • Futures Contracts the same group CLEARWATER, FL

  16. Trading evolution (OTC) CLEARWATER, FL

  17. Trading Volumes (Power Exchanges) • During first 2 years only 2% of energy in the spot market CLEARWATER, FL

  18. CLEARWATER, FL

  19. BALANCING Volumes • During first years only 5% of energy in the the balancing market CLEARWATER, FL

  20. SETTLEMENT MECHANISM • System imbalance REAL S. Sell Price FP FP S. Buy Price REAL MW CLEARWATER, FL

  21. SETTLEMENT MECHANISM Prices CLEARWATER, FL

  22. Possibilities for the demand • Power Exchanges and OTC • Direct participation in the Short, medium and long term trading • Balancing markets • Direct Offers and bids • Contract with the SO • Frequency Response: • Commercial • Primary response • Secondary response • Reserves: • Fast Reserve (<2min) • Standing Reserve (<20min) • Reactive Power: • Enhance Reactive Power CLEARWATER, FL

  23. Participation • Offers and bids in balancing market:small participation <1% • Ancillary services: CLEARWATER, FL

  24. 2.3.- Rest of Europe Nordic countries(I) • Market structure • Involved Countries: • Norway, Sweden, Finland and Denmark • Structure: • Financial markets • Bilateral contracts (OTC) • Nord Pool • Elspot: Day-Ahead market • Elbas: Hour market • Regulating power market CLEARWATER, FL

  25. Nordic countries (II) • DR possibilities and participation • Day-ahead bids: Elspot • Hour-ahead bids: Elbas • Balancing offers and bids: regulating market • Reserves: regulating market • Fast active disturbance reserve (controllable loads) • Slow active disturbance reserve • Frequency control (with automatic disconnection of loads) • Frequency controlled disturbance reserve CLEARWATER, FL

  26. 3.- Research efforts 3.1.- International Energy Agency • Agency objective: • Seek to promote the effective operation of international energy markets and encourage dialogue with all participants • Initially focused on strategic oil reserves • Currently includes: • Fossil fuels • Electricity • 26 Member countries CLEARWATER, FL

  27. IEA Demand-side Management Program • Tasks: • Task I: International Database on DSM Technologies and Programs • Task II: Communications Technologies for DSM • Task III: Co-operative Procurement of Innovative Technologies for Demand • Task IV: Development of Improved Methods for Integrating Demand • Task V: Investigation of Techniques for Implementation of DSM Technology in the Market Place • Task VI: Mechanisms for Promoting DSM and Energy Efficiency in Changing Electricity Businesses • Task VII: International Collaboration on Market Transformation • Task VIII: Demand-Side Bidding in a Competitive Electricity Market • Task IX: The Role of Municipalities in a Liberalized System CLEARWATER, FL

  28. IEA Demand-side Management Program • Tasks(II): • Task X: Performance Contracting • Task XI: Time of Use Pricing and Energy Use for Demand Management Delivery • Task XII: Cooperation on Energy Standards • Task XIII: Demand Response Resources • Task XIV: Market Mechanisms for White Certificates Trading • Task XV: Network Driven DSM CLEARWATER, FL

  29. IEA dsm TASK XIII • Goals • Define and build turn-key DRR infrastructure model including Business Model, Business Rules, Enabling Technology, Standards and Implementation Plan • Deliver DRR into “any” emerging or existing liberalized electricity market • Subtask • Finalize global and country-specific objectives • Define the DR resource base and market characterization • Market potential of DRR • Demand response valuation • Role and value of enabling technologies • Characterize priorities and barriers, and develop solutions and recommendations • Develop DRR network of methods, tools and applications • Deliver products and Intellectual Property to IEA DSM program and project participants CLEARWATER, FL

  30. 3.2.- EU-DEEP • The birth of a European Distributed EnErgy Partnership that will help the large-scale implementation of distributed energy resources in Europe • A European Project supported within the Sixth Framework Programme for Research and Technological Developement • 39 partners and 15 countries • Project begining: January 2004 • Finishing: 2007 CLEARWATER, FL

  31. DR within EUDEEP (I) • In WP1 • Market segmentation. • From the customer point of view • Three levels of segmentation: • First level: Residential, Commercial & Industrial • Second level: economic activity • Third level: Considering uses of energy • Segments potential evaluation (ranking) • Ranking combination of three different rankings: • Distributed Generation • Distributed Storage • Demand Response • Characterization of segments also considering DR: • Energy supply, end uses, Demand flexibility, storage options, etc. Examples Factors: size, attitude, demand flexibility, load patterns, etc. CLEARWATER, FL

  32. DR within EUDEEP (II) • In WP3 • Evaluation of Local Trading Strategies • Impact of DR applications in load curves • economic apraisal • Market possibilities Through modelling of characteristic customersand simulating combinations of strategies: DG+DS+DR CLEARWATER, FL

  33. 3.3. EFFLOCOM Energy eFFiciency and Load curve impacts of COMercial development in competitive markets • A EU SAVE program • 6 partners, 5 countries • SINTEF Energy Research, Norway • ECO-Tech, Norway • EDF, France • Energy Piano, Denmark • Electricity Association, England • VTT, Finland • Project period: July 2002-August 2004 CLEARWATER, FL

  34. 3.4. Busmod BUSiness MODels in a world characterised by distributed generation • EU-EESD project • Objectives: • Analysis of current methodologies and distributed generation characteristics. • Definition of different business scenarios in a deregulated distributed generation electrical power market. • Anticipation of future actors participating in deregualted electricity markets. • Design of a methodology allowing feasibility studies related to distributed generation, through a systematic procedure. • 7 partners, 5 countries • IBERDROLA (Spain) • LABEIN (Spain) • VUA (The Netherlands) • ECN (The Netherlands) • UMIST (United Kingdom), • SINTEF Energy Research (Norway), • EnerSearch (Sweden). CLEARWATER, FL

  35. 3.5. PIER Demand Response Research Center • Promoted by the California Energy Commission • Led by Lawrence Berkeley National Laboratory • Main objective: • Develop, prioritize, conduct, and disseminate research that develops broad knowledge that facilitates DR • Activities: • Create a research roadmap for DR in California • Establish multi-institutional partnerships • Foster connections with stakeholders through outreach efforts • Sustain long-term attention to DR research topics • Conduct research, development, demonstrations, and technology transfer Research Categories: Policies, programs, and tariffs Utility markets, technology, and systems Customer and end-use technology and systems Consumer and institutional behavior CLEARWATER, FL

  36. 3.7. Demand-Side Working Group (DSWG) • Created and Chaired by Ofgem, UK • Objective: • identify and assess any practical and/or commercial obstacles to demand side participation in the wholesale electricity trading arrangements • Activities • Reviews and assesses options and potential opportunities for the demand to participate in wholesale market. • Identifies practical and/or commercial obstacles inhibiting effective demand side participation in the wholesale market; • Determines measures for the removal of these obstacles • Evaluates and proposes a timescale over which the necessary improvements to demand side participation in the wholesale electricity tradingarrangements can be addressed. CLEARWATER, FL

  37. 4. Conclusions • Demand Response is an active subject in the energy industry • Stakeholders have been interested and developed DR structures • World wide research efforts try to overcome actual obstacles to reach a massive deployment • Research efforts are focused in the demand-pull approach: • The customer is the cornerstone of DR • IEA, EU Commission CLEARWATER, FL

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