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Energy Payments for Demand Response Resources Dispatched in FCM

The Demand Response Baseline – A CSP Perspective. Energy Payments for Demand Response Resources Dispatched in FCM. Herb Healy. May 13, 2009. Problem Statement.

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Energy Payments for Demand Response Resources Dispatched in FCM

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  1. The Demand Response Baseline – A CSP Perspective Energy Payments for Demand Response Resources Dispatched in FCM Herb Healy May 13, 2009

  2. Problem Statement • Under current FCM rules, Demand Resources, including active Demand Response resources, with a CSO that are dispatched do not receive any energy payments • Issue of energy payments was punted at time of FCM Settlement, to be part of the discussion of how Demand Response is to participate in the wholesale energy market in FCM era • Because the Demand Response wholesale energy market initiative has been extended, absent this separate process, Demand Response has lost its opportunity to secure energy payments for FCM resources come the start of the FCM in 2010

  3. Distinction - DALRP and FCM Energy Payments • DALRP - Economic; voluntary price response program • FCM - Capacity adequacy/ reliability; mandatory response if dispatched DALRP does provide possibility for energy payments for FCM events only if resource bids & clears in DA DALRP Events FCM Events • Exposure for FCM resources during FCM • Events • all RTEG • RTDR that does not clear in DA

  4. Suggested Approach • EnerNOC proposes to extend the current TICAP payment structure for energy for Demand Response resources that have a CSO and that are dispatched in the FCM • Similar, but separate, to proposed extension of the DALRP • Source of payments same as TICAP • Does not prejudice the broader, on-going stakeholder initiative of price-responsive demand participating in the wholesale market • Only interim payments until broader issue resolved and implemented • Would sunset commensurate with implementation of stakeholder initiative

  5. How Does It Work in Transition Period? • Demand Response resources that are registered, and are dispatched in reliability event, receive energy payments based on their load reduction over the event window • Payment structure: greater of RT energy price, or $500/MW-hr

  6. How Many $s at Stake? • Assumptions – 1st Commitment Period • 40 hours/ yr for RTDR • 4 hours/ yr for RTEG • All hours paid at $500/MW-hr • Payments for 1st Commitment Period • RTDR ~ $18.8 M • RTEG ~ $ 1.8 M • Total ~ $20.6 M 2nd Commitment Period expected to be about same magnitude

  7. ISO IMMU Recommendations* re DR in FCM • “Product Definition And Penalties Comparable • Except Demand Resources have no PER” • “Energy Revenues Provide An Incentive For Generation To Respond During Shortage Events” • “Recommend That DR Have An Opportunity To Earn Energy Revenues To Increase Incentives” * To be clear -- IMMU is recommending energy payments, but not the structure or payment approach suggested herein for the interim period

  8. Next Steps • EnerNOC seeks comments for consideration in finalizing approach • EnerNOC will come back to Committee with full proposal

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