As most of us in the eastern half of North America can testify, it is frightfully cold out. But the chill is not limited to us living beings alone. Even our electricity infrastructure is feeling the brunt of it. And Demand Response (or DR as it is affectionately called) is providing a crucial role in keeping the grid stable and functional.
First, a quick primer on DR. A fundamental property of our electrical system presently is that electricity cannot be stored. So what is needed must be produced instantaneously. In other words, demand and supply of power need to match at every instant. So, when there is more demand for power than is available, either the supply can be increased or, alternatively, demand can be curtailed. In simple terms, DR allows customers to get paid for dialing back power consumption when there is not enough supply to go around. DR might be provided by a manufacturing facility shifting production to other times of the day or night, or a series of large buildings turning their thermostats up a few degrees on warm days (or down a few degrees on a cold day like today!). DR helps keep demand in check and prices stable. In extreme circumstances, DR can help keep rolling blackouts at bay.
The wholesale supply of power is coordinated by regional entities, known as Independent System Operators (ISOs) or Regional Transmission Organizations (RTOs). Major RTOs/ISOs in the eastern half of the US include NYISO (NY state), ISO-NE (large parts of New England), PJM (Mid-Atlantic and parts of the Midwest), MISO (large parts of the Midwest), and ERCOT (most parts of Texas). These ISOs have sophisticated control centers that monitor the grid 24/7.
The value of DR has been mostly seen in the summer months. For example, on especially hot days or hours the increasing desire to run air-conditioners could create a surge in power needs, exceeding supply. DR could be called on to cut load from elsewhere in order to manage available supply and rising demand. Just this summer in the PJM region, DR was called on in July and September to respond to power shortage conditions.
But now DR is being called on to help out during the biting cold. The esoteric power markets community is abuzz with news about the somewhat unusual circumstances over the past couple of days.
In PJM, due to the severe cold snap, power demand has surged, considerably exceeding PJM’s projections. Up to 20 percent of installed power generation capacity was offline due to outages as a result of frigid weather conditions or scheduled maintenance. The situation reached a tipping point on Monday night when about 2,000 MW of generation was lost due to system stresses. Blackouts were avoided only by calling on 1,900 MW of much-needed DR, and by purchasing emergency power from neighboring regions. While wholesale prices were temporarily pushed up to around $1,800 per megawatt-hour, power outages were avoided. PJM and state regulators also urged consumers to cut back usage during the emergency – an informal form of demand response!
In ERCOT, overnight Sunday and into Monday 3,700 MW of capacity was forced to shut down; more than half of the shutdowns were weather-related. ERCOT was able to avoid rolling blackouts by deploying DR and importing power.
In NYISO, one of the nuclear reactors at Indian Point shut down due to water level issues (not thought to be weather-related). NYISO resorted to DR to manage its power needs and help the grid needs of neighboring regions.
DR provides the grid critical flexibility benefits. As demonstrated, it is a viable and relatively cheap option to meet surges in power demand – much more so than building or maintaining redundant power plants that sit around waiting for the odd power spike. DR can also respond quickly to grid needs, oftentimes more quickly than fossil-fired equipment.
Energy efficiency also plays a critical role in ensuring grid reliability. A prevalence of energy efficient appliances dampens the potential for power demand spikes as such appliances contribute less to demand than their less efficient brethren. Of course, energy efficiency also saves users a lot of money. And during cold winter days, when electricity and natural gas prices are much higher than normal, energy efficiency can rack up those savings. Read my colleague’s blog on energy-efficient furnaces’ potential to save consumers energy and money.
The recipe for a clean grid includes large amounts of renewable energy and energy efficiency, and reducing amounts of fossil-fuel power plants. A healthy amount of demand response can complement clean technologies by providing much needed grid flexibility while ensuring reliability. DR is sure saving the day right now.