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Demand response (DR)

Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Mar 21, 2022
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Demand response (DR)

Facing the challenges derived from the rise in gas and electricity prices and the beginning of the dry season in Brazil, points to a solution that deserves to be evaluated by the electric sector is to implement a DR program.

The justification is very simple. Paying an attractive bonus for consumers who voluntarily  reduce their consumption when the national system operator identifies peaks, is a real win-win as it avoids the dispatch of very expensive thermal plants.

DR has been a successful program for many years in a list of countries. It should be implemented  ASAP, so that Brazil captures an opportunity that only depends on its own interest, commitment and planning to structure it.

Does Brazil have leadership in the electricity sector to make it happen for 2022?

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Richard Brooks's picture
Richard Brooks on Mar 21, 2022

In ISO New England there are two types of demand response resources, active and passive. Active resources are able to respond to dispatch instructions and participate in energy markets. Passive resources are permanent reductions in load associated with energy efficiency programs. Both type of resources participate in the capacity market, only active resources participate in the energy markets.

Bob Meinetz's picture
Bob Meinetz on Mar 21, 2022

"Passive resources are permanent reductions in load associated with energy efficiency programs."

Dick, this labeling of efficiency as a passive energy "resource" raises more questions than answers.

1) Do ISONE reps visit the homes and businesses of customers to verify that they've swapped all of their incandescent bulbs for LEDs?
2) Are smart meters in New England so smart they can meter how much electricity a customer would have used, but didn't? What if a customer gifts their new energy-efficient refrigerator to a relative in Syracuse?
3) Do supersmart ISONE meters also know when a customer turns his/her refrigerator down a few degrees because running it costs less - even if he/she is now using more energy (the "rebound effect")?
4) I assume money paid by utilities for passive capacity resources in ISONE is billed to customers. Do customers receive anything of value in return for these payments, or does Eversource get all the credit?
5) Since reductions in load are considered permanent, are utilities entitled to permanent rate increases? 6) What would prevent a utility from shutting down, and continuing to bill its customers for the massive reduction in load they've accomplished?

I ask, because we don't have capacity markets in CAISO. But it seems when I ask these questions in online discussions with New Yorkers, the dawning realization they're paying something for nothing just makes them angry.
 

 

Richard Brooks's picture
Richard Brooks on Mar 21, 2022

All good questions, and observations Bob. I think we can all agree that each region operating wholesale markets has room for improvement. EE is a low hanging fruit IMO.

Rafael Herzberg's picture
Rafael Herzberg on Mar 22, 2022

The passive mode is actually a great way to go also. |n my experience it is fairly easy to reduce 1/3 of the difference between the maximum recorded demand in a month (almost 3 000 15-minute intervals) and the mean demand (that one that corresponds to 100% load factor) as its occurrence happens less than 2% of the intervals. 

The good news: 2% of the intervals are only 2 15-minute-intervals per day! And finding loads that can e shed for 2 intervals are usually easy. Heating and cooling loads are excellent examples. They can be shed for 2 intervals without major challenges. 

 

Bob Meinetz's picture
Bob Meinetz on Mar 26, 2022

Rafael, given customers would never know in advance exactly what 15-minute interval of the day maximum consumption might occur, it seems to avoid paying a higher tier customers would need to set minimum temperatures for air conditioning and maximum temperatures for heating. Is that correct?

Again, I can't help but note the social-justice implications of demand/response - of foisting the responsibility for providing sufficient, reliable, affordable electricity upon customers.

In the 1930s, American president Franklin Roosevelt believed everyone should have equal access to electricity, that like water and refuse removal, it was a fundamental human right. During the Great Depression utilities had no interest in building transmission out to rural areas - there weren't enough customers to make it worthwhile. Roosevelt signed legislation mandating that In exchange for their natural monopoly, utilities would be forced to build transmission to rural areas at their expense, so farmers would be rewarded for growing food for a citizenry with little money to pay for it. Everyone shared the expense, everyone benefited.

In 2022, should California utility PG&E be charging customers in remote areas higher rates? After all, building and maintaining all of that extra transmission is expensive, and it's not PG&E's fault customers who live there don't want to rent a luxury condo in San Francisco. Is it?

Rafael Herzberg's picture
Rafael Herzberg on Mar 29, 2022

BOB I was referring as passive DR as a tool of demand control, from the customer's prospective. 

In this case the customer does have a energy management system which measures in real time the kW demand (integrated in 15 minutes and "takes action" automatically shedding previously selected loads (typically with high inertia) for a few minutes basically to avoid a "high" recorded demand, thus saving on the $ kW demand charge.

Savings are achieved by the industrial/commercial/institutional energy user which do not depend on what happens with the electric utility's grid because it is associated with the ongoing billing format.

Bob Meinetz's picture
Bob Meinetz on Mar 29, 2022

Understood, Rafael. My point was that with DR it becomes customers' burden to guarantee system reliability, to have enough electricity for everyone - and that burden falls disproportionately on the backs of lower-income customers. Whether that burden is borne as a financial expense or limiting use of air conditioning until the temperature of a customer's home exceeds 38°C is irrelevant.

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