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Will the federal government force states to allow demand response aggregators?

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Christopher Neely's picture
Independent Local News Organization

Journalist for nearly a decade with keen interest in local energy policies for cities and national efforts to facilitate a renewable revolution. 

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  • Sep 9, 2021 9:21 pm GMT
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Populations are growing, the weather is showing more and more extremes and the demands on our nation's grids increasing. Load reduction strategies are becoming more important for both energy infrastructure and customers, which has led to the proliferation of demand response programs across the country that benefit all players, from utility to customer. 

However, not demand response is not working as well as it could in all states thanks to an old Federal Energy Regulatory Commission that allows states to opt-out of allowing aggregators to play a role in the demand response market. In these states, which the National Resources Defense Council says are mostly in the midwest, utilities are relying on expensive and mostly dirty peaker power plants when in desperate need to balance out the increased demand for electricity. 

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Well, the FERC is now considering an amendment to that rule that would no longer allow states to opt-out prohibit aggregators from making a play in local energy markets. Of course, such an amendment would decrease the value of peaker plants—bad for energy systems that have invested in them—but also potentially decrease cost, the threat of overloading and bring customers to the table as a player in the market. 

When the days are incredibly hot or incredibly cold, demand for electricity increases. This places utilities and the grid under stress and they have to respond to demand increases. In these midwester states, they fire up peaker plants. In my state of California, PG&E simply asks customers to reduce power usage. In other states, such as some mid-Atlantic states, aggregators have been brought into the market as a go-between for utilities and customers. Aggregators hook into customer energy systems, such as a thermostat, and reduce their energy usage automatically and sell that usage back to the grid. When the demand spike event finishes, the aggregator and the customer of compensated for their efforts to reduce the load. 

It's quite a market but it has proven successful. And as distributed energy resources become more common, through electric cars and residential/commercial solar panels, customer participation in demand response bcomes easier, cheaper, and more logical than a dirty peaker plant. The FERC has not officially amended this rule yet, but removing the ability to opt-out will be a good step forward in addressing the inevitable population and energy demand increases. 

 

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