Insights on how to integrate production, transmission and distribution systems with demand management?

Currently there is an array of design solutions on the demand side that can be applied to reduce the peak capacity (and energy) requirements from the grid. They are generally dealt with under the term DER (distribution energy resources) but can include distributed generation (DG), where customer has a generating resource that can come on line at time of peak and reduce utility's requirement to supply peak capacity, or demand response (DR), where the customer moves part of its demand away from the peak time for the electricity system and brings it back at low system load. Of course both of these solutions will have to be contractual, that is the utility will rely on these measures to be taken by the customer for it to defer its investment on peak capacity. The benefit for the customer being reduced electricity rates because of lower consumption at peak capacity time and the deferring the utility investment in capacity. DR is an easier and less costly solution for the utility as it does not interfere with grid's operations. It just reduces the load on the system at peak and makes it resurface at off peak when capacity is available on the grid's supply and distribution systems. DG is more impactful on the grids in its integration, as it injects power into it. It will increase, for example, short circuit levels at distribution nodes, change the reach of protective relays on distribution feeders, or cause intolerable reverse power flows on system transformers. Hence the need for further investment on the grid components, to be upgraded and become compatible with the new operational mode. It is generally understood that up to 15% DG is tolerable by the grid systems and above that level upgrades will be needed. DG is particularly attractive, economically, if it is used as CHP. That is if heat is also required by the DG host the electricity thus produced is only priced for its portion of fuel consumption (diesel generator with CHP on it). DR has another benefit, for systems with large solar generation in them that will face a fast rising demand level near dusk when the solar goes off, and system night peak is approaching. By removing load through DR the rate of increase in generation will slow down and hence less investment needed on fast ramping generation such as gas turbines. Finally are the new comers in the DER scene such as hybrid solar/battery or wind/battery systems that make the need for capacity provision from the utility significantly reduced. These combinations will need utility as the ultimate capacity provider in cases of long outages in the renewable source generation. In all, there are numerous ways to design the DER systems depending on the load requirements and resource availabilities at the locales and the utility's financial vehicles that incentivizes such systems.

It is hard to be effective , even in case it is achievable . The integrated power system ( generation , transmission and distribution) looks as The Central Bank of State , while all demands are spot markets of different goods. Does the fluctuations of some good prices affect the CB policies ? 

I believe we manage the grid according to peak load because, in part, we are limited by the technology we have today. To manage against real-time demand, we would probably need:

*  Generation sources that can come line and go offline rapidly.   Natural gas fired turbines cannot do this.   Probably need storage with every generation source to do this. 

*  A rapid communication and management system operated by utilities who would then control all generating sources in a near-instant manner.  This does not exist either.   Nor do the permissions between the utility and the generators.

If we managed to get this far, we would have only managed to address the generation side.  This scenario may also require similar control of the demand side.  But how would we do this when organizations and residents want to draw their electricity instantly, solely at their discretion?....Bill Buchan, P.E., Market Potential, Inc.

Interesting question!  I think you allude to the fact that you need to plan resources for the full load regardless of DM. if that is the case then DM is a bonus of sorts that brings down customer costs, reduces utility costs, flattens the load curve which means less strain on equipment since you can run more base load units. This process of course lets you get a handle on firm DM that you can plan on and move forward using that portion of DM in the planning process.

This is an area where you can exercise a fair amount of discretion and ingenuity to develop a cohesive plan. In the end though remember that the utility is the load server of last resort so there is an obligation to be there if needed.