Overview and Comparison of Demand Response Programs in North American Electricity Markets

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1 , pp Overview and Comparison of Demand Response Programs in North American Electricity Markets Pedro Faria 1, Zita Vale 1 1 GECAD Knowledge Engineering and Decision Support Research Center Polytechnic of Porto Rua Dr. Antonio Bernardino de Almeida, Porto - Portugal Abstract. The concept of smart grids is related with diverse changes occurring in the electric power systems operation, namely the integration of demand response resources and related programs. All over the world, demand response programs are being implemented according to the specific local requirements and contexts. This includes the integration in electricity markets, the automation level of the distribution grid, etc. The present paper focuses on the analysis of the demand response programs currently implemented in North America wholesale electricity markets. Several parameters are used in order to characterize each program, according to a report published by the independent system operators association. 1 Introduction The current implementations of Demand Response (DR) programs assume several levels and characteristics according to each specific case and context [1]. A research currently taking place in Europe [2] concluded that measurable progress has been made between 2012 and 2013 in response to the Energy Efficiency Directive (Article 15.8) requirements. It also concluded that only 6 countries have been able to make DR commercially viable. In 4 countries, DR depends on regulatory developments. In the remaining countries it is concluded that DR will stay either illegal or impossible due to regulation. Further reading on EU DR current status can be found in [3]. In the US, in 2012 the load under DR contract was 66.3 GW (8.5% of the summer peak load) and the actual load reduction reached 202.2GW (2.6% of summer peak load). In some regions, the actual load reduction reached 90% of the region summer peak load [4, 5]. Regulatory orders and reports from FERC concerning the use of DR play a relevant role. The FERC Order No.719, in 2008, advised electricity market operators to Accept bids from demand response resources in their markets for certain ancillary services on a basis comparable to other resources [6, 7]. DR programs can belong two one or two (hybrid) main groups. For the first one price-based DR consumers respond according to the electricity price signal and DR ISSN: ASTL Copyright 2015 SERSC

2 remuneration is inherent to the lower electricity price. For the second group Incentive-based DR consumers receive remuneration fees in accordance with their actual consumption reduction [8]. Further classifications parameters on DR programs can include the following [9]: Features o o o Service type: Energy, Capacity, Reserve, Regulation Trigger logic: Automatic response, Economic dispatch / Energy price higher than offer price, Critical peak hours, Day-ahead Locational Marginal Price (LMP) Overuse restriction: number of declared events in each DR program, maximum number of days, maximum number of hours per day Participant roles o Deployment: Resource-Specific Deployment, Bulk Deployment, Self- Deployment Event process o Timing: advance notification period, ramp period, Sustained Response, Recovery, o Metering: Telemetry, telemetry accuracy, reporting interval, data transmission frequence Performance evaluation o Maximum Base Load, Baseline Type-I, Baseline Type-II, Meter before / meter after, Meter generator output. Till now, DR programs have been successfully used for events that are announced with some anticipation. This anticipation usually ranges from the day-ahead to timings very close to real-time. In the cases closer to real-time, a ramp period is assumed (around 10 minutes at least) so that the aggregator or the consumer is able to arrange the consumption reduction capacity. The anticipated announcement is required so that consumers are alerted to the need or opportunity of lowering their demand during the event periods. Although the enrolment in the DR programs is voluntary, once enrolled consumers assume some obligations. As there is a large diversity of DR programs, these obligations can assume diverse forms. For example, it can be found obligations and constraints as: minimum resource size and minimum reduction amount (from 0 to 5 MW; in the large ones, aggregation is allowed); total DR contribution limit (from 10% to 50%); overuse restriction (sometimes, the response above the scheduled is not paid); sustained response period (can be up to 8 hours); minimum number of participated voluntary events (typically 2 events over 4); etc. However, the obligation of providing the DR program manager with some load reduction is ensured by the demand side. The work presented in this paper is based on a report from the North America ISO and RTO association [10]. The report titled North American Wholesale Electricity Demand Response Program Comparison 2013 Edition includes the characterization of the DR programs according to several aspects regarding the parameters above. In the present paper, the presented results are discussed along 3 sections (2 to 4) after this introduction section. Copyright 2015 SERSC 23

3 2 DR Programs by Service Type The implementation of DR programs can be characterized according to several features, as referred in section 1. One of the main ones is the service type, which can be energy, capacity, regulation, and reserve. The present section organizes the DR programs in 4 tables, one for each service type. The rows in grey indicate that some features are common to distinct programs. In Table 1, concerning Energy Type, on can see that DR is used for both economic and reliability issues. For the trigger logic, while in the reliability driven programs only Operational Procedure (OP) is defined, without further details, in the economic driven programs one can also find price-triggered programs. In one specific case, this price is defined as $100/MWh. Table 1. Energy. Primary Driver Economic Reliab. Trigger Logic Min. Resource Size Minimum Reduction (kw) Aggregation Allowed Response Required DR Contribution Limit (%) Min. Sustained Response Max. Sustained Response $100/ MWh OP / Price / /5 -/5 -/5 -/ OP / /60 240/- - Advance Notification Ramp Sustained Response Recovery While a minimum resource size is in most of the cases defined, the minimum reduction is not so rigid. However, in many cases, the minimum reduction is equal to the minimum resource size. The aggregation of resource in order to meet the program requirements is generally allowed, as wheel as no limit for the contribution of DR is defined. The mandatory response to a declared event is very expressive in the pricetriggered programs. This can be due to the fact that in such programs the consumers, or aggregators, previously submitted a bid to the market so the participation is understandable mandatory. 24 Copyright 2015 SERSC

4 Concerning the event process, it is possible to find a wide diversity of response time, advance notification, and ramp period. It is important to note that for the ramp period we can have 0 minutes or - which means undefined or non-applicable. These are very different meaning values. The recovery period is generally not defined or not monitored. It is interesting the see the case of the third grey row, in which for the same program features (trigger, minimum resource size, minimum reduction, aggregation and response need) very different event process times are verified in two distinct DR programs. Focusing now on the Capacity service type, the programs are listed in Table 2. In the case, the existing DR programs are only reliability-driven. Contrarily to the Energy service type, the electricity price appears as one of the possible triggers. However, in this case, the events can only be declared in the peak consumption hours. Comparing to the Energy service type, the minimum resource size and minimum reduction are more flexible and the aggregation is always allowed. However, once a DR event is declared, the response is mandatory. It is also notable that in what concerns the event process, it is usual to have undefined or non-applicable parameters. Table 2. Capacity. Primary Driver Trigger Logic Min. Resource Size Minimum Reduction (kw) Aggregation Allowed Reliability Response Required DR Contribution Limit (%) Min. Sustained Response Max. Sustained Response Advance Notification Ramp Sustained Response Recovery load >= 90% peak Peak hours / Price OP / / Other market opportunities for DR are the ancillary services, as the case of Regulation and Reserve. These are also the remaining service types in the DR programs characterization. Details are given in Table 3 for the regulation and in Table 4 for the Reserve services respectively. Comparing the two services, one can see that both include economic and reliability features as primary driver. No differences can be found in the trigger logic, except the specific case in the reserve service in which the trigger is the system frequency level. Copyright 2015 SERSC 25

5 Table 1. Regulation. Primary Driver Econ. Reli. Trigger Logic Min. Resource Size Minimum Reduction (kw) Aggregation Allowed Response Required DR Contribution Limit (%) Min. Sustained Response Max. Sustained Response OP Price AR OP , Price Advance Notification Ramp Sustained Response Recovery In what concerns the resource, whereas in the regulation service the minimum reduction is mostly matching the minimum resource size, in the reserve service one can find lower minimum reduction levels comparing to the minimum resource sizes. Table 2. Reserve. Primary Driver Economic Reliability Trigger Logic Min. Resource Size Minimum Reduction (kw) Aggregation Allowed Response Required DR Contribution Limit (%) Min. Sustained Response Max. Sustained Response OP / Price , / Freq OP , , OP+AR /0, /180 Concerning the remaining characterization features, it is notable that the response is always mandatory in the regulation service. Moreover, it is in the reserve service that the limits for the DR contribution are more frequent and higher. This can be due to the fact that the reserve service provided by such unpredictable resources must be controlled or bounded. Advance Notification Ramp Sustained Response Recovery 26 Copyright 2015 SERSC

6 One can also see that in the regulation service, the ramp period is always equal to zero. Due to the fast change in the required regulation level, the sustained response period is in almost all of the DR programs not monitored. For last, it should be noted the last row in the Table 4. The DR events in this row are declared by an Operational Procedure but activated by an Automated Response. 3 DR Programs by Primary Driver The second main feature used for the DR programs characterization, as seen in Tables 1 to 4, is the primary driver, which can be economic or reliability. Both appear in the service type s characterization except in the capacity service which is only driven by reliability issues. The present section addresses the DR programs characterization by primary driver. The analysis of DR programs by primary driver is presented in Figure 1 and in Figure 2, respectively for the DR program features and for the DR event timing. In left are presented the reliability results while in the right side the economic-driven programs are depicted. As can be seen, the data has been normalized, i.e. all the values have been put in a scale of 0-1. It was assumed as top scale actual values: 5000 for minimum resource size and minimum reduction, 1200 for the advance notification, 150 for the ramp period, 520 for the sustained response, and 600 for the recovery. Fig. 1. DR program features. Left: Reliability. Right: Economic. For the service type, the labels are: Capacity 0,25; Energy 0,5; regulation 0,75; Reserve 1. The DR programs have been sorted by service type label. One can see that while in the reliability-driven DR programs all the service types are applied, in the economic-driven programs the capacity service programs are not use. The ener- Copyright 2015 SERSC 27

7 gy service is the most used for economic driver while the capacity service is the most used one for reliability. One can also see that the non-mandatory response programs are related to the energy service, disregarding the primary driver. Higher minimum reduction levels are required in the reliability-driven programas. Fig. 2. DR event timing. Left: Reliability. Right: Economic. Regarding the DR event timing, as seen in Figure 2, higher advance notification periods appear for economic driven programs, since for reliability the need of DR is usually due in emergency. While higher sustained response and recovery periods appear for reliability, the ramp periods are higher in the economic-driven programs. 3 Conclusions The changes in the operation of the electric power systems, namely in the context of smart grids are strongly related with the integration of demand resources. Demand response programs have been implemented in several contexts around the world namely I the scope of electricity markets in which the electricity is managed in a wholesale level. The present work discussed the parameters and characteristics usually used in demand response programs modeling and implementation. The focus has been given to a report made by the North America ISO and RTO association concerning wholesale programs implementation in North America. Despite the wide range of market opportunities for demand response integration, the existing ones only cover some specific features. It is expected that the improvements provided by the widening of smart grids potentiate the increase of demand response programs and their covering on the integration opportunities. 28 Copyright 2015 SERSC

8 Acknowledgements. This work is supported by FEDER Funds through the Programa Operacional Factores de Competitividade COMPETE program and by National Funds through FCT Fundação para a Ciência e a Tecnologia under the projects FCOMP FEDER: UID/EEA/00760/2013, and SFRH/BD/80183/2011 (P. Faria PhD). References 1. Faria P, Soares J, Vale Z, Morais H, Sousa T, "Modified Particle Swarm Optimization Applied to Integrated Demand Response and DG Resources Scheduling", IEEE Transactions on Smart Grid, vol. 4, pp , March Maping Demand Response in Europe Today. April Available: [accessed in April 2015]. 3. Stromback J, Demand Response Barriers and Opportunities in Europe Available: ts/2_sedc_ pdf [accessed in April 2015]. 4. Godin C, Energy Efficiency and Demand Response Programs in the United States Available: ts/8_dnv_kema_ pdf [accessed in April 2015]. 5. FERC. Assessment of Demand Response and Advanced Metering Staff Report Available: [accessed in April 2015]. 6. Federal Energy Regulatory Commission, Wholesale Competition in Regions with Organized Electric Markets Available: [accessed in April 2015]. 7. Federal Energy Regulatory Commission, Demand Response Compensation in Organized Wholesale Energy Markets Available: EventCalendar/Files/ RM pdf [accessed in April 2015]. 8. Benefits of Demand Response in Electricity Markets and Recommendations for Achieving them Available: DocumentsandMedia/DOE_Benefits_of_Demand_Response_in_Electricity_Markets_and_ Recommendations_for_Achieving_Them_Report_to_Congress.pdf [accessed April 2015]. 9. NAESB, Recommendation to NAESB Executive Committee: Review and Develop Business Practice Standards to Support DR and DSM-EE Programs, September 29, ISORTO North America ISO and RTO association, North American Wholesale Electricity Demand Response Program Comparison 2013 Edition. Available: [accessed in April 2015]. Copyright 2015 SERSC 29

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