There’s no doubt that building excess power generation infrastructure can ensure a consistent supply of electricity during unexpected system emergencies. Unfortunately, this infrastructure is expensive to create and often lies idle and unused. The possibility that a utility or independent system operator (ISO) might be unable to meet the system demand, however, has always been unacceptable. The Energy Policy Act of 2005, for example, was created following the blackout that hit the northeastern part of in 2003 to prevent such an occurrence in the future. Under the act, utilities and ISOs must guarantee that they operate a robust grid and have sufficient reserves at all times to deal with multiple “contingencies” or face severe penalties. These contingencies include unexpected system events such as the sudden loss of generation or transmission system outages caused by contact with trees or lightning strikes. No one had any doubt that this was going to cost a lot of money in terms of new infrastructure and standby generation, but there previously was little alternative.
Recently, in what might appear to be a perverse twist, a reliable and cost-effective way to meet these requirements on a large scale makes use of “brownouts” and has actually received the support of power consumers nationwide.
Operating a power system fundamentally consists of continuously matching ever-changing supply and demand while system contingencies can occur at any time. In addition to this, power generation machinery must operate at constant frequency levels. Even small changes in the spin rate of an expensive turbine can create vibrations that dramatically reduce its useful life. To cope with this stability requirement in the face of continuously changing electrical demand and potential system contingencies, ancillary grid support services, such as synchronized reserves, are an essential component of grid operations. Recently these reserves have only become more important with the growth in renewable resources, such as wind and solar, because their ability to generate power is intermittent and less predictable.
As a result of the overwhelming requirement to meet the demand, these reserves have traditionally been provided by fast-reactive, expensive generation resources. Synchronized or “spinning” reserves able to be brought on-line within a few minutes must continuously be available to the system operator at a level determined by national reliability rules. In organized ISO markets, these resources are procured from generators through a competitive auction. Until recently, the idea that entities consuming power could be a part of that auction, by offering to provide the same (or better) benefit by reducing load as quickly (or more quickly) than a spinning generator could ramp up to supply it, was not a consideration, at least not at any significant level.
However, over the last few years, commercial “Demand Response” providers such as CPower have demonstrated that aggregated demand-side resources can provide ancillary services on a large scale. Demand reduction is an extremely effective form of synchronized reserves, and can be reliably provided by using SCADA systems for real-time monitoring, metering and control that meet the same requirements as those installed at generation facilities. By paying medium to large energy consumers a meaningful dollar amount–equivalent to or less than the cost of using generation for these reserves–large consumers are often willing to commit to electricity reduction as a stand-by resource for the grid. In effect, they are agreeing to a voluntary, rolling brownout in return for a portion of the costs of the generation needed to prevent one. For example, in the ERCOT market, CPower manages more than 225 megawatts that can respond in 10 minutes or less. The value of CPower”s synchronized demand reserves is illustrated in the following example
- On February 26, 2008 (the same day that suffered a blackout), a significant amount of wind and conventionally generated electricity was expected to be on-line in ERCOT but was unavailable. At the same time, the demand for electricity was significantly higher than forecasted. As a result, ERCOT dispatched its rapid-response demand-side resources. CPower provided more than 100% of its obligation within 10 minutes, as did other providers. A total of 1,200 megawatts of load was able to drop off the grid within 12 minutes, thereby preventing ERCOT from having to create rolling blackouts for non-participating clients by involuntary load shedding.
Demand-side resources are proven to provide a reliable and cost-effective form of fast-reactive reserves in ERCOT, and more recently in the PJM and regions. Demand response is well equipped to compete with generation resources in this regard and, in fact, brings a host of other benefits to grid management. This was recognized in 2008 when the Federal Energy Regulatory Commission (FERC) mandated that ISOs allow demand-side resources to participate in their ancillary services markets unless prevented by local legislation. We might expect, given the proven benefits of demand response, to see less of such local regulation over time and more participation by the demand side in those ISO reserve markets where it is currently restricted.
About the Author
Peter Maltbaek is Vice President of Utility Sales for CPower Inc., a privately held company headquartered in New York. He previously worked for the electrical engineering multinational ABB Inc. At ABB, he was Vice President of Business Development for the company’s power markets business worldwide and was involved in the successful delivery of the infrastructure systems to operate new electricity markets in seven different countries on four continents, including the original systems to operate the California ISO. He lives in Mountain View California
CPower delivers targeted energy management services and solutions that enable companies to optimize their facilities and operations through strategic energy reduction initiatives, and earn market payments for those reductions. Through its advocacy for energy users and partnerships with utilities and grid operators, CPower works to design and manage programs that maximize the rewards for energy reductions and provide reliable relief to grid operators. CPower works with clients across North America, including in the major energy markets of New England, New York, the Mid-Atlantic region, Texas, California and Ontario. The company’s clients range from medium to large energy users and span the industrial, commercial, retail and institutional markets.