By Matthew H. Tackett, P.E., Tackett Electric Co. Inc.
A number of problems are hampering the creation of a successful retail electricity market in the United States. Many of the solutions lie with advanced AMR and load management systems. Customer Interface Unit (CIU) technology, coupled with a Dynamic Load Aggregation (DLA) process, provides both suppliers and consumers an expanded number of market choices, allowing each participant to take full advantage of competitive markets.
Most retail consumers cannot effectively participate in a retail energy spot market. The inability of most revenue meters to record energy consumption on an hourly basis prohibits consumers from deriving benefits associated with managing energy usage in response to price signals.
The second problem is the inability of retail consumers to procure capacity, thus ensuring reliable generation service for a price, while simultaneously providing suppliers with additional opportunities to earn revenue and added incentives to install new generation facilities.
The third problem is the imperfect and unfair settlement processes that exist because load aggregators cannot determine the hourly energy consumption of their consumers, either in real-time or after the fact.
The typical kilowatt-hour meter must be replaced with a more advanced device, the CIU, capable of recording energy consumption on an hourly basis, monitoring and transmitting real-time consumer demand data to a centralized location, and interrupting an individual consumer in response to a remote signal. These devices must also provide for the monitoring and control of specific loads operated by the consumer.
In addition to CIUs, a process known as DLA must be established. DLA is the process of aggregating real-time demand data from consumers dispersed throughout a region based on the actual merchant (load aggregator or spot market) that is supplying the consumer. The losses associated with transmission and distribution providers can also be aggregated in this manner, allowing a specific merchant to know the total demand of their customers in real-time. This sets the stage for real-time balance between merchants and their customers, thus eliminating the requirement for an imperfect and unfair settlement process.
CIUs and DLA will also allow for a better transmission management process. The CIUs and DLA will expand the options available under retail energy and capacity markets. With regard to spot markets, consumers may purchase energy on a conventional basis, curtailable basis, or managed load basis. Under a curtailable arrangement, consumers can specify the maximum price they are willing to pay for spot market energy in advance, and can authorize automatic curtailment (and the starting of a backup generator if one exists) by the CIU device for any hour where market prices exceed this level. Under a managed load arrangement, consumers would install monitoring and control equipment on specific utilization devices. In essence, the CIU technology allows for a more elastic demand curve in the energy spot market.
With regard to load aggregation, the DLA process enables suppliers to balance their generation resources with the real-time demands of their consumers. In addition, DLA allows consumers to diversify their energy procurement. For example, a base level of energy could be supplied each hour to a consumer via the spot market, while any energy in excess of this amount is supplied by the load aggre-gator. This will allow the consumer to enjoy relatively low spot market prices most of the time, but will limit spot market purchases during those hours when price spikes occur.
With regard to capacity markets, CIUs and DLA allow for the real-time monitoring of individual consumer demands and the curtailment of those consumers who do not purchase capacity. CIUs and DLA provide flexibility in purchasing capacity as well. For example, specific loads could be managed such that they are curtailed during a capacity constraint, thus reducing the capacity costs of the consumer. The cost of capacity could also be reduced via a shared capacity arrangement, where consumers would take turns avoiding load curtailments during capacity constraints in return for a lower capacity price.
Utilization of CIU devices and the DLA process will require changes in the methods of operating generation systems and transmission grids. Once regional transmission organizations (RTOs) are established, traditional control areas within these RTOs could be eliminated in favor of a generation operating model built around individual merchants.
CIU devices would provide each RTO with real-time transmission bus demand data for each merchant. Knowledge of the real-time generation resources supporting each merchant will allow sophisticated state estimating routines to determine the true impacts of each merchant on the transmission grid in real-time.
Finally, CIU devices will provide the same benefits available from conventional AMR systems. Meter reading, service connections and disconnections, outage detection, and energy diversion detection would be automated. CIU devices would also support state estimation on the distribution system, allowing voltages and power flows throughout the distribution system to be known in real-time.
While the utilization of CIU technologies will represent considerable expense, the cost to implement this technology could be recovered via a monthly competitive access charge.
Matthew Tackett is president of Tackett Electric Co., provider of consulting, software, and other technology-based solutions focused on power delivery reliability and retail deregulation. Contact Tackett at 804-639-3955 or via e-mail to Mhtackett@aol.com