The Potential for Residential Demand Response on Transmission
and Distribution Assets
Dec 29, 2006 Rick Boland, Energy
The power grid has evolved over the
last century to meet the demands of many different
customers. From REA’s and co-ops to industrials, grid
connections have been engineered to deliver during
peak consumption periods over their projected lifespan.
Designing for the lifespan of transmission and distribution
decades ago would have used a percentage estimate
for increase in annual demand, as no other options
were possible. Without load shedding, shifting and
demand response (DR) technologies of the last decade,
design would have been an open-ended exercise – the
engineers would have chosen a number they thought
appropriate and designed accordingly. And this still
may have been design practice today.
As the grid has matured, load has increased.
The increase in load may have matched the original
design estimates, but in many cases unanticipated
increases happened. Costs to construct new T&D escalated
along with the value of the power it carries, and
efforts to reduce stress on the system during peak
times have been successful. Getting the most bang
for each dollar invested in load shifting, shedding
and demand side management systems meant going working
with large industrials and commercials whose power
use could justify the expense of additional communications
and equipment. Along with their substantial power
use came predictability and the ability to measure
changes directly at the power buyers’ meter. Savings
and ROI could be calculated. All of these efforts
reduced peak load on the grid and extended the lifespan
of T&D assets.
With a good percentage of “shift-able”
and “shed-able” loads now “responding” in some form,
peak loads on the grid are still approaching the T&D
capacity of the infrastructure in many areas. While
numbers vary, 60 percent of peak load could be coming
from residential customer demands – but residential
customers don’t know it. To residential customers
the grid is a black box – energy magically comes out.
A window from each residence into that black box is
the final frontier for DR tools that could again extend
the life span and improve utilization of T&D assets.
Current Solutions are “Meter-Centric”
It has taken some crises to bring T&D
issues to public attention, but what seems to be an
obvious remedy – mass residential DR – is still elusive.
Why? DR strategies to date are “meter-centric,” meaning
the meter has to be changed as a first step to DR
and automating homes. That could take years. Savings
to small power users may not justify the cost. Predicting
the “respons-ability” is a guess too, but, remember
the grid is a black box that customers have never
had information from before. These high costs and
unpredictable effectiveness issues have stalled previous
efforts. “Response-abling” messages need to come from
the grid. Communications equipment must, at a minimum,
make people aware of grid situations so that they
have something to respond to. But communication has
its price. The lower the cost, the better the coverage
and the more likely it would reach every customer.
A message datacast that could be seen and heard in
residences would give the ability and awareness of
when to respond. How much response comes back will
be directly related to the number of customers getting
the message – particularly for people without automated
equipment who are likely 95 percent of the residential
market. The most reliable responses are automated,
but without new grid-aware appliances, an electrician
is needed to wire the home – either way it costs,
and the penetration of DR into the residential customer
base will depend directly on the cost of the system
to make it work.
The reality of residential customers
-- whether they know it or not -- is that they are
daily buyers in an energy market. Every time a light
or air conditioner turns on, a “buy” is done. Until
power prices skyrocketed and large-scale blackouts
happened in areas of the continent, the impact on
customers’ wallets wasn’t big enough to get a response.
An even harsher reality is most customers are resigned
to paying their bills because they can’t do anything
about them. There is no way to know if buying in the
future will be cheaper than buying now or if buying
now will cause an outage and stop the entire market.
Engaging Customers to Make Informed
If an inexpensive way could be found
to reach residential customers, then DR that makes
residential customers “response-able” for that 60
percent of peak T&D load could become much more likely.
With that comes the potential to add value to both
existing and future T&D through improved utilization
and usable life. If datacast messages could go out
within seconds to millions of homes, it could even
be used as a “shedding on demand” system. If messages
could target specific areas, it could be used to localize
outages and reduce their potential to spread without
concerning other customers. Recent efforts in California
like the Statewide Pricing Pilot have shown that residential
customers want some kind of market interface, but
the options available at that time had some DR proponents
looking to a billion dollar government investment
or unappealing increases of rate base to cover the
costs of changing meters – the mete- centric first
Residential DR that would benefit T&D
operations is faced with the classic challenge of
finding lower cost-per-residence alternatives to get
them “response-able,” or continuing to seek increasing
prices to customers for the meter-centric technology.
The separation of generation from distribution companies,
the creation of the ISOs and electric service providers,
makes investment justifications even more complex.
But it is in all stakeholders’ interests
to keep T&D operating as efficiently and effectively
as possible -- the power market stops without it.
For residential customers to be “response-able” --
changing their demand to keep the grid operating --
they all need just a bit of information at just the
A residential DR market has value to
T&D operations. Does it take a new meter on every
home for their combined response to make a difference
at the T&D level? Existing substation automation could
see combined responses easily at the feeder and substation.
Getting a DR system that can deliver messages to residences
at the same substation and feeder resolution providing
local price changes and local operation information,
while minimizing operational impact -- its value may
be higher than current predictions.