ORIGINAL REPORTING: California’s Plan To Use Customers’ Resources With Real Time Prices

Regulators Propose Combining Distributed Resources and Real Time Pricing to Allow Customer Generation to Support the Grid

Herman K. Trabish, July 7, 2022 (California Current)

Editor’s note: This ambitious plan would move California’s economy – the fifth biggest in the world – to a power market that allows customers to benefit from real time electricity prices.

California just took another big step toward bringing more customer-owned rooftop solar, batteries, and electric vehicles into its evolving power system.

Use of these distributed energy resources can be expanded by making real time electricity prices directly available to them and third-party aggregations of distributed energy resources, according to a June 22 California Public Utilities Commission Energy Division White Paper and Staff Proposal.

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Smart DERs, like those controlled by smart thermostats or smart inverters, now only play a very small role in the state’s power mix. But real time pricing, based in actual electricity market prices, would allow them to help stabilize and strengthen the California Independent System Operator’s power system.

Real time pricing, modified by fixed charges, would resolve questions about compensation for DERs, staff said. Appropriately rewarding customer-owners when their DERs quickly respond to CAISO needs for reliability or resilience is a type of demand response that can make the power system more “flexible” than it was with traditional but less instantly responsive forms of generation, like nuclear power.

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This novel approach to “demand flexibility” brings together work in 15 or more CPUC and California Energy Commission proceedings, and Lawrence Berkeley National Laboratory research, the paper said. Simpler options, like flat subscription rates, would allow other customers to continue to pay “a predictable, pre-determined price” for hourly usage, it added.

There also are challenges from rapidly rising penetrations of customer-controlled DERs and variable utility-scale renewables, staff said. But policy supporting demand flexibility can take advantage of DERs’ opportunities and limit the challenges. Behind-the-meter distributed resources, “if aggregated, coordinated, and shaped properly at scale,” can “play a major role” in resolving growing reliability and resilience challenges, staff observed. But current DR programs and policies “may have become a barrier” to enabling that potential, it added… click here for more

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