ORIGINAL REPORTING: Putting Flexibility Into The New Power System
Two barriers to utility and customer savings with flexible loads and how regulators can help; Utilities, regulators and load flexibility authorities say better distribution system control technologies and compensation are needed to increase use of flexible customer-sited resources.
Herman K. Trabish, Jan. 6, 2021 (Utility Dive)
Editor’s note: As policy momentum grows behind transitioning to a power system with a high-penetration of variable renewables, efforts to understand and develop flexibility to balance them are accelerating.
Utilities' ability to protect reliability in today's rapid transition to variable, distributed generation faces two key barriers and regulators' help is needed to overcome them.
Advanced demand response (DR) can use the flexibility of customer-owned technologies to meet the balancing challenges of the changing supply mix, regulators and utility executives agreed during an Oct. 20 symposium hosted by The Brattle Group. Utility pilots are revealing what works, but also showing how technology and incentive structures are keeping flexible loads, such as customer-owned solar and smart thermostats, from supporting reliability.
"Load flexibility can shift energy use to when it costs less, shape energy use to match renewables' availability, and to allow them to meet other system needs," said Minnesota Public Service Matt Schuerger during the symposium. "And it can be a cost-effective solution for reliability by offsetting other investments in generation with lower-cost customer-owned distributed technologies."
That cost-effectiveness may soon make the flexibility of advanced DR valuable. "As transportation and building electrification initiatives grow, flexibility might become necessary for utilities to manage cost," said symposium co-chair and Brattle Group Principal Ryan Hledik. In fact, "the regulatory approval of grid modernization investments to support electrification, decarbonization, and increase utility revenues could be justified by the cost-effectiveness of flexibility."
Utility advanced DR pilots are growing, but regulators have only begun to resolve the two key barriers of finding technologies to manage distribution systems and creating incentives for stakeholders, Brattle's symposium revealed. Almost 70% of today's approximately 60 GW of U.S. DR capability comes from traditional commercial-industrial load management, according to a June 2019 Brattle study. But new demand-side smart technologies, utility control and communications technologies could transfer market dominance to residential customers within the next ten years, according to Brattle.
The resulting nearly 200 GW of cost-effective load flexibility from existing and new DR could meet up to 20% of the estimated 2030 U.S. peak load, avoiding over $15 billion annually in system costs, Brattle found. Existing incentives and technologies can deliver an estimated 40% of the new load flexibility capacity, but the other 60% will require new technology and incentive solutiozns. Thze bulk of the 2030 value will be in avoided capital expenditures for new generation, Brattle estimated… click here for more