OVERVIEW OF ISSUESDR AND AMI HELP SOLVE

Dr. Eric Woychik

Executive Consultant, Strategy Integration, LLC

APSC Workshop on DR and AMI

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Overview

Aim: To define the needs and opportunities Demand Response and Automated Metering Infrastructure are best applied to

• Demand Response vs. Energy Efficiency

• Super-peak needs and Summer Heat Waves

• Define the resource types

• Displace Combustion Turbines & Ramping Capacity

• Selected Resources: G + T + D + env. mitigation

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Demand Response (DR) vs. Energy Efficiency (EE)

• DR is generally more available during the peak and super peak periods; provides capacity deferral for select hours• May be automatic, or dispatchable on short notice

• EE is generally provided over a longer duration, to provide energy reduction• Is not generally flexible, but is fixed in its application

• Permanent DR is something in between, providing capacity reductions on a constant basis• Managed, such as to optimize facility demand reduction• May be relatively fixed, such as “ice storage”

• DR over a duration can also help save energy

• DR and EE can be great compliments when integrated

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What is Demand Response?

• Interruptible load (e.g., by industrial customers)

• Dispatchable, direct load control (e.g., AC or irrigation)

• Automatic demand response; smart thermostat or control

• Price response, on-call, manually activated and/or preset

• Thermostat operation (e.g., temperature set-back)

• Permanent demand response; managed with controls

• Manually or automatically triggered load reductions (e.g., lighting controls)

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Super-Peak Needs and Summer Heat Waves

• Electricity peak may be 1 PM until 8 PM, summer months (June and September) – so just 87 days or 610 hours

• Super-peak is likely 2 PM to 8 PM, during the 16 hottest days of the year, about 100 hours or less (about 1%)• Electricity generation capacity is maximum• Transmission and power flows are maximum• Air conditioning (AC) is used to the maximum

• AC loads increase system peak & reduce load factor

• Summer heat waves are a major driver of super-peak• NOAA, NASA, NERC, and IGCC, suggest climate change• Average and peak temperatures appear to be increasing

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Basic Electricity Resource Types

• Purchases -- on the market …at a cost

• Reserves -- available for contingencies and peaks

• Peaking – ramping or load following

• High capacity factor load following (CF LF)

• Intermediate (load factor)

• Baseload – e.g., coal and nuclear

• Transmission (may be ignored in some least cost plans)

• Demand Response (DR) and Energy Efficiency (EE)

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Entergy Arkansas Electricity Peak & Resources

0

1,000

2,000

3,000

4,000

5,000

6,000

0% 20% 40% 60% 80% 100%

2,299

3,068

440

715547

1,581 1,124

504800

0

1,000

2,000

3,000

4,000

5,000

6,000

Entergy System Strategic Supply Resource Plan, Plan Description, 2006

Intermediate

Peaking

Base

Reserves

Purchases

High CF LF

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Peak Demand, Load Factor, and Retirements

• SWEPCO peak demand (August 16) record 4,910 MW

• Entergy Arkansas peak demand is about 5,600 MW

• Load factor in AR is declining with increased use of AC

• Decision to retire an existing plant • Compare the forward cost of the existing unit with the

forward cost of alternatives – this is oversimplified

• Many older gas and oil-fired units run at low capacity factors to serve the peaking and reserve roles

• Decision to add a new coal plant, is related to older units that will shift roles to serve peaking and reserves

• Add new coal as baseload then use existing old plants?

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Displace Combustion Turbine & Ramping Capacity

• Recent AEP-SWEPCO CT proposal for 332 MW was $102.8 million (for used units at 50% of new).• Each 80 MW CT must operate at 75% of capacity for NOx• Can operate from 52MW to 83MW and 104MW to 332MW

• Ramping capacity is to meet loads rapidly, typically between hours to avoid voltage lags & grid requirements• Baseload and intermediate plants ramp slowly• Peaking units ramp quickly (but many older units are used)• More renewables (must-take power); more ramping needs

• Criteria for peaking/ramping capacity are lowest life-cycle cost, reliable, flexible, and environmentally responsible

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Ramping and Load Following Resources

• System faces large daily load swings that require ramping and load following resources • Combined Cycle Gas Turbines (CCGTs) are typically

desired for operational flexibility and to limit exposure to high purchase power prices

• Replace current 35+ year old conventional gas plants?

• Utilities need resources in transmission critical regions• Reduce production costs at minimum run levels• Where Reliability Must Run (RMR) units are needed • For ramping and load following

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Selected Resources: G + T + D + env. mitigation

• DR and AMI can reduce or fully defer the capital and operating costs for system expansion:• Generation• Transmission• Distribution• Environmental mitigation

• Transmission deferral – Rocky Mountain Power & NEISO

• Distribution deferral – Commonwealth Edison & PG&E

• Environmental mitigation – preferred loading order (CA)

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Basic Ways DR/AMI Resolves System Needs

• Reduce overall system loads -- the EE effect

• Reduce system peak and locational loads – the DR effect

• Reduce existing and new generation needs

• Reduce existing and new transmission needs

• Reduce existing and new distribution costs…

• Reduce environmental mitigation costs

• DR/AMI can be installed when supply-side are more difficult

• AMI provides automated meter reading, remote connect/disconnect, communications to the home, and may enable building automation