Demand Response: The Demand Response: The Challenges of Challenges of

Integration in a Total Integration in a Total Resource PlanResource Plan

Howard SmithHoward SmithManager Manager

Resource Planning and Demand ResponseResource Planning and Demand ResponseAlabama Power CompanyAlabama Power Company

June 2010June 2010

Discussion

• Terminology• Traditional Demand Response and Energy

Efficiency• Smart Grid• Demand Response Sustainability• Integration of Supply and Demand

Response Resources in Long Range Resource Planning

• Operational Concerns

Demand-Response Terminology

LOAD MANAGEMENT (a.k.a. Demand Side Management & Demand Side Options)

The process of balancing the supply of electricity on the network with the electrical load by adjusting or controlling the load rather than the power station output

DEMAND RESPONSE (can be “Direct” or “Indirect” per dispatchability)

Providing electricity customers in both retail and wholesale electricity markets with a choice whereby they can respond to dynamic or time-based prices or other types of incentives by reducing and/or shifting usage, particularly during peak periods, such that these demand modifications can address issues such as pricing, reliability, emergency response, and infrastructure planning, operation, and deferral.

ENERGY EFFICIENCY Using less energy to provide the same or improved level of output.

CONSERVATION Reduced energy consumption

Load Management Flow Chart

LOAD MANAGEMENT

DEMAND RESPONSEENERGY EFFICIENCY

(NON-DISPATACHABLE)

DISPATCHABLE

“DIRECT”

NON-DISPATCHABLE

“INDIRECT”

CONSERVATION

• Price Signals to Customers• Controllable AC compressors• Controllable Pool Pumps• Controllable Hot Water Heaters• Higher Insulation Levels• Air Duct “Tightening”• Weatherization

Traditional DR and EE Resources

• Green – An environmentally friendly grid will reduce environmental impacts through initiatives in generation, transmission, and distribution

• Customer Service – Provide consumers with real time pricing and other system conditions to facilitate informed energy usage decisions

• Efficiency – New options to reduce losses, optimize power flows and improve asset utilization

• Reliability – dependable power with robust power quality and the ability to self heal after a disturbance

• Safety – SG will sense potential safety issues and automatically provide grid condition information for reconfigurations

Smart Grid

• Real Time Control of Thermostats, Hot Water Heaters, Pool Pumps, Etc.

• Ability To Offer Customers’ Their Energy Usage Patterns and Support Their Energy Management Systems

• Ability To Support Other Demand Side Management Programs such as Sending Price Signals or load Control Signals to End Users or Processes

Enhanced Benefits for Smart Grid Systems

8

Distribution Demand Response Initiative

(DROP/DEEP)

112

114

116

118

120

122

124

126

128

Distance

Vo

lts

Without DEPWith DEP

Lower Voltage Limit

Upper Voltage Limit

Substation

Lower CVR Limit

112

114

116

118

120

122

124

126

128

Distance

Volts

Upper Voltage Limit

Lower Voltage Limit

With DEP

Normal Voltage Profile

Lower CVR Limit Proposed DROP Profile

Distribution Energy Efficiency Program (DEEP)

DEEP:• GOAL - maximize the efficiency (minimize losses) of

distribution circuits while providing a load management option

Benefits:• Reduce system losses

• Decrease demand on present Generation Fleet• Lower Fuel Costs• Reduce peak

• Lower emissions• Decrease substation and feeder overloading• Defer capital projects (plants, subs, etc.)

• Provide additional Demand Response capabilities• Reduce non-compliance penalties for not meeting

pending emission and renewable standards• One of the more cost effective energy efficiency options

What is DROP?• Conservation Voltage Reduction (CVR)• REDUCES Voltage to LOWER Demand

and REDUCE losses• REDUCES system VAR requirements• Voltage level at regulator adjusted by

end-of-line voltage• Less expensive alternative to

conventional generation resources (in the $10/kW range)

• No carbon or emission offsets needed• No Customer Impacts

Distribution Regulation Option Program (DROP)

Demand Response Value and Sustainability

• Is the Demand Response Sustainable over the short and long term?•Who “controls” the Demand Response Resources?•What are the drivers that impact the Demand Response (price/savings, duration, economy, regulatory issues, and etc.)?•Participation and Penetration – Economic theory versus actual customer behavior?•The 4C’s Test – Cost, Comfort, Convenience, and Conservation

Cost

Comfort

Convenience

Conservation

Understanding how customers balance these drivers will determine the sustainability of demand response resources

Challenges of Integrating Demand Response and Supply

Resources•Creating a common basis for valuing Demand Response and Supply Resources (dispatchability, hours of use, cost parameters, etc.)•Sustainability over the short and long term•Operational Flexibility • Impacts on Customers (Reliability, Power Quality, Rates, Savings, and etc.)•Environmental Impacts

Generation Dispatch and Commitment of Demand

Response Resources

Hours per year/Capacity Factor

Generation in MW

Baseload Capacity

Peaking Capacity & DR

Intermediate Capacity & DR

Time in Hours

Load

in M

W

Peak to

valley

Load Duration Curve

5 pm5 am12 am 12 pm 12 am 5 am

Typical Load Duration

Load Duration with DR

Load Duration Curve with Demand Response

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QuestionQuestions ?s ?