Everyone is in favor of more demand response, but little gets delivered when system operators need it the most.
Scott Neumann is CTO of Utility Integration Solutions Inc., (UISOL), a consulting firm based in Lafayette, Calif. He can be reached at sneumann@uisol.com. Fereidoon (Perry) Sioshansi is president of Menlo Energy Economics, a consulting firm based in Walnut Creek, Calif., he can be reached at fpsioshansi@aol.com. Ali Vojdani is CEO of UISOL. He can be reached at avojdani@uisol.com. Gaymond Yee is a research coordinator at California Institute for Energy & Environment (CIEE), at Berkeley, Calif. He can be reached at gaymond.yee@ucop.edu.
With growing demand, rising electricity prices, and dwindling reserve margins, utilities and system operators around the country increasingly are focusing on bringing demand into the delicate real-time balancing of supply and demand. This elusive goal has preoccupied the industry for more than 30 years. Starting with relatively primitive and inflexible schemes, such as interruptible loads or time-of-use pricing (TOU),1 the industry gradually has become more sophisticated.
Schemes such as time-variable pricing—also called real-time pricing (RTP)—and critical peak pricing (CPP) increasingly are being offered. In fact, the Energy Policy Act that Congress passed in August 2005 makes it mandatory to provide such tariffs to virtually any customer who wants it.2
At the same time, state regulatory commissions in a number of states, notably California, have decided that the time for a virtual switchover to interval smart meters with two-way communication capabilities has arrived, encouraging utilities to undertake massive investments in so-called advanced metering infrastructure (AMI).3