How Lessons Learned from the California Grid Crises can be Adapted Nationwide
Resource Adequacy (RA), the conditions in which grid operators have enough capacity to meet forecasted demand on the grid, is a hot topic among utilities and regulators following the August 2020 grid emergencies in California. Throughout the crises, Demand Response (DR), in particular Automated Demand Response (ADR), played a critical role in restoring balance and will continue to drive policy and infrastructure through the clean grid transition.
So how can lessons learned from those events in California prepare us for similar crises nationwide?
What’s clear is the need for on-demand flexible capacity to ensure resource adequacy during these increasing emergencies. Demand Response was successful in California, and when scaled and automated, the technology can provide flexible capacity on-demand when it is needed most.
The Value of Automated Demand Response Technology at Scale
Demand response is not a new concept, but it has never been tested the way it was in California in August. According to analysts at Wood Mackenzie, California has 1.5 GW of program-enrolled demand response potential. This includes mostly manual demand response: direct load control, switches, and other basic forms of load-shedding strategies. Although 1.5 GW of DR would have met and surpassed the need for 400 MW of load to avert blackouts on August 14 and 15th, not all of this DR potential was available. Low response rates have been attributed to official DR program rules which limit required response to advance notification windows and to specific price signals, as well as location or congestion constraints.
Despite low response rates, what we did see during the crisis was a 470 MW load shed attributed to demand response. Where did it come from? Two places: through voluntary automated demand response and flex alerts.
Flex alerts, which are a request for consumers to reduce electricity consumption, yielded 4 GW of capacity during the crisis week proving that many small sites (in this case mostly residences) when aggregated, can provide reliable capacity in near real-time.
The second, and more scalable, measurable, and dependable source of additional capacity, came from voluntary automated demand response, such as what GridPoint deployed by leveraging customer sites. Operating voluntarily (without compensation) outside of official DR program rules, GridPoint, was able to dispatch curtailment across thousands of sites with OADR infrastructure within minutes of learning of the CAISOs capacity shortage. Throughout the crises, a subsection of GridPoint’s fleet of customer sites voluntarily participated in predetermined load shed strategies. These strategies permitted normal business operations to continue for GridPoint customers, many of which are considered essential services, while collectively adding MWs of capacity to the grid. Like the flex alerts, what this proves is that many small sites are collectively as impactful as one or several industrial sites providing DR.
Scaling ADR Infrastructure through a Value-Stacked Service
ADR infrastructure must be widely installed now to prevent capacity shortages in the future. There are thousands of untapped, small to medium buildings with the potential to provide reliable capacity. However, with cost as a barrier, the key to getting ADR technology into facilities is to deliver the solution in a way that offsets the cost through the benefits of energy efficiency and demand management.
GridPoint provides automated demand response technology as part of its smart building platform through an Energy Management as-a-Service (EMaaS) model. The EMaaS model eliminates upfront costs and provides both energy efficiency and demand response capabilities. The platform is expandable enabling future adoption and management of other DERs. The monthly cost of the solution is often less than the energy cost savings customers benefit from – removing that key cost barrier to customer adoption.
In addition, many utilities offer rebate incentives for OADR technology. Stacking values of these ADR rebates, reduced energy costs, and demand response revenue while delivering the platform through an EMaaS model is what accelerates ADR technology adoption.
Stakes are high for utilities in comparison to other markets as disruptions to the electric grid have severe, real-time consequences for end-users – especially during a pandemic. Through demand response readiness, ADR technology providers working in tandem with utilities can dramatically increase resource adequacy and on-demand flexibility. As we move towards a more modern grid – one with more intermittent generation, fewer traditional generation sources, and an increasingly stressful climate – it is crucial that infrastructure for fast, measured, reliable capacity is in place.
For strategies on how to implement OADR technology, or for more information about GridPoint’s ADR and EMS platform, please contact us at smartbuildings@gridpoint.com.