Earlier this month, California’s big three utilities announced awards for a new initiative to bring clarity to the value that flexible distributed energy resources (DER) can provide to the grid. The Demand Response Auction Mechanism (DRAM) program is one of the first attempts to incorporate a wide variety of DER into statewide grid operations. While this program is focused only on one service—helping reduce peak load on the grid—it is an important development in recognizing the full value that DER can provide.
The recently announced awards include load reduction through four primary technologies: behind-the-meter energy storage, residential DR, commercial & industrial (C&I) DR, and electric vehicle (EV) charging. Although the majority of this capacity was awarded to traditional C&I DR, the inclusion of more innovative technologies validate claims made by vendors that their solutions can provide value to multiple stakeholders throughout the grid system. Residential energy management providers such as EnergyHub, Ohmconnect, and Chai Energy won bids totaling over 11 MW to reduce load primarily using smart thermostats. Distributed energy storage vendors Stem and Green Charge Networks won a combined 880 kW of load reduction utilizing batteries they have located in C&I buildings. Finally, startup eMotorWerks will be shaving over 1.2 MW of load by aggregating the operations of more than 1,000 smart EV chargers.
DER Value and Growth
The diverse technologies included in this program demonstrate the ability of multiple technologies to provide valuable services to the grid. While the value these technologies provide for their host users differs significantly, they can be viewed as a single, flexible resource by grid operators. Navigant Research’s recent Distributed Energy Resources Global Forecast report provides a detailed breakdown of the rapidly growing DER market in countries around the world. As shown in the report and with the DRAM program, traditional DR is currently the most cost-effective form of load reduction for utilities. However, other technologies are expected to see much faster growth in the coming years. Distributed energy storage is expected to be the fastest growing DER resource in the United States, with a compound annual growth rate of 45% over the next decade.
Once again, California is leading the way in identifying and valuing the diverse services that new technologies can offer the power grid. All bids have been kept strictly confidential through the DRAM program, an important point to note as the various technologies have widely differing costs to install and operate. These bids will help inform future efforts to integrate DER both in California and around the world.
Tags: California Utilities, Demand Response, Distributed Energy Resources, Policy & Regulation
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