The demand response (DR) market is evolving from curtailing electrical demand during peak periods (typically only a handful of hours per year) to continuously balancing supply and demand for power on the grid.  Some observers refer to this new development as DR 2.0, while others are calling it “fast DR” or “grid balance.”  One of the major drivers is the need for ongoing adjustment to adapt to small, frequent changes in the power system on a second-by-second basis.  This becomes more imperative as more and more utilities have to incorporate intermittent renewables like wind and solar power into the grid, typically by adding ancillary or frequency regulation services that match total generation on the system with total demand on a second-by-second basis.

The major stakeholders, such as the Federal Energy Regulatory Commission (FERC), grid operators, and aggregators, are paying heed and are updating their policies and procedures to support the increased use of grid balancing.  For example, Ontario’s Independent Electricity System Operator (IESO) issued an RFP in August 2012 for non-generation suppliers to provide grid balancing.  It sought proposals from multiple vendors to procure 10 megawatts (MW) of regulation services from alternative sources, such as dispatchable and aggregated DR and storage technologies, including batteries and flywheels.  Similarly, New York ISO (NYISO) provides retail customers that are able to meet telemetry and other qualifications with an opportunity to bid their load curtailment capability into the market through regulation services.  These efforts have been given a boost by FERC, which released a new rule in October 2011 that requires grid operators in organized markets to compensate frequency regulation services based on actual services they provide.

Inherently Flexible

Several vendors have stepped forward to champion grid balance, including ENBALA Power Networks, which won IESO’s RFP and has been operating and delivering regulation services to the market served by the regional transmission operator, PJM Interconnection, for over a year.  ENBALA’s intelligent platform captures storage that already exists in the power system by aggregating available demand-side storage, by making small automated adjustments in the electricity use of equipment at commercial, institutional, and industrial sites, to deliver real-time flexibility back to the grid.  Another vendor, Calico Energy Services, recently announced that it’s licensing a set of technologies from Battelle called Grid Command Active Demand Management (ADM).  With this enhanced software capability added to its Energy Intelligence Suite (EIS), a hosted energy management platform, Calico will help utilities execute DR automatically, using two-way communications.

Undoubtedly, other vendors will emerge to provide fast DR as they begin to realize that many electrical loads, such as aerators, pumps, and chillers, have the inherent ability to be flexible without adversely affecting operating processes or changing the overall energy consumption of the system.  Fast DR represents not only a significant market opportunity, but also the next frontier of demand-side management.