Navigant Research Blog

Big Data Meets Demand Response

— August 4, 2015

Historically, demand response (DR) did not rely on real-time, accurate data in order to meet the needs of the utilities and system operators that ran DR programs. It was mostly used for peak load reductions, which meant there were long lead times and events that lasted several hours. Operators did not require immediate performance measurements to ensure system reliability; they could see the aggregated system load shape and determine with enough accuracy whether the desired reductions were occurring. Settlement of DR performance and payments could wait several weeks or months until customer meter data was available and baseline measurements could be calculated. Such was the world before advanced metering infrastructure (AMI), real-time communication capability, and fast-response DR programs and markets.

The use of DR in grid planning and operations has solidified as utilities increasingly rely on DR to meet installed capacity requirements and sometimes even operating reserve requirements. Furthermore, independent system operators (ISOs) led by PJM have incorporated DR into procurement mechanisms for capacity, energy, and ancillary services. DR has been active in the synchronous reserves market in PJM for several years, providing up to 25% of the requirement at times. The frequency regulation market has shown signs of growth for DR, particularly since ISOs implemented FERC Order 755, which affords greater compensation to faster-responding resources.
Such fast-responding programs require more robust data and communication infrastructure than in the past, and such upgrades are typically much more expensive but can be offset by increased program revenue opportunities. PJM recently approved a measurement and verification methodology to allow residential DR to participate in the synchronous reserve market based on sampling of meter data rather than every house needing full-blown metering.

Additional Benefits

Another aspect of data enhancing DR is on the program management side. AMI data gives utilities near real-time views to customer usage in order to forecast loads and availability of DR resources. On the back end of a DR dispatch event, the utility can see almost immediately if it is getting the desired response and react as needed if not, as opposed to flying blind in the past without a means to make dynamic decisions.

The benefits of data even flow into DR program design and outreach. It enables actions such as targeting and geo-targeting for maximum value and the use of smart data in resource potential studies. It helps in developing DR and other distributed energy resources (DER) such that their impacts can be identified at the grid level for functions like integrating DR with other DER (i.e., distributed generation, storage, and renewables) to assess synergies and interactions and use grid-level data combined with customer use data in analyses. The accuracy of virtual audits based on AMI data is still being tested, but is now used to target which customers are likely to benefit most from DR. This can reduce the costs of implementation, provide greater savings, and increase the value of a program.

The topic of data in DR will be addressed in the upcoming webinar, The Rapid Telemetry Edge: Market Trends and Technology Drivers for High Performance Demand Response, on August 18 featuring Silver Spring Networks and Navigant Research.


Clean Power Plan Ruling Presents Opportunities and Issues for States

— August 3, 2015

After a year in review, and following approximately 4 million comments and appeals by state public utilities commissions (PUCs), legislators, and special interest groups, the Obama Administration and the U.S. Environmental Protection Agency (EPA) have released a final ruling on the Clean Power Plan.

The Proposed Rule was released last June.  It included interim (2020) and long-term (2030) regulations that will be imposed state by state to decrease CO2 emissions from generation facilities.  It also requires gradual decommissioning of high-emissions facilities, increased support for low-emissions natural gas and renewable generation, and improvements in demand-side management and energy efficiency.  Speculations and protest across stakeholder groups has been colossal.

According to a paper sponsored by the Brookings Institute, the majority of comments to the plan centered upon several major issues: fairness, reliability impacts, attainability of goals, and its legal basis—many reaching past state boundaries and party lines.  Fairness concerns, held by 23 states, are largely based upon the 2012 baseline level of emissions. Many states had been proactive in the decade prior, already attacking the low-hanging fruit and therefore were being forced to implement improvements with higher marginal costs than those states that had not yet proactively addressed emissions. Reliability impacts, which differ from state to state, caution the over-dependence upon less reliable sources of power, in particular renewables.

Perhaps the most contentious pushback centered upon the attainability and legality of the program. According to the Brookings report, 36 states commented on attainability, predominantly criticizing the timeline as too short. Some states have even argued that the goals altogether are unattainable. Wyoming, for example, has an economy that is reliant upon coal production and coal-based generation. Wyoming Public Service Commission Commissioner Alan Minier, as well as other agencies in that state, has been outspoken in stating feasibility concerns surrounding the decommissioning of coal-fired plants as much as 30 years before scheduled retirement.  Similarly, although Wyoming has abundant wind resources, most of this power is exported and Wyoming would be unable to receive renewable energy credits under the plan.

The cherry on top is concerns on legality of the Clean Power Plan, particularly how it interprets the Clean Air Act (its legal basis), and that favoring gas-fired generation will encroach upon the Federal Energy Regulatory Commission’s least-cost principles in the dispatch of power. Experts have appropriately forecasted large sums in legal and lobbyist fees.

Issues and Opportunities

It’s clear that a number of issues exist within the Clean Power Plan’s approach to reducing CO2 emissions in the United States, and these do need to be addressed in order to realistically comply.  But there are also many opportunities.  In terms of creating pathways to alternative production and more efficient distribution of electricity, there has been more innovation in the energy in the past 5 years than in the previous 50. The introduction of the smart grid has invited the possibility of real-time, grid-wide networking and monitoring, enabling the use of renewable resources with very large to very small generating capacities, while ensuring reliability across the grid.

Many question the worth of derailing support for innovation in order to contest the rule. By supporting more engagement between utilities and building and industrial facility owners, city planners, and even individual homeowners to implement energy efficiency programs and integrate distributed generation, states can employ more creative and innovative approaches to compliance with the Clean Power Plan.  The possibilities are endless in terms of inviting an array of new stakeholders and developing new revenue-generating systems that can help states achieve their state goal. The question is whether the state will lend itself to innovation or litigation.


Autonomous Trucks Make Progress

— August 3, 2015

Autonomous vehicle technology continues to advance steadily, with new testing facilities opening to great fanfare at the University of Michigan being a recent highlight. Around the world, plans are being put into action to test self-driving cars in many different localities, and work continues within all the major automotive manufacturers and large suppliers. The first freeway cruising and traffic jam applications are going into production in a few 2016 models, and many more are promised by 2017.

The focus from large OEMs is still on incremental improvements to existing advanced driver assistance systems, with more capable software and sensor fusion. The marketing appeal to car buyers is based on convenience and comfort with the added benefit of greater safety. Prevailing wisdom says that the personal vehicle market will continue as it has done for the past century, but there is the potential for significant change if the technology delivers and legislation is updated to allow it. This topic is discussed in the latest version of the Navigant Research Autonomous Vehicles report.

Under the Radar

What is flying a little under the radar is the work going on to launch autonomous commercial vehicles. Daimler caused a stir in May when it gave a demonstration of its Freightliner Inspiration Truck at the Hoover Dam.  In July, the company announced that it expected to be able to begin testing on public roads in Germany before the end of 2015.

Another option that is an incremental step toward autonomous driving is offered by U.S. company Peloton, which offers a platooning feature that can be added to existing vehicles. Peloton’s technology connects two trucks wirelessly and allows the following truck to close the gap safely, with speed and braking controlled by the lead vehicle while the driver remains responsible for steering. The company claims that fuel savings on a long drive are approximately 4.5% for the front vehicle and 10% for the follower.

Deciding Whether to Invest

Fuel savings are the first step toward justifying new technology for fleet managers who must decide whether to invest. The ultimate potential of autonomous vehicles is to reduce or eliminate the cost of the driver, which produces the inevitable result of lost jobs, a topic beginning to stimulate some debate in the media.

New technology almost always brings societal change, but the rate of change has increased in the computer age, and a serious commitment to retraining programs needs to be made by governments as they make changes to legislation to support the emergence of autonomous driving capability and other forms of robotics. It isn’t all bad news though. The new truck pilot jobs will need new skills on top of the conventional driving ones and should command higher pay.


July Proved a Pivotal Month for Renewable Power

— August 3, 2015

The news stream started early on July 3, when the German government published a white paper presenting its proposal for power market reform known as Strommarkt 2.0, or Electricity Market 2.0. The proposed reform is focused around three ideas: the energy supply must be reliable, it must be environmentally friendly, and it must be cost-effective—even with a growing share of wind and solar power.

To achieve these focus points, the white paper proposed 20 pillars to support the new market. The most important are that the price is set by a free market, there is constant monitoring of the security of supply, a capacity reserve (but not a capacity market) will be introduced, and the power market will evolve to be balanced.

While the proposal does not affect renewables directly (Germany has been actively tweaking its incentives in the last 2 years to reduce impact on electricity bills), it does introduce the flexibility necessary to allow further growth of renewables in the country, which is a must if the country wants to meet its 80% renewables target in 2015.

More News

A couple weeks later, on July 17, the European Union (EU) Commission proposed a new regulatory package that set the stepping stones of its EU strategy. While most of the proposal is geared toward empowering consumers so they can make better decisions affecting their energy consumption, it also advocates for a new single-market design at the European level. This design will add flexibility to the system to facilitate the expansion of renewables, promote cross-border competition, allow decentralized electricity generation (including for self-consumption), and support the emergence of innovative energy service companies.

And a few days later, on July 22, the U.K. Department of Energy and Climate Change (DECC) announced a revamp of its solar and biomass policy support, ending solar feed-in tariffs for projects under 5 MW (projects above 5 MW were not eligible). DECC also said that it will remove subsidies that had been guaranteed to new biomass conversions and co-firing projects, including existing plants that were intended to burn higher shares of biomass. Finally, DECC announced it would delay new Contract for Difference tenders indefinitely.

Meanwhile, France announced a significant shift in its energy policy. On July 23, the French National Assembly approved its energy transition law. In it, the country announced that it will reduce its reliance on nuclear energy to 50% of its generated power by 2025, from 75% today, capping its nuclear power installed capacity at 63.2 GW. The country also set the share of renewable energy at 32% of its demand. In addition, France introduced a long-term target for carbon tax. Currently standing at €14.50 ($15.90) per tonne, this tax will increase to €22 ($24) in 2016, then to €56 ($62) in 2020, rising to €100 ($110) in 2030.

Overall, with their new intents, the EU, Germany, and France seem settled in their way forward, while the United Kingdom’s energy  policy is consistent at being inconsistent. After all, this is the third time it has changed policies in about 5 years.

A couple weeks later, on July 17, the European Union (EU) Commission proposed a new regulatory package that set the stepping stones of its EU strategy. While most of the proposal is geared toward empowering consumers so they can make better decisions affecting their energy consumption, it also advocates for a new single-market design at the European level. This design will add flexibility to the system to facilitate the expansion of renewables, promote cross-border competition, allow decentralized electricity generation (including for self-consumption), and support the emergence of innovative energy service companies.


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