ISOs seek flexibility, predictability from DR

Megawatt Daily
By Tom Tiernan
May 23, 2020

Officials with five independent system operators
discussed the growth of the demand response sector at
a meeting in Washington this week and growing pains that
remain, including the need for DR resources to be flexible and
predictable as a dispatch option for ISOs.

Because demand and some generation resources are ramping
up and down more rapidly in current markets, DR resources need
to be available on short notice and have the ability to meet the
ramping needs of ISOs, ISO officials said at the National Town
Meeting on Demand Response and Smart Grid.

In the Electric Reliability Council of Texas, “we need demand
response that can move up and down incrementally, and not
‘blocky’ DR that is not flexible,” said Paul Wattles senior analyst,
market design at ERCOT.

The California ISO will soon file with the Federal Energy
Regulatory Commission its plan to lay out the ramping requirements
for whether DR resources can be considered flexible capacity under
its tariff, said John Goodin, regulatory policy manager at Cal-ISO.

Cal-ISO is developing system-wide flexible capacity needs to
help integrate renewable resources such as wind and solar
generation that are growing in the state, and it is eyeing different
categories of flexibility: base flexibility; peak flexibility and superpeak
flexibility. “We’re trying to quantify” how much of each
type of flexible capacity will be needed, and whether DR can meet
those needs, Goodin said.

For any ISO, “a resource that is less flexible is less valuable”
and should not garner as much revenue through capacity markets
if it cannot be counted on when needed, said Henry Yoshimura,
director of demand resource strategy at ISO-New England.

In other sessions at the meeting, held by the Association for
Demand Response and Smart Grid, utilities, regulators and
consumer advocates discussed how utilities can do a better job
engaging customers and treating them as consumers, not simply
ratepayers without options. But at the ISO level and in the DR
market “we’re treating customers as resources,” because DR firms
aggregate load spread out among customers and bid it into capacity
markets to be available when called upon, said Yoshimura.

The Midcontinent ISO has heard from stakeholders that it
should consider more stringent testing on measuring and
verifying of DR resources, said Mike Barber, demand response
advisor with MISO.

DR markets “have come a long way,” but there are more gains
to be made to optimize demand-side resources, added Pete
Langbein, manager of demand response operations at PJM

For instance, at the North American Electric Reliability Corp.,
the demand response availability data system has been “a work in
progress” for several years, said Wattles. The goal is to eliminate
double-counting of DR resources and keep track of what is
dispatchable, but the system still has some growing pains to
overcome, Wattles said. The DADS effort at NERC is “still
maturing,” added Langbein.

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