Historically, demand flexibility was “nice to have.” It is increasingly becoming a “must have” as networks around the world are moving towards high levels of variable renewable generation resources. The increased variability of renewables, notably wind and solar, results in frequent episodes of feast and famine when supply exceeds demand and vice versa. The result is wide swings in wholesale prices, from near zero and negative to very high levels reflecting the imbalance in supply and demand (Box). Storage and exporting/importing the surplus/deficit are invoked to the extent possible but are often not sufficient.
Free electricity while supplies last
The cost to produce the next kWh of electricity varies a lot depending on how it is generated and how far it has to travel to get to where it is needed. It also varies based on the supply and demand – as in Economics 101. Increasingly, it depends on how much of the demand is supplied by variable renewable generation. When there is more generation that demand – as frequently happens these days on many networks – prices go negative. Unsurprisingly a lot of thinking is going to decide what to do during such episodes to avoid renewable curtailment.
One solution may be to give it away: Free electricity while supplies last. In Texas, which has a competitive retail market, some suppliers (including a few highlighted below) offer “free” electricity during off-peak hours, say 9 pm to 7 am and on weekends – usually with some strings attached, such as buying a minimum number of kWhs per month outside the “free” hours. In Texas, surplus wind during off-peak hours has become a nuisance.
- Just Energy: 10 hrs of free electricity every day (visual on next page);
- Quick Electricity: Free nights & weekends; and
- TXU: Free night & solar days.
Another scheme was recently announced by Octopus Energy in partnership with UK Power Networks to provide households with free energy during periods of excess renewable generation – mostly wind. Octopus Energy states that it hopes the offer will restore balance to energy supply and demand levels during peak periods of renewable generation. The scheme will alert customers when there is excess electricity on the local grid, encouraging them to ‘Power-up’ their homes or charge their electric vehicles. The offer will initially be available for selected Octopus Energy customers in the South and East of England.
Schemes such as these are more than marketing ploys. Creative new ways must be found to get rid of the excess solar and/or wind generation that regularly overwhelms many networks.
The next best option is to make more demand more flexible, which explains the recent surge of interest in
- Flexible loads;
- Demand flexibility services;
- Variable electricity pricing; and
- Technologies that allow the aggregation of small loads into large portfolios of manageable demand.
Interest in demand flexibility achieved through whatever means possible is wide-spread and gaining momentum in all circles, academic, research as well as within the industry.
Did you say free electricity?
Source: Just Energy
As an example, the National Renewable Energy Laboratory (NREL) is convening a workshop on the topic of Flexible Demand in 100% Clean Grids with the aim of examining technical, social, and economic capabilities for addressing seasonal mismatch and other reliability challenges resulting from systems with high variable generation. Among the issues to be considered are the seasonal mismatch between energy supply and demand, infrequent (less than once per year) exceptionally low energy output episodes with little sun and wind – known as “dark doldrums” – for one or more weeks, and the increasing importance of critical transmission assets in power systems with high wind and solar energy shares.
NREL says that the area “we are especially curious about and need … to understand better is flexible demand” and asks:
- To what extent can electrical loads help solve seasonal mismatch and other challenges that require coordination over multiple days?
- To what extent should electrical loads be asked to contribute to meeting these challenges?
- What are fair mechanisms for energy allocation and compensation for services?
Similar interest exists in other countries with high share of renewables, notably Australia, which is rapidly transitioning away from coal-fired generation towards more solar and wind. The Commonwealth Scientific and Industrial Research Organization (CSIRO), a Government agency responsible for scientific research, recently announced a pilot project to turn a collection of smart buildings into flexible load (Box on next page).
Other examples abound. In early Aug 2023, Pacific Gas and Electric Company (PG&E), and Sunrun, a leading solar battery installer, announced that they were collaborating to develop a Distributed Power Plant to improve the utilization of solar energy to help California’s grid during high temperature and high demand hours. The scheme envisions the participation of some 8,500 residential solar-plus-storage customers with 34 MW of capacity who can share the excess solar energy they are generating on their rooftops with their neighbors. The program, called Peak Power Rewards aims to support CAISO’s grid from 7-9 pm from August through October when high temperatures challenge California’s grid.
According to Mary Powell, CEO of Sunrun (photo on page 23), “As we make progress in partnerships with energy providers like PG&E, home storage networked into distributed power plants emerge as invaluable assets.” Patricia Poppe, CEO of PG&E Corporation agrees, “Working together with partners like Sunrun is a win-win-win for our customers, the electric grid and California as a whole.”
Australian pilot to make buildings smart and interactive
In Aug 2023 CSIRO announced a pilot project to make commercial buildings smart and interactive, allowing them to offer flexible demand and behave like batteries and other energy storage devices.
The pilot, Data Clearing House Platform, is aggregating the load of 200 commercial buildings to test whether it can synchronize air conditioners and hot and cold water systems to when renewable generation is plentiful and prices are low. It will, for example, adjust thermostats up or down slightly without inconveniencing the occupants.
Among the many challenges will be how to standardize digital connection for older and new devices and to encourage third party service providers to enter the nascent market for demand flexibility services. Stephen White, the project leader said the aim is to aggregate at least 5 MW of flexible demand for the pilot. He said, “All of these things require some kind of digital connectivity or telemetry systems to enable participation, and if we make it too complex for building owners they won’t participate.”
Gaining visibility on what is behind-the-meter in buildings with devices spanning different ages and manufacturers and managing them using artificial intelligence is the first step to unlock their battery-like capabilities. Everyone recognizes the need for increased visibility and control of distributed energy resources (DERs).
CSIRO is not the first to identify the potential of grid-interactive smart buildings because most electricity – 50-75% – is used in buildings, even more during peak demand hours. n
Sunrun customers with solar and battery systems in single-family homes served by PG&E who are not already enrolled in other demand response (DR) programs are eligible and will receive an upfront payment of $750 plus a free smart thermostat – which will come handy in managing their loads.
Decentralized generation is on the rise
Demand flexibility is inherent in virtually every device in every customer’s premise. If the aim is to get flexible demand, however, it makes perfect sense to go after the low hanging fruit, where the device has significant capacity to consume, generate or store energy. The obvious targets include customer with solar panels, storage, electric vehicles, air conditioners, heat pumps, pumps, motors, and other big electricity using devices.
Managing the flexibility in cooling in residential or commercial buildings is an obvious target, especially in hot climates. The energy intensity for cooling commercial buildings – energy consumed per square foot of floorspace – depends on the climate. Those in hot (and humid) climates tend to use far more electricity, as much as 6 times more than milder climates in the case of the US (visual next page). And since electricity is the predominant energy source used for air conditioning, accounting for over 98%, it is a major load on all electricity networks in hot climates.
The hotter the climate, the more cooling is required in commercial buildings
Source: EIA
As the climate gets warmer everywhere, and more humid in some places, demand for air-conditioning will continue to rise. Rising income levels is another major driver of AC penetration. In India, an emerging economy, currently only 8% of the population can afford AC – but the proportion is expected to rise as more people are able to afford it.
Another massive electricity using device is the electric car – which can consume as much as the rest of a typical house. Managing how, when and where they are charged becomes critical. Moreover, while ACs or heat pumps cannot store and give energy back to the grid, EVs can, which makes them uniquely interesting and useful as further explained in the following article.
Demand flexibility and devices that can provide it are becoming critical. The Association of Energy Service Professionals (AESP) designated 15 Aug as demand flexibility day, encouraging its members to share ideas at https://socialpresskit.com/demand-flexibility-day?utm_medium=email&utm_source=rasa_io&utm_campaign=newsletter
This article originally appeared in the September 2023 issue of EEnergy Informer, a monthly newsletter edited by Fereidoon Sioshansi who may be reached at [email protected]"