Environmental and consumer advocates, along with Illinois’ regional electric grid operator, launched an innovative pilot project this month to demonstrate how demand response can continue to support grid reliability year-round and lower electricity costs for Chicago businesses, institutions, government, and homeowners.
The pilot program, called the Combined Capacity Asset Performance Project (C-CAP), is a collaboration of Environmental Defense Fund (EDF), The Accelerate Group, Citizens Utility Board (CUB), and PJM Interconnection. The project will show how strategically combining resources can allow demand response to continue to compete with other sources of power in the market under new performance requirements.
The idea behind C-CAP is simple: If a building, energy storage, or renewable energy site can’t meet the stringent year round capacity performance market requirements on its own, it can combine with other buildings or off-site distributed energy resources to create a combined asset that fill in each others’ gaps.
Through the C-CAP collaboration, it is possible to create dynamic clusters of buildings, home thermostat programs, wind and solar farms, and energy storage projects that will layer their capabilities together to be able to meet their combined commitment at any hour of the year.
“Demand response has demonstrated its potential to cut peak electricity demand, help balance the grid, and save customers money. The project offers an inventive way to preserve and grow this valuable resource in the PJM market”, said Andrew Barbeau, President of The Accelerate Group and senior clean energy consultant for EDF. “The collaboration will serve as a strategic model for buildings, which will be able to combine their demand response potential to enter the market where they wouldn’t be able to participate on their own”.
The news comes soon after Chicago put in place a innovate set of strategies to become a true smart city in the future. The city has a range of plans and initiatives that aim to strengthen Chicago’s role as a leader in IoT technology. Its growth as a “city of data” provides a glimpse into the transformational understandings we will one day have of all our cities.
Indeed, after the announcement of a partnership between Opower and FirstFuel, covered by Memoori in late 2014, Roderick Morris, Opower’s senior vice president of marketing suggested “demand response gives us the ability to engage any service territory anywhere instantly, turning entire cities into virtual peaking power plants”.
Each year, PJM manages a capacity auction to buy enough power supply resources to meet the highest forecasted peak energy demand for the area it serves, including all or parts of 13 states and the District of Columbia. In PJM’s wholesale power markets, demand response resources compete directly with other forms of energy. Thus, demand response participants can bid into the auction, offering the amount of electricity they commit to reducing and receiving the same payments as power companies to meet electricity needs.
Under PJM’s new performance requirements, qualifying sources of energy must respond any time there is a critical need. Previously, demand response resources could choose to participate only during summer months, for example, by reducing air conditioning use. Yet PJM’s experience during the 2014 Polar Vortex cold snap demonstrated the need to rely on sources of energy (fossil fuels from power plants, energy efficiency, renewable energy, and demand response) that could be counted on year round, no matter what.
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“Demand response has proven to be a very flexible tool that meets a number of needs for the grid”, said PJM senior vice president of Markets, Stu Bresler. “In addition to helping lower prices and reducing pressure on the generation fleet during periods of peak use, demand response can be used by states and local communities to meet their public policy objectives”.
During the Polar Vortex, the capacity market as a whole was deemed by PJM to be ineffective and inefficient for meeting its purpose. Their reasons were simple, they said. The market, as designed, only required participants to be available for summer peak hours, and that meant PJM had one less tool at its disposal to make sure power needs were met year-round. In response, PJM proposed and received approval this June to create this new capacity performance market, phased in over the next few years, to help meet peak needs year round, for extended hours, and with a new incentive structure.
One of the first participants is Cook County government, which covers the Chicago area and surrounding suburbs. Cook County will be seeking to determine how to enter 45 of their buildings into the market, creating market revenue that will save the government money and help them achieve their sustainability goals. It is a vision of the future that shows great promise; networks of buildings and renewable energy interacting with the grid in real-time to more effectively meet grid needs.