Using Demand Responsive Loads to Meet California’s Reliability Needs

John Wilson, Arthur Rosenfeld, and Michael Jaske, California Energy Commission

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Abstract

The San Francisco Peninsula experienced rotating outages related to inadequate supply on June 14, 2000, which was followed by days of alerts and blackouts in January 2001. It was apparent that the state needed to take dramatic actions to avoid serious reliability problems in the summer of 2001. This paper reports on California’s experience with demand response policies in reducing peak electricity demand and increasing reliability.

During 2001 the state provided almost $1 billion for energy efficiency and demand response programs. Of these funds, about $50 million was spent on creating demand response capability in buildings, and $35 million was spent to install about 23,300 real-time meters for all customers with over 200 kW maximum demand. By the end of 2001, the demand response capability attributable to energy efficiency programs was about 250 MW. In addition, customers with real-time meters, representing about one-fourth (12,000 MW) of the statewide demand, will have meters and communication that will enable their participation in demand response programs. The goal is to obtain about 2,000 MW of demand response (or 17 percent of the air-conditioning and lighting load) from nonresidential customers at the specific times when reliability is threatened.

While the technology exists to create a large amount of demand responsive load, the major barrier is the lack of financial incentives and pricing structures that would reward customers for making investments and efforts to respond to price signals.