sign in sign up
<<
Home , Demand response

Environmental Benefits of

By reducing electric demand during peak hours, demand response (DR) can provide multiple environmental benefits while making regional electric grids more reliable. Demand response can save energy, reduce the need for fossil fuel power plants, and help integrate onto the electric grid by providing increased stability and management.

Energy Efficiency Reduced Reliance on Fossil Fuel Power Plants Demand response programs increase overall system Power plants that run during peak hours tend to be efficiency by shifting consumption away from inefficient and higher-emitting. For example, during the peak load times to more desirable periods when demand summer the carbon intensity of electricity in California can has settled. In addition to shifting demand, DR reduces be up to 33% higher during peak times compared to off- overall energy consumption and has historically been peak times.2 Offsetting these peaking plants with demand included in utility conservation plans. response can significantly reduce environmentally-harmful emissions. In the Midwest, combustion While the peak reduction impacts of demand response are turbines are often used for peak electricity. While this type well-known, the overall impacts are of electric generation from natural gas is significantly less less understood. At issue is the magnitude of the snapback carbon intensive than baseload plants, it is actually effect, or the increase in energy use experienced after a more carbon intensive than baseload combined cycle DR event. For example, if a utility reduces output from natural gas plants. residential air conditioners during a hot summer day, the Example MISO Summer Day Generation by Source A/C units may in theory need to work harder afterwards to Pumped Hydro Storage/ Other return their homes back to the original temperature. NG Combustion Turbine A recent study done for the state of Minnesota explored Wind the energy savings impacts of demand response. It NG Combined Cycle found that even after incorporating the snapback effect, residential demand response technologies still generate Coal/Nuclear Steam Turbine overall energy savings after an event (see table below). The degree of savings varies by technology. For example, Source: MISO Market Reports the study found that cycling electric heaters generates a Real-Time Cleared Offers net savings of 3.11 kilowatt-hours (kWh) per household for each DR event, while cycling air-conditioners produces a net savings of 0.71 kWh per household. NG Combustion Turbine Pumped Storage When consideringWind new investmentsNG in Combined electricity Cycle resources, The study also showed even greater energy savings from demandCoal/Nuclear response Steam should Turbine be looked at on equal footing commercial and industrial demand response programs. with electric generation as an option for meeting demand. For example, regulators and utilities conducted an analysis Program Type Net savings after the shutdown of a large plant in per home, per event southern California, and recommended that over a third of Air Conditioner Cycling 0.71 kWh the replacement resources should be met with preferred resources, including demand response, , Electric Heat Cycling 3.11 kWh renewable energy and energy efficiency.3 This reduced Domestic Hot Water 0.4 kWh the need for new conventional generation. Given declining Curtailment (summer) technology costs, these resources make economic sense in many situations. Many states in the Midwest have well- Sources: 1. Minnesota Department of Commerce and Michaels Energy, Demand established integrated resource planning, which are well Response and Snapback Impact Study. August 2013 equipped to give similarly fair consideration to demand 2. Star Tribune, Schafer: Promise of power storage still lacks payoff. February 15, 2014. response and other technologies as alternatives to 3. California Public Utilities Commission, Decision Authorizing Long-Term Procurement for Local Capacity Requirements Due conventional generation. to Permanent Retirement of the San Onofre Nuclear Generation Stations. February 11, 2014

Great Plains Institute Winter 2014-15 Page 1 Environmental Benefits of Demand Response

Renewable Energy Integration Renewable energy like wind and solar are variable by MISO Wind Curtailments nature—the sun does not always shine nor does the From November 2012 to July 2014 wind always blow. Demand response can help manage 9.0% this variability and will become increasingly valuable as 8.0% 8.3% 7.9% 7.9% 7.7% 7.4% 7.3% renewables continue to come online. Many power plants 7.0% 7.2% 6.8% 6.6% 6.6% 6.3% 6.0% 6.2% cannot vary their output quickly in response to changes 6.0% 5.8% 5.4% in renewable generation, but demand response can be 5.0% 5.3% 4.7%

4.0% 4.1%

deployed quickly to respond to variation and help integrate 3.6% 3.0% wind and solar.

2.0% 2.0% 1.6% 1.0% Managing an electricity system with higher levels of wind 0.0% and solar requires more system flexibility to manage Jul-14 Jul-13 Jan-13 Jan-14 Jun-14 Jun-13 Oct-13 Apr-13 Apr-14 Feb-13 Sep-13 Feb-14 Dec-12 Dec-13 Aug-13 Nov-12 Nov-13 Mar-13 Mar-14 May-13 May-14 swings in supply. For example, wind output in the Midwest Source: MISO Monthly Market Assessment Reports can vary significantly throughout the course of a day (see figure below). Actual Deployment California is facing increasing penetrations of solar, which impacts the system differently than wind. A challenge MISO Availability arises when electricity demand increases as people get From July 18, 2013, MISO’s summer peak. home from work at the same time as solar generation diminishes with the setting sun. High demand combined 9,000 with the drop-off in solar produces a steep ramp-up in the 8,000 7,000 evening that must be met by other resources. Deploying 6,000 demand response to manage energy usage during this 5,000 period would help mitigate system challenges brought 4,000 3,000 about by solar generation. 2,000 1,000 Recent studies exploring high penetrations of renewable 0 Wind Output (MegaWatts) energy point towards the important role of demand 1:20 PM 2:10 PM 2:10 3:00 PM 3:50 PM 4:40 PM 5:30 PM PM 6:20 7:10 PM 8:00 PM PM 8:50 9:40 PM 1:40 AM 1:40 2:30 AM 3:20 AM 4:10 AM 5:00 AM AM 5:50 6:40 AM 7:30 AM 8:20 AM 9:10 AM 12:30 PM 10:30 PM 11:20 PM response in facilitating the implementation of high 12:00 AM 12:50 AM AM 10:00 10:50 AM 11:40 AM Source: MISO Market Reports, “Real-Time Cleared renewables. Research exploring 80% renewable Offers” electricity penetrations conducted by the National Renewable Energy Laboratory and the Rocky Mountain If the supply of energy surpasses demand, then system Institute assumed aggressive expansions of demand 3 operators may need to curtail renewable energy response as a tool to reliably operate the system. generation, effectively wasting the opportunity to generate They determined demand response could reduce peak clean energy. Wind curtailments in the MISO region have electricity demand by 20% or more, which can be used been increasing over the past couple years (see next to mitigate reliability issues and shift electricity usage to figure) in conjuction with growing wind generation in the hours when renewable supply exceeds demand. Midwest. Demand response is one tool to deal with this issue. Managing demand to match more closely with Demand response offers a variety of environmental renewable generation will help reduce curtailments and benefits, such as reducing energy usage, offsetting ensure that wind energy can meet its full potential. This the need for fossil-fueled power plants, and helping to could involve shifting some energy usage to night, when manage system challenges from increased wind and wind production is typically higher and demand low. solar energy. Thus, demand response has an important role to play in helping us meet clean energy and climate Sources: goals throughout the US. 3. Rocky Mountain Institute, Reinventing Fire. October, 2011. & National Renewable Energy Laboratory, Renewable Electricity Futures Study; Volume 3, End-use Electricity Demand. 2012. Written by:  Steve Dahlke Policy Associate Dane McFarlane Senior Research Analyst

Great Plains Institute Winter 2014-15 Page 2