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SMART ENERGY TRANSACTIVE ENERGY by Paul De Martini Demand response as originally conceived and implemented over most of the past 30 years to provide emergency response and peak load management has become an important power system resource. However, fundamental forces are creating dramatic changes in the operation of markets and the electric transmission and distribution grids, creating additional opportunities for a new class of fast, flexible and continuously responsive distributed energy resources (DER). Customer energy resource options may include flexible onsite generation, demand response, storage, power electronics and electric vehicles. These forces are: 1. An evolution in customer behaviour and expectations, with greater demand for reliable electricity and self-reliance, including becoming both an energy consumer and producer, or “prosumer”. 2. Policy driven reliance upon renewable, intermittent resources and a shift to more decentralized energy resources. 3. Massive energy efficiency investments and structural changes related to codes and standards are yielding greater energy productivity relative to GDP. 4. Technological advancement leading to alternative methods and designs for providing and integrating services to the grid that are provided by customers’ responsive resources, including demand management, onsite generation and energy storage. The success of demand response was recognized in the North American Reliability Corporation’s (NERC) 2012 Long Term Resource Adequacy (LTRA) report. The report identified that increased availability of demand side management (DSM) over the next 10 years to reduce peak demands will contribute to the deferral of new generating capacity or improve operator flexibility in day‐ahead or real‐time time operations. The electric power system is evolving to become one of enormous complexity combined with local constraints. The US Energy Information Agency (EIA) projects renewable energy, excluding hydropower, will account for 32% of the overall growth in generation from 2011 to 2040. Meanwhile, US electric distribution systems may need to integrate over 150 GW of distributed solar photovoltaic (PV), combined heat and power (CHP) and storage by 2020. This, in addition to over 170 GW of back-up generation already installed. Market and system variability is increasing and operational temporal dimensions are declining across transmission and distribution. electric transportation to provide dynamic and continuous response based on direct or indirect value information to the mutual benefit of customers and a broad range of parties including load serving entities, services firms, aggregators, grid operators, and wholesale and local balancing markets through economic transactions.” POWER SYSTEM EVOLUTION Demand response has proven its ability to successfully compete with generation in these markets. Load as a capacity resource was reported to total over 19.3 GW in 2012 and forecast to grow to over 35 GW by 2015 in the 2012 FERC DR survey. Last year, the PJM independent system operator (ISO) reported a record 14.8 GW of demand response cleared their reliability pricing model auction for 2015-16. The maturity of load as a capacity resource is an important step in the evolution of demand response and other flexible distributed energy resources to potentially provide a broader range of bulk power system services. These include a growing set of ancillary services: • Spinning reserve: portion of unloaded capacity from units already connected or synchronized to grid that can deliver energy in 10 minutes and run for at least two hours. • Non-spinning reserve: extra generating capacity not currently connected or synchronized to grid that can be brought online and ramp up to a specified load within 10 minutes. • Regulation: used to control system frequency that can vary as generators access the system and must be maintained very narrowly around 60 Hz. While the total amount available in 2012 was comparatively small at over 1.3 GW, the projection in the FERC survey data suggests a strong growth pattern. Also, the collective effect of wind and solar PV generation patterns may create very large transitions several times each day. As depicted in Figure 2, the California ISO (CAISO) has determined that net load from variable and customer energy resources in the state will create several short dramatic swings daily, reaching as high as 13.5 GW in 2 hours. The swings, or ramps, have traditionally resulted from load patterns that rise in the morning to a mid-to-late afternoon peak and subsequent decline in the evening. To address these two fundamental operating challenges a range of new and expanded bulk power system services are needed. Services This transformation of the electric generation mix and the rise of prosumerization are driving the need for changes in both market designs and grid operations (Figure 1). This is driving the need for a new set of responsive capabilities at greater scale than existing demand response programs and with distinctly different characteristics to support the need for flexible market and grid resources. US Federal Energy Regulatory Commission (FERC) chairman Jon Wellinghoff discussed this evolution in his remarks at the White House Demand Response Forum earlier this year and again at the recent US Department of Energy (DOE) sponsored Transactive Energy Conference. This objective could be described as: “The ability of flexible distributed energy resources including responsive demand, onsite generation, energy storage and 72 Figure 1 – Evolution of DR/flexible DER METERING INTERNATIONAL ISSUE - 3 | 2013