Thread by @douglewinenergy

Demand stayed just below 80GW today. Large customer #demandresponse in the form of a rate structure called 4CP (more in this thread) helped to increase reliability and lower costs. Large customers are paid for their reductions. Small customers are not. 1/🧵
#txlege #txenergy

We won't have a reliable and affordable grid without demand flexibility. It’s possible—maybe—to white knuckle it through a summer with aging power plants at an extra cost of billions of dollars each year. But there’s a better and cheaper way...
#energytwitter 2/

To have a grid that is reliable and a market that is affordable, regulators need to figure out how to incorporate demand flexibility into market design.

*Pay people* to automatically (no action required) shift use to times when power is cheap and plentiful to reduce peaks. 3/

If we don’t have outages this summer, 4CP will be a big reason why (as it was in previous yrs). Large commercial & industrial customers in ERCOT have 2 main components of their bills: energy and T&D (tranmission & distribution). Note this applies to Austin Energy and CPS, too. 4/

The T&D part of their bill is set by how much power they consume during the highest 15 minute increment coincident with ERCOT system peak in Jun, Jul, Aug, & Sept. Add the power used during those 4 15-minute increments,➗ by 4 & that determines their T&D rate all year long. 5/

ERCOT quantified the effect: ~2 GW on avg. This lowers prices on the wholesale spot market and given peak would normally be met by 1950’s era combustion turbines, there is a big air quality benefit in addition to the reliability and cost benefit. 6/
ercot.com/files/docs/202…

You can literally see this today. Look at how the demand jumps above yesterday’s monthly peak (79.6GW) then flatlines. Building managers (usually using building control systems) were trying to hold the line to save money on next year’s bills. #Demandresponse at work. #txlege

But that's large C&I customers. What about residential and small commercial? There are barely any offerings at all for us. And yet most of the demand comes from these sectors, especially during extreme weather. We get asked to conserve but don't get paid for it. #txclimate 8/

ERCOT determined that 53% (!) of peak was “weather sensitive” (i.e., HVAC) w/ most of it residential in '18. That would mean today we have >42GW of HVAC. And yet there is only ~300MW of #demandresponse in the resi/small commercial sector (most of that Austin Eneryg and CPS). 9/

There are three main things #demandresponse can do: shift, shave, and shape. Most people think of DR as shaving (e.g. shutting off AC at 4pm). No thanks, even I don’t want anything to do with that. But then there’s shifting and shaping. #energytwitter 10/

Look at the supply and demand curve and price graph for today. Slightly narrow at peak w/ high prices late afternoon but massive amount of cheap spare capacity all the way until 2:00. Why not pre cool your house? Even better, why not get *paid* to pre-cool your house?
#txlege 11/

I don’t want my house above 77 on a hot summer day, but I’d be fine with 72 in the morning so that I’m using less in the afternoon if someone paid me. Would you? (NOTE: whether peak shaving, shifting, or shaping, DR is always voluntary). 13/

I'd need a lot to shut off my AC, but I don't need much to shift use. Even better, smart thermostats will do the work for you. Takes no human effort at all. Set the algorithm: no cooler than 72 in the AM, no warmer than 77 in the afternoon, or whatever levels you want...
14/

The algorithm will monitor pricing and optimize for comfort, cost, and grid reliability (see below). It will also optimize for renewable power and lower emissions, if you're into that sort of thing. (Happily, low cost and low emissions go together). 15/
…er.s3-website.us-east-1.amazonaws.com/#/

But we don’t do this. It’s a massive—& costly—missed opportunity. As the graphic below shows, increasing competition by including demand in markets, reduces spot market prices. Big customers get paid for #demandresponse; small ones don't. #txlege 16/
eepartnership.org/wp-content/upl…

Why don't we have more #demandresponse? (1) generators (broadly speaking) hate it. It lowers prices. That’s great for consumers, not so great for generators. (2) Most people think of it only as shutting off their AC. We need to shift thinking to shift energy use. #energytwitter

#Demandresponse has a big impact. You can see it on a day like today when large customers reduce and get rewarded with lower bills. Let the small business owners, homeowners, & renters get paid, too. We’ll lower bills, lower emissions, AND increase reliability.
End/🧵