FERC releases report on demand response

Demand response is an innovative smart-grid approach to meeting society's electricity needs. As customer demands on electric grids increase, the generating resources needed to meet higher and higher peak demands are typically more expensive to run and have more adverse environmental impacts.  In essence, demand response means covering electric load by having individuals or companies agree to temporarily cut back on electricity consumption in response to peak demand conditions.  When customers are willing to provide this service at a lower cost than generation, demand response can be a decentralized, crowd-sourced alternative to peaking power plants.

U.S. federal regulatory staff released a report this week assessing the nation's demand response and smart  meter resources.  The Federal Energy Regulatory Commission staff report is the sixth annual briefing since the enactment of the Energy Policy Act of 2005, which contained provisions promoting the development of demand response resources and markets.

The report notes that more and more customers have access to the kind of advanced meters that facilitate demand response participation.  These smart meters can not only measure instantaneous electricity demand, but typically report back to a utility automatically using radio frequency communications.  Since 2009, advanced meters have risen from 8.7% to a 13.4% share of all installed meters.  The report suggests that the actual penetration rate of advanced meters may be even higher if it includes meters that are installed but whose advanced features have not yet been activated.

The report also notes that in 2010, the grid operators it surveyed had a total of 31,702 MW of demand response resource potential, or enough to cover about 7% of the total 2010 peak demand.  Regional demand response capacities ranged from as low as 2.3% of peak load in the Electric Reliability Council of Texas to as high as 10.5% in the mid-Atlantic region's PJM Interconnection.  The report noted that demand response resourcs "made significant contributions to balancing supply and demand during system emergencies" in 2011.

August 18, 2011 - new report assesses Texas, SW blackouts

Last February’s blackouts in Texas and the Southwest disrupted life for millions of electricity consumers.  When the weather became unusually cold for the region and an ice storm struck, a number of electric generators suffered outages, and natural gas supplies became curtailed.  As a result, real-time wholesale power prices rose to 40 times their previous level, and grid operators were forced to resort to rolling blackouts.  Even as the grid struggled to maintain its integrity, policymakers called for an investigation of what happened – and how to prevent a repeat performance.

This week, after six months of inquiry, the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) have released a report on the incident.  This report – linked here as a 357-page PDF – concludes that most of the electric outages and gas shortages were due to weather-related causes, but noted that proactive steps to protect reliability were lacking.

For example, although many generators did in fact winterize their plants so they could operate in cold conditions, the report concludes that no state, regional or NERC standards required generators to take this step.  The report notes that electric outages were generally caused by weather-related mechanical problems that could have been prevented by proper weatherization – measures to prevent frozen sensing lines, equipment, water lines and valves.

The report similarly concludes that the natural gas shortages and outages were mostly attributable to the lengthy cold weather, the resulting and unprecedented high demand for gas, and simultaneous reductions in supply.

Will this report change the way we protect the reliability of our grid?

February 17, 2011 - Texas blackout aftermath

When Texas experienced rolling blackouts earlier this month due to severe weather and disruptions to generation and the electric grid, over one million customers lost power intermittently.  Imposing rolling blackouts on customers is an extraordinary measure rarely seen in U.S. power markets.  Typically, utilities and regional transmission organizations will do everything they can to ensure adequate electric supply for all customers.  So what went wrong in Texas?

That question has been on the minds of electricity customers, and is now drawing increased attention by regulatory agencies.  On February 7, less than a week after these outages, the nation’s electric reliability organization North American Electric Reliability Corporation (NERC) announced a joint investigation in coordination with Texas Reliability Entity, Inc. and the Western Electricity Coordinating Council, to understand exactly what happened and what can be done in the future to prevent such electricity curtailment.  In its announcement of its investigation, NERC noted that it will examine whether the recent shift towards greater reliance on natural gas to produce electricity played any role in the outages.

Now, the Federal Energy Regulatory Commission (FERC) has initiated a staff inquiry into the outages and the restrictions of natural gas and electricity service in Texas and other western states.  This inquiry, docketed as Docket No. AD11-9-000, focused on disruption to the bulk of power system in Texas and Arizona as well as disruptions to natural gas delivery in Texas, in Mexico and elsewhere in the southwest.  Notably, FERC’s order opening this investigation states that this will not be an enforcement investigation; rather, this investigation will identify the problems and gather facts, leaving the decision on whether to initiate enforcement proceedings to a later date.  FERC has designated a staff task force to conduct this inquiry.

Meanwhile, Texas’ main electric grid operator, the Electric Reliability Council of Texas (ERCOT) is taking a look at its own internal procedure with an eye to improving its response to situations such as this.  Over the course of the day on February 2, 82 power plants with the combined generating capacity of 11,000 megawatts went offline.  During the peak of the outage, 80,000 megawatts was offline.  Of these, 59% were powered by natural gas, 40% by coal, and 1% by wind.

We shall soon see what these inquiries find.

February 3, 2011 - ERCOT rolling blackouts over?

Following on yesterday's report of rolling blackouts in Texas: grid operator ERCOT has reported that the need for intermittent power cuts may have passed, although ERCOT noted that scarcity of available generation might again lead to the need for blackouts.  As the storm moves away and life gets back to normal, we're seeing some of the impacts of the blackouts.  For example, the Houston Chronicle reports that the Houston fire department responded to 30 elevator rescues yesterday - 10 to 15 times as many as on an average day.  Rolling blackouts are unpredictable; even if you know the grid operator is imposing them, you might not know exactly when they'll strike.  ERCOT and utilities tried to avoid cutting power to key elements of social infrastructure like hospitals, but anyone who got stuck in an elevator when their building lost power probably didn't enjoy the experience.

ERCOT continues to ask consumers to reduce their consumption of electricity, particularly during times of peak demand.

February 2, 2011 - weather leads ERCOT to rolling blackouts

What happens when bad weather strikes the power grid?  Depending on the storm, and the region, some customers may lose power if distribution lines are damaged.  More serious cases, like when key generators are tripped offline, may lead to more serious consequences.

Groundhog Day 2011 in Texas provides an example of the more serious consequences: power prices rising to 40 times their previous level, coupled with rolling blackouts.  The Electric Reliability Council of Texas, or ERCOT, operates the electric grid and manages the deregulated market for 75 percent of the state: about 22 million customers in areas including Houston, Dallas, Fort Worth, San Antonio, Austin, Corpus Christi, Abilene and the Rio Grande Valley.

Thanks to the weather, apparently there just isn't enough power to go around.  Reports indicate that ERCOT has imposed rolling blackouts after multiple power plants were disabled by a major ice storm.   Rolling blackouts are an extraordinary measure, seen more often in other countries than in the U.S.  When the utility cuts your power, unless you're connected to distributed generation or storage, your lights will go dark.

Beyond the rolling blackouts, the price of energy may lead to other consumer impacts.  Reuters reports that hourly energy prices in ERCOT rose from $50 per megawatt-hour to $2,000 per megawatt-hour, a forty-fold increase.  (Although individual residential ratepayers may not feel that price spike directly, it would translate into paying $2.00 per kilowatt-hour if they did - and large commercial and industrial ratepayers who buy power at wholesale in the market are exposed to these prices directly.)  Sounds like a good time for demand response!