I. Potential for Thermal Storage and Load ShiftingII. Thermal Storage ExampleTable 2. Normal vs. Controlled Air Conditioning SchemesIV. System Wide Effects of Demand ResponseFigure 6. Average Hourly Demand by SegmentVI. Additional Potential BenefitsVII. Future ResearchReferencesDemand Response as a Substitute for Electric Power System Infrastructure Investments Jason W Black ([email protected]) Massachusetts Institute of Technology Abstract – This paper investigates the system-wide implications of regulatory policies to promote demand response as a substitute for investments in system capacity (generation, transmission, and distribution). Investments in demand response technologies, such as smart thermostats for thermal energy storage, have the potential to improve the efficiency of operations and investments in the electric power system. Reducing the magnitude of demand fluctuations will allow the utilization of the generation, transmission, and distribution systems to be increased and the levels of ancillary voltage and frequency support and reserves reduced. An analysis of the long term effects of demand response on electricity pricing and generation investment is modeled. This analysis enables a general comparison of the potential for avoided costs in generation, transmission, and distribution that could be expected from active regulatory support of demand response investments. Introduction This paper investigates the potential for demand response to provide a substitute for capacity investments. Large scale implementation of demand response is modeled to determine the potential impact on capacity investments. The paper focuses on demand response at the residential level, which is typically discounted in terms of its potential size and perceived cost effectiveness. This paper attempts to present a case for the potential for residential demand response. Section 1 of the paper outlines the potential of demand response to reduce peak loads via thermal storage or load shifting. Section 2 contains an example illustrating the potential for thermal storage. Section 3 briefly explores the issues associated with implementing large scale demand response. Section 4 presents the results from simulations to determine the effects of large scale demand response on long term generation capacity. Section 5 illustrates the potential for demand response to substitute for investments in transmission capacity. Section 6 gives a brief overview of secondary benefits from demand response. Section 7 explores areas for future research. I. Potential for Thermal Storage and Load Shifting Innovations in control and communications technologies enable the creation of relatively low cost demand response schemes. A significant portion of peak demand can be shifted using these technologies given the proper regulatory and market structures. Past studies of the potential for demand response typically involved studies of consumer reaction to real time or time of use pricing without including the technologies to facilitate demand response. Several utilities currently have successful demand response programs that demonstrate the potential for peak shaving. The majority of these programs focus on large consumers. There is significant potential for peak shaving amongst smaller, residential consumers, however, that could be realized with the proper incentive schemes. Electricity demand is indirect demand. Consumers do not actually demand electricity itself, but the services provided by equipment that uses electricity. Electricity demand can be differentiated by demand for power and demand for energy. Demand for power is instantaneous, while demand for energy is not. Energy based demand can be utilized as a storage mechanism for electric power. In addition, the services provided by equipment which demands power rather than energy are not time dependent in many cases. A sub category of power demand consists of deferrable load. Washers, dryers, dishwashers, and possibly electric ovens are examples of appliances that have deferrable load. Consumers often are not concerned with the exact times that such appliances run, as long as it is within a certain interval. This presents an opportunity for deferring the power consumption by these appliances from peak to off peak time periods – especially if programmable controls are available to automate the deferral. Although these appliances typically make up a small portion of the total residential load due to their intermittent usage, they do consume significant amounts of power while running and therefore offer the potential for significant peak shaving whenever they can be shifted to off peak consumption.Energy Based load consists of air conditioners, refrigerators, water heaters, and electric space heaters. These provide service based on thermal transfer (heat or cooling). As such, consumers are indifferent to the actual time that this equipment runs, as long as the temperature remains within a certain range. By intelligently controlling consumption, the desired temperature range can be utilized as a thermal storage medium, and therefore as an indirect electricity storage method. Energy based load accounts for nearly 50% of total household consumption. This represents a very large potential for load shifting in order to reduce peak demand by utilizing thermal storage. Air conditioning accounts for over 20% of household electricity usage in the United States. Air conditioning load is also highly peak coincident, since summer peaks are almost entirely caused by air conditioning load. “Residential and commercial air conditioning load represent at least 30% of the summer peak electricity loads”. [2] Refrigeration accounts for over 10% of household electricity usage [2]. The load pattern of a refrigerator involves cycling over short time periods, on the order of minutes, which is relatively smooth between hours. This load profile is a result of the thermal characteristics of refrigerators and the desire for minimizing temperature deviations. The storage time for a refrigerator is therefore too short to adequately allow for inter-hour load shifting. It is possible, however, to utilize for short term load reductions such as frequency control or possibly for VAR compensation. Refrigerators may also be integrated into protections schemes – they could “trip” much like circuit breakers in response to voltage sags