The integration of demand response in microgrids and distributed energy resources (DER) presents a lucrative opportunity to enhance resilience while providing extra income to participants. By adjusting electricity usage, utility customers aid in balancing the power grid, particularly during peak demand periods or emergencies when microgrids can operate independently to contribute power back to the grid.
Despite this potential, engagement in wholesale demand response markets remains disappointingly low, according to the Energy Systems Integration Group (ESIG) report, which reveals stagnation or decline in participation. As the demand for energy management systems grows, especially with the rise of clean energy sources like wind, solar, and batteries, the need for efficient participation in demand response programs has become critical.
The report underscores a widespread desire for uniform market regulations among demand response participants. Clear and consistent rules across different jurisdictions can significantly bolster engagement. Yet, from 2017 to 2022, peak demand savings failed to grow, remaining between 2% to 8% across states, with a national average of 6.5%. There exists substantial untapped potential for demand response to enhance grid flexibility and capacity.
Challenges to boosting demand response participation are prevalent. Fragmentation of market rules, a lack of understanding of demand response technology, and burdensome communication standards are inhibiting progress. Additionally, inadequate public information regarding demand response performance during emergencies has led to diminishing confidence among system operators and consumers alike.
Another barrier is the imposition of penalties for demand response non-compliance, particularly within the PJM region. This effort to tighten market participation has paradoxically driven active players away, increasing perceived risk among demand response providers. Such penalties discourage participation, affecting the overall development of the demand response landscape and limiting effective resource utilization.
Capacity accreditation further complicates matters. Demand response, while previously credited with 90% capacity, has seen this figure drop to 77% in certain regions, translating into diminished trust in its regular availability. Many stakeholders question whether consumers will adhere to demand reduction during critical times, which contributes to pervasive skepticism regarding demand response as a reliable resource.
Data regarding the performance of demand response programs during emergencies is vital for reinstating confidence among consumers and stakeholders. Recent event performance data could galvanize interest in market programs. Effective demand response market design involves collaboration between ISOs and stakeholders to create responsive and beneficial regulatory frameworks.
Financial incentives play a decisive role in attracting participation. Consumers often find the benefits of demand response participation, such as minimal savings, insufficient to justify their engagement. Aggregators of resources struggle to create enough incentive to negotiate a vibrant virtual power plant market, where financial returns must be distributed among many stakeholders.
Notably, the report found that successful demand response programs often depend on individual champions within ISOs or utility companies. Growing the base of these advocates will be crucial for optimizing demand response and maximizing the benefits for the microgrid industry. As the landscape shifts with the retirement of traditional power plants, the agility of demand response technologies becomes even more essential for balancing energy supply and demand effectively.
Demand response can enhance microgrid and DER economics while ensuring grid stability, yet participation remains stagnant. The Energy Systems Integration Group’s report identifies barriers such as inconsistently structured markets and weak financial incentives. The role of champions within ISOs is essential for driving participation, leveraging demand response’s flexibility to balance energy supply and demand effectively.
The findings highlight a pressing need for enhanced participation in demand response programs to capitalize on their benefits for microgrids and DER. This requires overcoming significant barriers, such as inconsistent market regulations, lack of consumer incentives, and insufficient data. As support for demand response grows, it promises immediate solutions to stabilize energy supply amidst a transitioning power landscape impacted by growing renewable resources.
Original Source: www.microgridknowledge.com
