The Value of Demand Response (DR) to Mitigate Wind Integration Costs in a Smart Grid

Abstract

In the last five years the electric grid worldwide has seen increasing amounts of installed wind generation capacity. Over the last five years, North America (USA and Canada) has witnessed wind capacity grow at an annual rate of over 30%. At the same time, increasing investments in smart grid technologies have enabled improvements in energy products such as Demand Response (DR). The utility industry, system operators and regulators are investing heavily to understand and determine the impacts of increasing wind penetration on the power system. As explored below, an often neglected, but important point of interest to the authors has been the effect of increased cycling of large fossil, formerly base loaded power plants due to increasing penetration of variable wind or solar power. Various types of DR programs have been implemented by utilities and system operators and these DR programs may be classified based on the time it takes to call upon a DR event or the energy market that the programs are allowed to participate within. Hence, we may have a “slow” DR that participates in a Day-Ahead market and the events are called upon well in advance. On the other hand, “fast” DR programs would participate in Real-Time and Ancillary Services markets. DR from a power dispatch perspective can be considered a “virtual power plant” providing energy, ancillary service and capacity in energy markets. Energy benefits of DR have been explored extensively, especially in terms of reduced fuel costs due to reduction in demand. In this paper we explore the conceptual use and value of DR in providing benefits associated with reduced damage to a fleet of fossil-fueled power plants if it is used to reduce startups and/or load following/cycling.