Press release: Settlement agreement to expand use of demand response in California
California Public Utilities Commission has opportunity to approve a plan to drive deployment of cost-effective demand response to meet system needs and renewable energy goals.
August 5, 2014
NEWS RELEASE: Settlement agreement to expand use of demand response in California
California Public Utilities Commission has opportunity to approve a plan to drive deployment of cost-effective demand response to meet system needs and renewable energy goals
San Francisco, CA — Yesterday, the Clean Coalition and a broad range of stakeholders filed a settlement agreement with the California Public Utilities Commission (CPUC) that recognizes increased value of demand response and supports a cost-effective transition towards more renewable energy.
The Clean Coalition worked with the California Independent System Operator (CAISO), California’s investor owned utilities, the Environmental Defense Fund, ratepayer advocates, and others on the settlement agreement, which acknowledges that existing market and regulatory mechanisms fail to monetize all benefits load modifying demand response provides to consumers, such as deferring distribution investments and reducing the need for flexible capacity.
“As California progresses towards its 2020 renewable energy goals, it is critical that demand response providers have access to compensation for meeting system needs,” said Stephanie Wang, the Clean Coalition’s Policy Director. “This settlement recognizes that we need smarter market and regulatory mechanisms to drive the deployment of cost-effective demand response.”
Use of load modifying demand response is one of the least expensive ways California can address system balancing issues as the State approaches its 33% by 2020 Renewable Portfolio Standard. A study by the Clean Coalition determined that load modifying demand response can minimize the steep ramps highlighted in CAISO’s “Duck Chart” and reduce the need for additional flexible capacity from new gas plants.
As part of this settlement agreement, a working group will be established to guide full monetization of load modifying demand response. The working group will provide its recommendations in time to inform the demand response roadmap that will be developed in 2015.
While this settlement does not set new deployment goals for demand response, parties agreed to the parameters of a study that will determine firm goals in the near future. Future goals will be designed to meet system needs and state objectives, rather than being based solely on a percentage of peak needs as has been done historically. Furthermore, this study will examine the potential to integrate demand response with other distributed energy resources, such as electric vehicles and solar, to meet a broader range of system needs.
Until future goals are determined, this settlement maintains a floor for demand response at 5% of the sum of the peak demands for all three investor owned utilities by 2020. Based on load impact reports filed in April 2014, the utilities are collectively at 3.9%. Collectively, they will need to bring another 640 megawatts of demand response online by 2020 to meet 5% of current projections for peak needs.
This settlement agreement addresses Phase Three of CPUC Rulemaking 13-09-011, which was opened in September 2013 to enhance the role of demand response in meeting the state’s resource planning needs and operational requirements. While the agreement offers collective recommendations from involved parties, the CPUC is not bound to the settlement terms. A CPUC decision on the settlement agreement is expected in December 2014.
About the Clean Coalition
The Clean Coalition is a nonprofit organization whose mission is to accelerate the transition to renewable energy and a modern grid through technical, policy, and project development expertise. For further information on the Clean Coalition, please visit www.clean-coalition.org.