California Public Utilities Commission staff detailed their proposal to increase customers’ ability to help balance the grid during energy spikes by tying use of their connected electric vehicles, solar rooftops, batteries, and appliances to real time pricing. That is expected to lead to more attractive incentives to shift and reduce demand, save customers money on utility bills, minimize the need for system upgrades, and cut greenhouse gases from the electricity sector.
The CPUC’s Energy Division released a White Paper last month on the future of distributed energy resources in California’s power system and the need for demand flexibility. It is linked to a new rulemaking launched by the full commission last Thursday. The rulemaking will aim to significantly increase consumers’ role in the operation of the state’s grid by altering their electricity use during peak periods in response to higher price signals or other incentives. Staff’s demand flexibility rate proposal is expected to provide the framework.
Scaling demand flexibility from customer EVs and air and water heaters and coolers will improve electric system reliability, accelerate the state’s net zero emissions goal, and go “a long way to minimizing the cost of service” of a grid stressed by higher electricity demand from rising electrification and renewables, said the CPUC’s Demand Response Team Manager Gupta Aloke. He spoke during the commission’s July 21 workshop on staff’s Demand Flexibility White Paper.
“Supply has always met demand, but we are flipping the tables to have clean energy demand be flexible to meet supply needs,” said the CPUC’s Jean Lamming. Paying customers real time prices for altering their energy use to protect the grid “ties customer costs to what is really happening on the grid,” she added.
Rising renewable resources, including from behind-the-meter solar and batteries, are surging and so is demand on the grid from electric vehicles and more electric appliances. That will be very problematic for the electricity system if unmanaged.
In 2020, an average 4.3 GWh a day of excess solar and wind resources were curtailed, and that is estimated to rise to 15 GWh if unmanaged, Lamming said. But these “challenges looked at another way present a massive potential opportunity” when demand response is flexible and managed, she added. That includes aligning the projected 5.5 GWh demand from electric light duty vehicles with renewable surges, and enabling customers and aggregators to send energy stored in the vehicle batteries to the grid as instructed by the system operator.
Current utility rate structures are impeding demand flexibility that could improve grid reliability, as well as lower system and customer costs and greenhouse gases. Time-of-use rates “are quite a blunt instrument” that do not help maximize customer energy efficiency, according to Lamming. She pointed to San Diego Gas & Electric, noting that more than 50% of the highest prices were outside its TOU rates.
The staff’s model, called California Flexible Unified Signal for Energy, or CalFUSE, rolls in facets of load management entailed in various proceedings. It includes six key policy elements that will be available on an opt-in basis.
Staff’s comparison of real time flexible CalFUSE rates with Southern California Edison’s time-of-use pricing found the former resulted in much higher bill savings and greater greenhouse gas reductions. SCE customer savings under time-of-use were about $447 a year while they were estimated at a $919 when applying the CalFUSE model. Carbon pollution fell under SCE’s time-of-use rates by 0.25 metric tons compared to 0.36 metric tons under CalFUSE, said Achintya Madduri with the CPUC’s retail rate division.
He also pointed to simulated savings from another transactive system conducted by the Pacific Northwest National Lab for ERCOT. It found dynamic flexible rates lowered peak demand by 15% and load swings by 44%, saving up to $5 billion in energy costs and deferred system upgrades.
The commission has not yet incorporated the staff’s white paper strategies into its new rulemaking, but likely will do so as part of its scoping plan.