Demand Response in New York State

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Demand Response in New York State

• Northwest Power and Conservation Council DR
  workshop
• February 24, 2006

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New York and Neighbors
Hydro Quebec 35,137 MW
ISO - New England 25,348 MW
IMO 25,414 MW
New York ISO 30,983 MW
PJM / PJM West 63,762 MW
Peak Load in Megawatts
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The NY Marketplace

• Deregulated since late 90s
• Nearly all generators are owned by IPPs
• NYISO administers capacity and energy markets
• Energy is bought and sold on a day ahead basis at
  zonal hourly prices (LMP)
• The highest priced bids accepted in a zone for
  each hour set the price

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New Yorks Energy Market
Bilaterals 50
NYISO Day-Ahead Market 45 50
Real Time lt5
Bilateral Contracts 50 Day-Ahead Market 45 -
50 Real-Time Market lt5 100
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New Yorks Capacity Market

• Load Serving Entities must procure 118 of the
  load they serve This covers the reserve margin
  of 18
• Capacity beyond that is assigned a decreasing
  value as supply becomes more abundant
• This value is set by a demand curve and funded
  through uplift (socialized)

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The value of DR

• DR provides the same benefit to the system as
  generators, so should be given the same value
• This holds true for both capacity and energy
• DR acts like a peaking plant, and should be
  valued as such for both capacity and energy
  (peaking plants typically only run when energy is
  expensive)

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DR Program Options

• Capacity Based
• Could be combined with energy based program
• Could be called either for reliability or when DR
  is more economic than generated electricity
• Performance should be mandatory to justify
  capacity payments
• Energy Based
• Can be voluntary if capacity is not valued
• Could be called either for reliability or when DR
  is more economic than generated electricity
• If scheduled economically, performance should be
  mandatory

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New Yorks Capacity Program

• NY has a capacity based program where DR is bid
  into the same capacity market as generators
• Resources are paid LMP for energy (not less than
  500/MWh)
• DR is penalized for underperformance as a
  generator would be
• Resources are called for grid reliability, not
  price mitigation

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New Yorks Emergency DR Program (Energy Based)

• Resources are paid LMP for energy (not less than
  500/MWh)
• Resources are called for grid reliability, not
  price mitigation
• Response is voluntary
• Participants are often in this program to be good
  citizens rather than for the money

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New Yorks Day Ahead DR Bidding Program

• DR bids an energy price at which they are willing
  to load-shed
• Bids are entered in competition with generators
• If DR bids are less than the market clearing
  price, they are selected to run and receive the
  clearing price, just as a generator would
• This provides the market with the option of
  choosing DR instead of generators when DR is more
  cost effective

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DR Safety Net or Market Efficiency?

• Both DR can serve as a safety net to avoid
  brownouts or blackouts, but
• Why schedule a generator at 300/MWh if DR will
  provide a like resource for 200/MWh?
• DR could be integrated into the market to compete
  with generators on both a capacity and energy
  basis for either emergency or economic dispatch

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The System Benefit

• In addition to the reliability benefit, DR can
  result in ratepayer savings
• If DR is more cost effective than the more
  expensive generators, rate payers pay less
• DR empowers end users to act like a resource,
  giving them market power
• DR is more than just an insurance policy, its
  an alternative to generation and can delay TD
  upgrades

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Questions/Comments?Chris SmithNYSERDA518-862-1
090 ext. 3360