Demand Response Opportunities for Electric Vehicle Charging Stations. April 2014

Transcription

1 Demand Response Opportunities for Electric Vehicle Charging Stations April 2014

2 SemaConnect is in the early stages of evaluating demand response opportunities for its commercial plugin electric vehicle charging stations. The purpose of this presentation is to frame a discussion around key demand response concepts and options for electric vehicle supply equipment (EVSE). The demand response opportunity arises from the ability of SemaConnect s electric vehicle (EV) chargers to modulate charging rates up and down in response to external control and/or price signals. Demand response provided by EVSE is still uncommon. The first EVSE play is residential dynamic electricity pricing programs available at a handful of utility companies. Additional opportunities will emerge, with nudging from advocates and regulators, as lessons from pilot studies are publicized, communication protocols evolve and industry confidence builds. There is no to need to wait for demand response programs that specifically invite commercial EVSE loads. EVSE can participate in certain existing market programs, although more needs to be learned. This examination is a first step toward consideration of points of possible market entry. 2

3 Demand response can be a confounding concept because it refers to both an action (curtailed electric usage) and a quantity (amount curtailed), which is not directly measurable. Changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized. It is expected that demand response programs will decrease electricity consumption or shift it from on-peak to off-peak period. Federal Energy Regulatory Commission Amount curtailed Peak electricity use normally occurs on hot weekday afternoons. Source: ISO-NE 3

4 Changes in the electric power sector have created an opportunity for demand response to help meet electric system reliability needs. Experience with EVSE as a demand response resource is limited to a few small pilot projects. 1 Utility Scale Renewables Increasing amounts of renewable generation with intermittent output, particularly grid-scale wind and solar, are coming online. Renewables will represent 32% of new generation by Distributed Generation Increased penetration of distributed energy resources such as rooftop solar are altering electric load profiles in Southern California. Greater penetration of solar, EVSEs and other distributed energy resources are anticipated in more regions. 3 Fossil Fuel Units Offline Environmental Protection Agency regulations are resulting in the early retirement of coal plants that are too costly to retrofit with air pollution controls. California is leading the way among states by taking certain once-through-cooling plants (steam generators) that cannot comply with water quality regulations out of service. 4

5 s 1990s Declining electric load factors due to rapid adoption of air conditioning. High peak demands relative to average demand is increasing electricity cost and reducing reliability. Utilities introduce first generation of DR programs to provide electric load reductions during system emergencies. These situations include needle peaks and T&D distribution system congestion in locations. Electric industry restructuring ends many vertical utility monopolies, and DR programs are abandoned. The legal framework for wholesale DR emerges. Utility DR programs are reintroduced. This is the advent of DR 1.0. Energy Policy Act requires changes to wholesale power markets that put DR on an equal footing with generation. Regulations establish specific rules and payment structures for DR. DR 2.0 brings enhanced communication automation making DR feasible for more kinds of resources. Utility and wholesale DR programs expand. DR 3.0 and smart grid introduce twoway communications and intelligent load management to the distribution network. 5

6 There are two principle categories of demand response dispatchable and non-dispatchable. EVSE loads can potentially participate in either type of program. Dispatchable Curtailment of electric usage to meet utility or grid or emergency situations. Equipment (telemetry, communication, control) must be installed. Automatic or semi-automatic response to curtailment signals. Reliability (emergency) DR is dispatched to meet system reliability needs Response required within 1-3 hours of notification Programs focused on geographic areas with reliability problems Dispatchable DR Economic DR bid into day-ahead market Resources that clear the day-ahead market may be dispatched into the realtime energy market Demand Response Ancillary Services Grid balancing services historically provided by fossil fuel generators Response required within seconds to one hour of notification DR provides only a small percent of this resource now, but this will increase. Non- Dispatchable DR Energy Price Time of use rates, Critical peak pricing, Special EVSE rates (mainly residential) More special rates are expected in the future While dynamic rates are available for both residential and commercial customers, EVSE rates have been residential only Non-dispatchable DR providers have the option to reduce electric use based on time varying prices that reflect the cost of service at different times. 6

7 EV Opportunities Changes in the power industry (generation mix, environmental regulations, technology) are creating a push for demand response that can serve moment-to-moment grid operational needs. Fossil-fired generators used to provide all necessary ancillary services. Output from these resources was ramped up and down to balance the grid nearly instantaneously. Demand response resources with certain operating characteristics are being coaxed by changes in market rules into supplying ancillary services. New rules reward demand resources with certain operating characteristics such as greater reliability, greater availability and faster response times. Ancillary services markets are compensating providers with higher payments than in the energy market that DR normally participates in. Ancillary services pilots using DR are being conducted in Texas, Hawaii and Florida. Utilities are experimenting with near real time load balancing by controlling end uses such as water heaters. Ancillary services support the reliable operation of the transmission system as it moves electricity from generating sources to retail customers. Synchronized (spinning) reserves. Supply electricity when the grid has an unexpected need for more power on short notice (contingency situation). Regulation. Corrects for short term changes in electricity use that could affect the stability of the power system. (This is part of normal system operations.) Source: PJM Interconnection 7

8 EV Opportunities MW There are several forms of ancillary services used to balance the grid as part of normal operations and to address contingency conditions. DR unsuitable Response Speed Duration Cycle Time Elapsed time between notification and dispatch Avg and Max $/MW Frequency Regulation Regulation Reserve <30 seconds 4 seconds to 5 minutes seconds to minutes minutes seconds to minutes minutes $35-$45 $200-$400 Spinning Reserves Non-spinning Reserves Supplemental Reserves seconds to < $7 minutes minutes hours to days $100-$ to 120 $3-$6 <10 minutes minutes hours to days $100-$400 $0.4 - $2 <30 minutes 2 hours hours to days $2-$36 Source: Synapse Energy Economics for RAP,

9 EV Opportunities Commercial EVSE can potentially participate in both wholesale and retail demand response programs. These markets are structured and regulated differently, as illustrated below for California. FERC regulates independent system operators and regional transmission operators. These ISOs and RTOs file individual tariffs with FERC. CAISO s DR program rules are based on FERC tariffs. California ISO Programs (Proxy Demand Response, Reliability Demand Response). State regulatory commissions govern utility operations. Utilities, including those with statewide DR programs, file individual program tariffs with their respective commissions. PG&E s DR program rules and timevarying rates are based on California PUC tariffs PG&E programs (Demand Bidding, Aggregator Managed Portfolio, Peak Day Pricing). 9

10 EV Opportunities The Federal Energy Regulatory Commission regulates the nation s Independent System Operators and Regional Transmission Operators. Together they serve two-thirds of all electric customers. The main difference between ISOs and RTOs is that the latter have a stronger focus on grid reliability. The terms are often used interchangeably. 10

11 EV Opportunities FERC has been a strong proponent of demand response, creating rules intended to provide a level playing field with generation resources. This allows generators and demand response to directly compete on price in market actions. Each ISO/RTO (except ERCOT) files its own program tariffs with FERC that govern DR program rules and compensation to providers. Three ISOs/RTOs have capacity markets (ISO New England, New York ISO and PJM) that pay incentives to attract investment and stand ready to provide energy into the market. The remaining regions have energy-only markets that pay for actual energy provided. ISOs/RTOs do not correspond to state boundaries; some are single-state and some are multiple-state. There are significant differences between ISOs/RTOs and within individual RTOs. ISO New England includes the six northeast states and is fairly cohesive. The utilities in each member state administer the ISO s programs (rather than their own). These states have a tradition of working collaboratively on energy issues. The 13 PJM states have almost no history of collaboration. Some are very active in demand response and others are coal producing states skeptical of DR. The Midwest ISO has demand response programs, but has not dispatched DR in seven years. 11

12 Public utility commissions regulate utility demand response programs. PUC support for demand response varies widely. Even states with supportive PUCs have been known to have legislatures roll back policies. Most states have independently owned electric utilities that are heavily regulated by state commissions. Vermont created a standalone state efficiency utility that administers the state s DR programs. Broader DR participation is being enabled by smart grid, automated metering infrastructure (AMI) and net metering (two way power flow). Regulators in many states have transitioned individual utility programs into statewide programs to improve program efficiency, quality and evaluation. These programs are typically still administered by the separate utilities. Utility DR programs are becoming more integrated with their respective ISO/RTO programs. The northeast states administer ISO-NE s programs. Utilities in other states still develop and implement programs to meet their own needs. 12

13 Demand response is procured in various ways, each with its own rules and forms of compensation to providers. ISO/RTO Buyers Utility Buyers Auctions Energy Markets DR Contracts Peak Rates DR resources are bid into the market and compete on price against offers for generation. Forward capacity markets (ISO-NE, PJM, NYISO) provide DR sellers both capacity and energy payments. Energy only markets (ERCOT, CAISO, MISO, SPP) provide only energy payments. Includes energy and ancillary services markets. Day-Ahead Market: DR is bid into the Day Ahead market. Real Time Market: Bids that clear the Day Ahead market are dispatched into the real time market, as needed, the following day. DR buyers include utilities, ISOs/RTOs and DR aggregators. DR sellers include resource owners and DR aggregators. Buyers and sellers enter into contracts that specify the amounts of DR, operating characteristics and delivery schedules. Utility rates must be approved by state public utility commissions. This is the simplest option for DR sellers. Does not yet address commercial EVSE. 13

14 Typically In-house Typically In-house Typically In-house Typically In-house Typically In-house Typically In-house The demand response ecosystem is comprised of DR buyers, DR sellers, regulators and companies that provide services, software and hardware. Utilities DR Buyers DR Sellers ISO/RTO Aggregators Customers Aggregators FERC State Commissions Tariffs Tariffs DR Aggregators Integrators Consultants Outsourced Services As permitted As permitted As permitted Loads Aggregated Aggregate loads Automation Communication Devices T&D infrastructure 14

15 The largest category of demand resource service providers is DR aggregators, also known as curtailment service providers. Aggregators are third-party entities that act as an intermediary between the owner of the DR and buyers. They are responsible for recruiting program participants, installing necessary equipment and measurement and verification required for settlement (performance based). DR aggregation is a competitive business marked heavy costs for grid connection, telemetry and controls. EnerNoc, Comverge, Constellation are among the largest aggregators. There has been industry consolidation in this sector. NRG acquired Curtailment Service Providers (2013). Johnson Controls purchased Energy Connect (2011). Constellation purchased CPower (2010). The potential revenue stream to aggregators must justify initial cost. All Demand Other response DR aggregators Services will remain two-thirds of the market 15

16 In 2011, 80 entities in the U.S. had demand response programs (NERC). DR capability rose from 53 GW in 2010 to 72 GW in 2013, which represents 9% of peak demand (FERC). Wholesale market DR grew 26% over 2010 to 2012, due in large part to PJM and MISO activity. ISO-NE has an active DR market, but the northeast states are smaller. ERCOT is poised for rapid growth in DR due to changes in market rules motivated by system reliability concerns. The total market size for the DR value chain will be $6 billion in five years. DR Capability Total DR Capability by Sector 72, est Source: FERC 16

17 Dispatchable DR programs offer a potential near term opportunity for commercial EVSE charging. Dispatchable DR Demand Response Non-Dispatchable DR Dispatchable DR programs are available in both retail (utility) and wholesale (ISO/RTO) markets. Reliability (emergency) Economic Ancillary Services EVSE loads have not been specifically targeted or marketed for existing dispatchable DR programs. EVSE charging loads would need to be aggregated to participate. It is not clear whether any commercial EVSE loads are participating in ISO/RTO markets outside of pilots; it appears that there is little presence to date. Planned changes in consumption that the consumer agrees to make in response to directions from someone other than the customer The decision to reduce load can be in response to acceptance of the consumer s bid to sell its demand reduction at a price in an organized market or to a retail provider (utility). Federal Energy Regulatory Commission 17

18 The current EVSE opportunity for non-dispatchable DR is time-varying residential electric rates. Demand Response This is a self-regulating form of DR that includes dynamic pricing, special EVSE tariffs and managed charging. Dispatchable DR Non-Dispatchable DR Special EVSE rates are offered by utilities in several states today, and will be offered by more in the future. Existing special rates for EVSE do not include commercial charging station loads. Programs and products in which the customer decides whether and when to reduce consumption based on rate design that changes over time. Federal Energy Regulatory Commission 18

19 Building out EVSE charging infrastructure can be expensive and risky without a careful analysis of market forces and anticipated revenue streams. Demand response presents potential opportunities to improve these economics. Below is a sample of opportunities (there is overlap between categories). Utility pilot programs Austin (Texas) pilot with 10 EVSE charging stations Additional pilots at DTE Energy, PSEG, Dominion, National Grid, Florida P&L, Duke Energy Special EVSE utility rates California utilities (PG&E, SCE, LADWP) Additional states: AK, AZ, GA, IN, HI, KY, MI, NV, OR, TX, VA Wholesale market ISO/RTO PJM: Grid on Wheels pilot with University of Delaware, Honda and NRG ISO-NE: No EVSE loads to date State and local EVSE initiatives San Francisco $5M to support EVSE charging South Carolina subsidization of 80 charging stations Connecticut funding 56 charging stations Joint ventures, collaboratives Lawrence Berkeley Lab: SEEDZ pilot commercial scale EVSE Department of Defense Vehicle to Grid project Grants ARRA funding Idaho National Laboratory 200 fast chargers in 21 cities ARRA funding $115M for public power company partnerships Grants have typically been from states and local government. With the exception of ARRA funding, which is ending, the federal government s emphasis has been to make EVSEs more appealing to customers (e.g., workplace branding, egallon metric to compare cost) rather than through direct incentives. 19

20 The cities with the greatest forecasted EVSE adoption are shown below. Urban concentrations of EVSE reveal only part of the story; demand response is deployed at an increasingly local level to manage specific substations and feeders problems. ISO New England New York ISO California ISO PJM Interconnection ERCOT Source: Deloitte 20

21 Commercial EVSE charging loads are potentially good candidates for existing wholesale market programs. However there is almost no known activity to date. PJM is conducting a pilot project to test the ability of EVSE to serve as a demand resource. ISO New England is not aware of any EVSE loads in its markets, although it would not necessarily know about every aggregated load. There is no readily available information about DR aggregators enrolling commercial EVSE loads their DR programs. Certain ancillary services appear to be a good application for commercial EVSE loads. For regulation, EVSEs can adjust charge rates up or down. They must meet response time requirements (signal to dispatch) and perform for specified durations (15 minutes to 1 hour). For reserves, EVSEs can reduce charging levels nearly instantaneously upon dispatch instruction. The typical required response time is 10 minutes. Commercial EVSE can participate in both regulation and reserve markets at the same ISO/RTO. 21

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