California Load Management Standards and How They are Expected to Spur Innovation

Commissioner Arthur H. Rosenfeld, Ph.DCommissioner Arthur H. Rosenfeld, Ph.DCalifornia Energy CommissionCalifornia Energy Commission

Berkeley Wireless Research CenterBerkeley Wireless Research CenterGranlibakken, CA --- June 1, 2009Granlibakken, CA --- June 1, 2009

Demand Response Event on 7/9/200828 Sites Shed 2.2MW

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Two Energy Agencies in California

• The California Public Utilities Commission (CPUC) was formed in 1890 to regulate natural monopolies, like railroads, and later electric and gas utilities.

• The California Energy Commission (CEC) was formed in 1974 to regulate the environmental side of energy production and use.

• Now the two agencies work very closely, particularly to delay climate change.

• The Investor-Owned Utilities, under the guidance of the CPUC, spend “Public Goods Charge” money (rate-payer money) to do everything they can that is cost effective to beat existing standards.

• The Publicly-Owned utilities (20% of the power), under loose supervision by the CEC, do the same.

3

California Energy Commission Responsibilities

Both Regulation and R&D

• California Building and Appliance Standards– Started 1977– Updated every few years

• Siting Thermal Power Plants Larger than 50 MW• Forecasting Supply and Demand (electricity and fuels)• Research and Development

– ~ $80 million per year• CPUC & CEC are collaborating to introduce communicating electric

meters and thermostats that are programmable to respond to time-dependent electric tariffs.

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California’s Energy Action Plan

• California’s Energy Agencies first adopted an Energy Action Plan in 2003. Central to this is the State’s preferred “Loading Order” for resource expansion.

1. Energy efficiency and Demand Response2. Renewable Generation,3. Increased development of affordable & reliable conventional

generation4. Transmission expansion to support all of California’s energy

goals.

• The Energy Action Plan has been updated since 2003 and provides overall policy direction to the various state agencies involved with the energy sectors

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Per Capita Electricity Sales (not including self-generation)(kWh/person) (2006 to 2008 are forecast data)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,00019

60

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

United States

California

Per Capita Income in Constant 2000 $1975 2005 % change

US GDP/capita 16,241 31,442 94%Cal GSP/capita 18,760 33,536 79%

2005 Differences = 5,300kWh/yr = $165/capita

6

Annual Energy Savings from Efficiency Programs and Standards

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,00019

7519

7619

77

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

GW

h/ye

ar

Appliance Standards

Building Standards

Utility Efficiency Programs at a cost of

~1% of electric bill

~15% of Annual Electricity Use in California in 2003

7

8

Impact of Standards on Efficiency of 3 Appliances

Source: S. Nadel, ACEEE,

in ECEEE 2003 Summer Study, www.eceee.org

75%60%

25%20

30

40

50

60

70

80

90

100

110

1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006Year

Inde

x (1

972

= 10

0)

Effective Dates of National Standards

=

Effective Dates of State Standards

=

Refrigerators

Central A/C

Gas Furnaces

SEER = 13

9

Source: David Goldstein

New United States Refrigerator Use v. Time and Retail Prices

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002

Ave

rage

Ann

ual E

nerg

y U

se(k

wh)

or P

rice(

$)

0

5

10

15

20

25

Ref

riger

ator

vol

ume

(cub

ic fe

et)

Energy Use per Refrigerator(kWh/Year)

Refrigerator Size (cubic ft)

Refrigerator Price in 1983 $

$ 1,270

$ 462

~ 1 Ton CO2/year~ 100 gallons Gasoline/year

10

Annual Energy Saved vs. Several Sources of Supply

Energy Saved Refrigerator Stds

renewables

100 Million 1 KW PV systems

conventional hydro

nuclear energy

0

100

200

300

400

500

600

700

800

Bill

ion

kWh/

year

= 80 power plants of 500 MW each

In the United States

11

Value of Energy to be Saved (at 8.5 cents/kWh, retail price) vs. Several Sources of Supply in 2005 (at 3 cents/kWh, wholesale price)

Energy Saved Refrigerator Stds

renewables

100 Million 1 KW PV systems

conventional hydro

nuclear energy

0

5

10

15

20

25

Bill

ion

$ (U

S)/y

ear i

n 20

05In the United States

12

Air Conditioning Energy Use in Single Family Homes in PG&E The effect of AC Standards (SEER) and Title 24 standards

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1975 1980 1985 1990 1995 2000 2005 2010 2015

Ann

ual k

Wh

per n

ew h

ome

for c

entr

al A

C

If only increases in house size -- no efficiency gainsChange due to SEER improvementsSEER plus Title 24

13

0

20

40

60

80

100

120

3 Gorges三峡 Refrigerators冰箱

Air Conditioners 空调

TWh

2000 Stds

2000 Stds

2005 Stds

2005 Stds

If Energy Star

If Energy Star

TWH

/Yea

r

1.5

4.5

6.0

3.0

7.5

Valu

e (b

illio

n $/

year

)

Comparison of 3 Gorges to Refrigerator and AC Efficiency Improvements

Savings calculated 10 years after standard takes effect. Calculations provided by David Fridley, LBNL

Value of TWh

3 Gorges三峡

Refrigerators 冰箱

Air Conditioners空调

Wholesale (3 Gorges) at 3.6 c/kWh

Retail (AC + Ref) at 7.2 c/kWh

三峡电量与电冰箱、空调能效对比

标准生效后， 10年节约电量 14

Annual Energy Savings from Efficiency Programs and Standards

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,00019

7519

7619

77

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

GW

h/ye

ar

Appliance Standards

Building Standards

Utility Efficiency Programs at a cost of

~1% of electric bill

~15% of Annual Electricity Use in California in 2003

15

California IOU’s Investment in Energy Efficiency

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,00019

76

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Mill

ions

of $

2002

per

Yea

r

Forecast

Profits decoupled from sales

Performance Incentives

Market Restructuring

Crisis

IRP2% of 2004

IOU Electric Revenues

Public Goods Charges

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Demand Response

In 3 cool seasons CA peak is 40 GW, but a/c adds 20 GW in summerSo we want demand response to price. So all customers will receive Communicating interval meters, 10 million of them Dynamic pricing: TOU summer afternoon + “critical peak” 10 days/yr Programmable communicating thermostats and controls. Cost premiums are small: $20-30 for meters, $20-30 for thermostats

TOU and dynamic pricing will change the design of buildings – promote thermal storage and the use of thermal mass, white roofs, etc. If you announce dynamic prices today, architects will design better buildings tomorrow.

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California is VERY MUCH a Summer Peaking Area

California Daily Peak Loads -- 2006

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06

MW

Residential Air Conditioning

Commercial Air Conditioning

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Critical Peak Pricing (CPP)with additional curtailment option

0

10

20

30

40

50

60

70

80

Pric

e (c

ents

/kW

h)

Standard TOUCritical Peak PriceStandard Rate

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Extraordinary Curtailment Signal, < once per year

CPP Price Signal10x per year

?

Potential Annual Customer Savings: 10 afternoons x 4 hours x 1kw = 40 kWh at 70 cents/kWh = ~$30/year

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Just some of the proposed systems for PCTs and demand response in the residential and small commercial/industrial sectors.

Source: Pat McAuliffe, pmcaulif@energy.state.ca.us

Possible Strategies to Reduce Electricity Sector Carbon Emissions in California, ignoring ramp up times and other implementation issues -- The ELECTRICITY Perspective

240,000

260,000

280,000

300,000

320,000

340,000

360,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

GW

H

Triple EE Programs

Doubling Standards

20% Renewables

More Efficient Combustion

Less or Cleaner Coal

21

Source: Pat McAuliffe, pmcaulif@energy.state.ca.us

75

85

95

105

115

125

135

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mill

ion

Met

ric T

ons

of C

O2

eq.

Triple EE Programs

Doubling Standards

20% Renewables

More Efficient Combustion

Less or Cleaner Coal

Possible Strategies to Reduce Electricity Sector Carbon Emissions in California, ignoring ramp up times and other implementation issues -- The CARBON Perspective

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Load Management Standards

“Cost effective programs that result in improved utility system efficiency, reduced need for new electricity generation, reduced fuel consumption, and lower long-term economic and environmental costs.”

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Current LMS Proceeding(08-DR-01)

• Assess which rates, tariffs, equipment, software, protocols, and other measures would be most effective in achieving demand response, and

• Adopt regulations and take other appropriate actions to achieve a price responsive electricity market.

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Proceeding History (08-DR-01)

• IEPR 2007: Proceeding Recommendation– Coordinated with CPUC & ISO

• January 2008: OII/IOR 08-DR-01• March 2 – July 10, 2008: LMS Workshops

– Scoping, Smart Grid, Advanced Metering Infrastructure, Rates, Technology, and Education

• November 2008: Draft Proposed LMS• December 10, 2008: Draft LMS Workshop• January 2009: All Comments in on Draft• January – March 2009: Stakeholder Meetings

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Successful Statewide DR Requires:

• Advanced Metering Infrastructure (AMI)• Time-Varying and Dynamic Rates• Information Model • Common Signaling Infrastructure (CSI)• Programmable Communicating Devices

(PCDs)

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“Programs” vs. Direct Demand Response

• Historically, utilities have offered special programs geared toward direct control of loads

• Direct Demand Response takes place without the need to sign up for any special program

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Load Management Standards Guidelines

1. Customers should determine which loads are shed first

2. Demand Response capability should be available to every customer in the state

3. Customers should not have to participate in utility DR programs

4. Standards should not hinder customer participation in utility DR programs

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Load Management Standards Guidelines (con’t)

5. Standards should leverage market forces and economies of scale

6. Standards should be technology neutral7. Standards should set minimum technology

functional requirements; e.g. an expansion port on every appliance or an override button for thermostats

8. Customers should have no-cost access to “near-real time” information

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Proposed Load Management Standards

• LMS -1: Advanced Metering Infrastructure (AMI) Schedule– Purpose: To require all utilities to prepare a plan for

deploying advanced meters to all customers within their service territory.

• LMS-2: Dynamic Electricity Rates– Purpose: To require utilities to develop and offer rate

designs that support the state’s objectives of providing cost-based price signals.

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Proposed Load Management Standards

• LMS-3: Statewide Time-Differentiated Rate Broadcast– Purpose: To establish a standard method for

transmitting current rate and reliability information to customers.

• LMS-4: Home Energy Rating System Information– Purpose: To require utilities to provide their

customers with information about the Home Energy Rating System, designed to promote the use of in-home energy audits and subsequent cost effective energy efficiency improvements.

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Proposed Load Management Standards

• LMS-5: Existing Building Peak Energy Efficiency Improvements– Purpose: To require utilities to develop and expand

programs to encourage cost effective energy efficiency improvements in existing building stock within their service territory.

• LMS-6: Programmable Communicating Device (PCD) Program– Purpose: To require utilities to offer a discounted

programmable communicating devices (PCD’s) to customers equipped with advanced meters.

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Proposed Load Management Standards

• LMS-7: Customer Access to Meter Data– Purpose: To ensure customers have access to

information related to their energy usage on a “near real time” basis.

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LMS Will Spur Innovation

• Goal #1: Actionable information from interval meters should be available on any display device from any physical channel and device, e.g., via cell phones, broadcast digital radio (RDS) and TV (DTV), the Internet, etc.

• Goal #2: Time-differentiated energy prices create a need for products that automatically act as an energy management proxy to meet individual consumer preferences.

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LMS Will Spur Innovation

• Goal #3: Traditional consumer devices such as thermostats and appliances will need to “hear” price and grid-event information from utilities and third parties through a variety of physical channels and merge that information with consumer preferences, local weather, existing personal schedules, existing sensors from security & other systems that may come from local sources, from the web, and will be continuously changing.

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LMS Will Spur Innovation

• Goal #4: Appliances, thermostats, etc., can’t be stranded as technology changes. Simple pathways must be found to upgrade these devices through low-technology actions such as the standard information port being promoted by the U-SNAP Alliance.

• http://www.usnap.org/U-SNAPOverview.pdf

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U-SNAP Alliance

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LMS Will Spur Innovation

• Goal#5: Appliances, thermostats, etc., must be able to move to new locations with their owners and still receive price and event information from their new utility and/or third-party providers (Common Information Model).

• Goal #6: Time-differentiated prices will create a need for products that automatically act as energy management proxies for consumers.

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Wireless Can Help

• Energy-related communications installations must be simple, low cost & low-energy/power– Ad hoc self-organizing networks (no manuals)– Energy/power scavenged from environment

• Must interface & leverage legacy networks, e.g., security, entertainment, home LAN, …

• Must facilitate “operational efficiency” through the seamless exchange of information from all local and global network resources

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