Lack of uniformity in standards inhibiting demand response growth in North America


Washington, DC, U.S.A. — (METERING.COM) — October 17, 2007 – The lack of uniformity in metering and communication standards, which requires service providers and customers to develop different systems to participate in multiple markets, has been identified as one of the key barriers to expanded demand response in North America’s electricity markets.

In a new report released by the ISO/RTO Council (IRC) assessing the value that North America’s 10 Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) bring to the electricity markets they administer, it is noted that the lack of standards in existing metering and associated information management systems for data exchange limits the scope and scale of economies that are possible with demand response. Because utilities have developed their metering and consumption data retrieval systems independently and over different time spans and generations of technologies, the sector’s devices and systems cannot communicate with one another and are not readily amenable to communicating with new, more robust systems, such as those that are Internet-based. In addition, ISOs and RTOs operate their own data collection and communication systems.

To fully integrate demand response into ISO and RTO market operations, inbound and outbound data retrieval is required, in some cases very frequently. The ISOs and RTOs are working together to develop standards for lower cost open architecture technology for measuring demand response to enable more small demand response resources to participate in the ISO and RTO markets.

The report states that more than 23,000 MW of demand response are now participating in North American ISO and RTO markets, representing 4.5 percent of their combined electricity demand. Researchers have found that demand response of about 5 to 15 percent of peak demand should result in an efficient balance between building new supply resources and reducing demand. Several of the North American markets operate within that range, including New York ISO, New Brunswick, the Midwest ISO, Ontario, and Alberta, while the other regions are nearing that range. As more intermittent resources such as wind power are added to the grid, the need for demand response resources and the balancing capabilities of regional grid operators will become even greater.

Alberta, New England, New York, Ontario, PJM, and ERCOT support demand response by enabling consumers to directly compete in the markets against generating resources and by managing programs that provide economic incentives for participants to shift their electricity consumption to off-peak hours. California, the Midwest, the Southwest, and New Brunswick support significant state- and province-funded and utility-implemented demand response programs.

The report notes that the ISOs and RTOs have accomplished much in fostering demand response to improve the performance of electricity markets at both the wholesale and retail levels, but more must be done to ensure that the full force of customer demand for electricity is exerted consistently and in a sustainable manner in these markets.

The second key barrier to demand response growth is the lack of uniformity in protocols to measure and verify the customer baseline load (CBL), which is required to establish the load impacts of demand response. The ISOs and RTOs are collaborating with other stakeholders and to define more standardized M&V approaches, which should better enable demand response actions by third parties, load aggregators and others across multiple markets.