Blogs The new shape of the world: Net Demand

Monday, December 1, 2014

X-posted from the Power Markets blog.

I had the honor of speaking at the annual conference of the National Association of Regulatory Utility Commissioners (NARUC).  I spoke on a panel about “lessons learned from Germany.”

It was a lively and informative conversation, with input from Lola Infante of EEI, Julia Hamm of SEPA, and Jurgen Weiss of Brattle Group.

While many lessons could be learned from Germany’s energy transition, given my limited time, I focused on one particular lesson – the concept of net demand.

Traditionally, the job of grid operators is to follow demand and make sure a set of dispatchable power plants are deployed to meet it.  Demand was not controllable, so supply must adjust to meet it.

But wind and solar power are changing that job (as is demand response*).

Wind and solar are not controllable by generators, at least in the sense that they can’t be turned on or up as needed.**

So grid operators now look at the concept of “net demand,” where wind and solar are subtracted from the overall “gross” demand.  What is left over is what they now operate for, deploying dispatchable plants to meet the residual load.

This issue is acute now in Germany, where renewables have accounted for about 70 percent of load at times.  It is getting to be an issue in California, which has seen days with over 30 percent wind and solar.  CAISO has begun reporting net demand in real time.

The net demand curve can be a dramatically different shape than the gross demand curve, with big implications for daily operations, long term planning, and the money flows in a power market.

To hear the audio of my talk along with the slide deck, click on the movie below.  Enjoy, and feel free to pass it along or send me comments.

*  Demand response allows grid operators to control power demand, by reducing it, shifting it to other times, or even increasing it.  Here is more info.

** They can in fact be turned down, and grid operators are now using them to provide down-ramping services.  Kind of like demand response for generators.