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Led by PJM, demand response takes a new tack in Chicago

By: Barbara Vergetis Lundin |

llinois’ regional electric grid operator, along with environmental and consumer advocates, have launched a pilot to demonstrate how demand response can support grid reliability year-round and lower electricity costs for Chicagoans across the board.

The Combined Capacity Asset Performance Project, as the pilot program is called, is a collaboration of PJM Interconnection, the Environmental Defense Fund (EDF), the Accelerate Group, and Citizens Utility Board (CUB), and will show how strategically combining resources can allow demand response to continue to compete, under new performance requirements, with other sources of power.

“Demand response has demonstrated its potential to cut peak electricity demand, help balance the grid, and save customers money. The project offers an inventive way to preserve and grow this valuable resource in the PJM market,” said Andrew Barbeau, president of the Accelerate Group and senior clean energy consultant for EDF. “The collaboration will serve as a strategic model for buildings, which will be able to combine their demand response potential to enter the market where they wouldn’t be able to participate on their own.”

Each year, PJM manages a capacity auction to buy enough power supply resources to meet the highest forecasted peak energy demand for the area it serves, including all or parts of 13 states and the District of Columbia. In PJM’s wholesale power markets, demand response resources compete directly with other forms of energy. Demand response participants can bid into the auction, offering the amount of electricity they commit to reducing and receiving the same payments as power companies to meet electricity needs.

Under PJM’s new performance requirements, qualifying sources of energy must respond any time there is a critical need. Previously, demand response resources could choose to participate only during summer months by reducing air conditioning use, for example. PJM’s experience during the 2014 Polar Vortex demonstrated the need to rely on sources of energy — fossil fuels from power plants, energy efficiency, renewable energy, and demand response — that could be counted on year-round.

In the face of these updated requirements, this innovative pilot will show demand response participants new approaches to allow them to provide the year-round availability the grid needs. The project will bundle variable, renewable energy, like wind and solar, and the demand response potential of multiple buildings into combined capacity assets that are bid in the market. These energy resources can work together in real-time during emergency events to meet their electricity commitment.

“Demand response has proven to be a very flexible tool that meets a number of needs for the grid,” said PJM senior vice president of Markets, Stu Bresler. “In addition to helping lower prices and reducing pressure on the generation fleet during periods of peak use, demand response can be used by states and local communities to meet their public policy objectives.”

Over the past several years, EDF and CUB have been working closely with commercial office buildings and residential buildings in Chicago to help them save energy and costs, as well meet the electric grid’s peak needs through demand response, energy efficiency, and energy storage.