Download Allegheny Power Residential Demand Response Program

Allegheny Power
Residential Demand Response Program
Demand Side Stakeholders Review
February 26, 2008
Agenda
• RDR Program Summary
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Description
Benefits
Costs
Benefit/Cost Ratio
Sensitivity Analysis
Conclusions
• Q&A
Program Description
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Voluntary residential A/C control program
Device Options (one-way communication)
– Smart thermostat (indoor)
– Smart switch (outdoor)
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Available cycling options
– 100% during PJM declared (emergency) events
– 50% during PJM (emergency) or AP (economic) declared events
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Incentive Payments
– 100% cycling = $50/yr
– 50% cycling = $25/yr
– Credited equally to first four bills rendered from June through September
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Interruption quantity and duration
– Up to 10 events per year (June-May)
– Up to 6 hours duration per interruption
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Opting out of an event
– Participants would receive day-ahead notification of an event (delivery method is
technology dependent)
– Participants may opt out of one event per year without penalty
– Participants that insist on more than one opt-out will be removed from the
program and forfeit any remaining incentive payments
General Assumptions/Statistics
• Potential universe of participants
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220,000 residential customers (2007)
A/C saturation = 51%
Electric heat pump saturation = 13%
Eligible participants = 148,800 by 2011
• Assumed participation rate = 10%
• Assumed participant cycling option selection
– 100% cycling = 10%
– 50% cycling = 90%
• Assumed device selection
– Smart thermostat = 50%
– Smart switch = 50%
• Weighted-average participant load reduction = 0.778 kW
Program Benefits
• Benefits were identified in four areas:
– Direct benefits are savings derived from a customer
participating in the program
• Direct Capacity
• Direct Energy
– Indirect benefits are savings that result from greater
demand elasticity and more efficient market operation
• Indirect (Mitigation) Capacity
• Indirect (Mitigation Energy
Direct Benefits
• Direct capacity benefits
– Available ILR or DR resources
Total Resources,
MW
DR Resources,
MW
ILR Resources,
MW
20082009
20092010
20102011
20112012
20122013
20132014
20142015
20152016
and
beyond
0.0
1.5
5.0
8.6
11.6
11.6
11.6
11.6
0.0
0.0
0.0
0.0
1.5
5.0
8.6
11.6
0.0
1.5
5.0
8.6
10.1
6.6
3.0
0.0
– Capacity value
Capacity Price Assumptions
2009-2010
2010-2011
2011-2012
and beyond
DR Price, $/MW-Day
$191.32
$174.28
$264.78
ILR Price, $/MWDay
$191.32
$174.28
$264.78
Direct Benefits (Cont.)
• Direct capacity benefits (Cont.)
– Bid Strategy
• Resources available in February each year would be offered into
the ILR program for the upcoming delivery year
• Resources available in February each year would also be offered
into the RPM BRA for the delivery year 3 years in the future
– NPV = $6,522,068
• Direct energy benefits
– Assumes full 60 hrs per year
– Energy price = $195.89MWh
• 2005, 2006, 2007 PJM LMP for AP Zone
• Ten highest priced events, 6 contiguous hours
– NPV = $426,037
Indirect Benefits
• Indirect capacity benefits
– Offering DR resources in the RPM BRA reduces the amount of more
expensive capacity that must be cleared to meet PJM’s IRM
– Constrained LDA vs RTO
• AP Zone and SW MACC have different VRR curves
• Value of reducing 1 MW in SW MAAC is approximately 5 times greater than
in AP Zone
– AP Maryland residual residential load is approximately 5 times smaller
than BGE
– NPV = $643,062
• Indirect energy benefits
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Relied on Brattle Group Study
Net benefits to AP Zone = $400,000/yr
Maryland residential allocation = $36,662/yr
NPV = $303,814
T&D Benefits
• AP did not project any T&D benefits resulting from the
RDR program
– AP is dual-peaking
• Since 2002, AP has set its annual peak during the winter season 3 times
• Over the same period, the winter peak has averaged 98.4% of the summer peak
– A summer demand response program may not alter the need for
system upgrades or reinforcements
Year
AP system
winter peak
(MW)
AP system
summer peak
(MW)
Maryland
winter peak
(MW)
Maryland
summer peak
(MW)
2002
7,406
8,034
1,335
1,411
2003
8,245
7,898
1,547
1,406
2004
8,377
7,749
1,690
1,401
2005
8,361
8,536
1,650
1,570
2006
7,720
8,734
1,365
1,572
2007
8,664
8,606
1,670
1,553
Average
8,129
8,260
1,543
1,486
Note: AP summer and winter peak values from 2002 -2005 have been modified to exclude the Ohio service territory
that was sold to AEP 1/1/2006.
Program Costs
• Program costs are not vendor specific and include:
– Cost of, installation and on-going maintenance of field devices
– Cost of, integration and on-going maintenance for back-office IT hardware and
software
– Operating costs, including program administration, contractor costs, M&V and
customer incentives
– Since AP does not have the necessary communications infrastructure,
communication is via 3rd party service estimated at $60/point/yr
Variable Costs
Customer Installed Equipment
Communication
Customer Incentive
Fixed Costs
Hardware
Software & IT Labor
Consulting
Marketing
O&M
$215 Weight-Average/Participant
$ 60 $/Year/Participant
$27.50 Weight-Average/Participant
$ 250,000
$1,000,000
$ 450,000
$ 750,000
$ 431,000 $/Year
Program Costs (Cont.)
• Utility Incentive
– Tiered shared-benefit structure calculated as a
percentage of the sum of the direct and indirect
capacity benefit and the direct energy benefit
Estimated Annual Utility
Incentive Payments
2008
$0
2009
$0
2010
$9,414
2011
$43,745
2012
$85,460
2013
$97,334
2014
$100,962
2015
$104,292
2016
$105,833
2017
$105,593
2018
$101,337
2019
$82,758
2020
$65,842
2021
$45,003
2022
$0
Benefit/Cost Ratio
• NPV Benefits = $7,895,000
• NPV Costs = $18,990,000
• BCR = 0.39
Sensitivity Analysis
10% Participation
20% Participation
50% Participation
75% Participation
100% Participation
$25 for 50% Cycling $50 for 50% Cycling $50 for 50% Cycling $50 for 50% Cycling $50 for 50% Cycling
$50 for 100% Cycling $100 for 100% Cycling $100 for 100% Cycling $100 for 100% Cycling $100 for 100% Cycling
Participation Scenarios
Cycling Stragegy:
10% at 100% Cycling
90% at 50% Cycling
0.39
0.48
0.64
0.69
0.72
Cycling Option 1
10% at 100% Cycling
0% at 75% Cycling
90% at 50% Cycling
Cycling Option 2
10% at 100% Cycling
30% at 75% Cycling
60% at 50% Cycling
Cycling Option 3
25% at 100% Cycling
0% at 75% Cycling
75% at 50% Cycling
Cycling Option 4
50% at 100% Cycling
0% at 75% Cycling
50% at 50% Cycling
Cycling Option 5
100% at 100% Cycling
0% at 75% Cycling
0% at 50% Cycling
Participation Scenario 1 - 10% Participation
Customer Incentives:
$25 for 50% Cycling
$37.50 for 75% Cycling
$50 for 100% Cycling
0.39
0.45
0.46
0.59
0.81
Participation Scenario 2 - 20% Participation
Customer Incentives:
$50 for 50% Cycling
$75 for 75% Cycling
$100 for 100% Cycling
0.48
0.55
0.56
0.68
0.87
0.64
0.72
0.74
0.87
1.09
0.72
0.81
0.82
0.97
1.19
Participation Scenario 3 - 50% Participation
Customer Incentives:
$50 for 50% Cycling
$75 for 75% Cycling
$100 for 100% Cycling
Participation Scenario 4 - 100% Participation
Customer Incentives:
$50 for 50% Cycling
$75 for 75% Cycling
$100 for 100% Cycling
Conclusions
• AP does not recommend implementation of an air
conditioner cycling program at this time
• AP will continue to explore ways to lower implementation
costs, such as the Advanced Utility Infrastructure Pilot
• AP will also continue to evaluate and recommend cost
effective DSM programs for implementation, such as the
those included in this filing
– Energy Conservation Kits for Residential Customers
– LED Traffic Signals
– LED Exit Signs