Demand Response Service Moves Forward at ERCOT; so does Hogan B+

In the non-descript building in South Austin which houses the offices of the Electric Reliability Council of Texas, there is a lot of discussion about proposed changes occurring in the ERCOT market. The way it works in ERCOT is every issue or change that someone wants is filed either by the market participant or ERCOT staff through a “Nodal Protocol Revision Request” or NPRR and goes through a working group or subcommittee. Assuming it moves through these groups it eventually goes to a voting committee called the Protocol Revision Subcommittee. From there it goes to the Technical Advisory Committee, and eventually to the Board of Directors of ERCOT.

Sierra Club is currently a member of ERCOT and yours — Cyrus Reed – is spending way too much time here, but this stuff is actually important.

There are four important NPRRs being discussed today at PRS.

The first — NPRR 564 — was approved by PRS today and allows a new 30-minute “demand response” service to serve as an “Emergency Response Service” for those times when ERCOT determines there is an emergency. Demand response is a service that lowers energy consumption during peak times of use. A 30-minute demand response service would be for resources that are capable of providing demand response within a 30 minute time-frame. Examples of the types of energy consumers who might be able to be paid by ERCOT for agreeing to turn down or off power during an emergency might include a large commercial operation with air conditioning or even a city’s wastewater treatment plant. Some examples of the kinds of sites that are interested in ERS 30 include higher education, irrigation & water treatment, and different kinds of manufacturing. Market participants believe that this new product could open the door for more demand response to participate not only in these emergency products but eventually in the energy market itself.

A second NPPR – 571 – Weather-Sensitive Loads — would add another DR product — more focused on residential air conditioning programs, that could be added to the ERS service if companies were able to aggregate these loads and create a program for ERCOT. This NPPR was not approved but sent to a separate committee for further work.

While getting new demand response programs into these emergency response services run by ERCOT, more important will be allowing loads to actually bid into the energy market by providing a “Negawatt.” ERCOT has already approved “Loads in SCED 1.0” which will be implemented next summer. This change will not allow loads to bid into to sell the negawatt but it will allow them to do a “bid to buy,” meaning they will offer to not consume power at a certain price. Market participants like Sierra Club are now working on a a Loads in SCED 2.0 that would allow much more active participation for demand response. Stay tuned.

A third NPPR — 560 — Floors and Caps for Energy Storage — was delayed a month to allow ERCOT to do a full analysis of the impact on its staff to implement the changes. The protocol revision would help set the rules for energy storage facilities like batteries. Batteries can provide short-term energy into the market as needed without producing pollution at the time they are dispatched. A good new resource in the ERCOT market. Two large-scale compressed air energy storage facilities are also being developed that could be on-line by 2016, providing energy largely derived from wind turbines.

Finally, after a decisions by the Public Utility Commission to create a Operating Reserve Demand Curve that would create an additional payment to those providing energy or capable of putting energy into the market (and ancillary services), the PRS discussed NPPR 568, which implements the ORDC. ORDC is sometimes referred to as Hogan B+ after the MIT professor who came up with the concept. The new scarcity pricing mechanism would be implemented by June of 2014, and is likely to increase energy prices during times of scarcity. However, voting on the NPPR 568 broke down over how to treat “loads” — those bidding into buy energy or turn off their consumption — as well as issues like the ERS programs. PRS was scheduled to retake up the issue on Friday.

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