1. Fully Engaging Demand: Lessons and Insights from the Olympic Peninsula GridWise ® Demonstration Demand Response Town Meeting June 2-3, 2008 Washington, DC Rob Pratt Pacific Northwest National Laboratory robert.pratt@pnl.gov

2. 2 Going Beyond the Traditional Benefits: Raising Demand Response as a Strategic Asset The broadly recognized, traditional benefits of demand response (DR) are: Minimize need for new generation & transmission capacity Manage demand on peak days Mitigate wholesale price spikes The strategic opportunity is: Engaging DR continually rather than intermittently brings many additional benefits, including carbon Maximizing return on the DR investment is simply good business (not just another peaking resource!)

3. 3 06121824 IBM ancillary services distribution congestion transmission congestion wholesale cost Johnson Controls Invensys Johnson Controls $ MW Olympic Peninsula Demonstration Clallam PUD & Port Angeles n = 112, 0.5 MW DR Clallam County PUD Water Supply District 0.2 MW DR Internet broadband communications Market Sequim Marine Sciences Lab 0.3 MW DR 0.5 MW DG

4. 4 1: Continually Engage DR to Get Benefits at All Levels of Grid Multiple benefits are the key to the business case for DR Wholesale: provided demand reduction ~15% less than the normal annual peak Transmission: reduce transmission LMPs Distribution: defer need for new capacity Ancillary services: regulation and spinning reserve Energy efficiency from DR M&V for energy efficiency and carbon reductions Real-time prices (RTP) provide the basis to continually and seamlessly engage DR to obtain multiple benefits

5. 5 2: RTP Focuses Customer Incentives When and Where They Will Do the Most Good … and in proportion to value they provide Given choice between CPP/TOU and RTP, residential customers will sign up for and respond to 5-min. RTP if provided: Increased opportunity to save 10% on their electric bill Technology that makes it simple to automate their preferred response RTP incentives offer customers real, quantified incentive proportional to the degree & regularity of their response Directly tying price/incentives to the value provided helps maintain appropriate, transparent financial equity between utility & customers Readily incorporates backup/distributed generation, firm DR to localize and sustain distribution peak load reduction Help manage customer fatigue in multi-day events Limit high prices (they are generally the highest cost resource)

6. 6 3: Deploy DR in a Customer Friendly Manner Being customer friendly means that the customer … Is offered a choice of contract types (fixed-price, CPP/TOU, RTP …) Maintains control of all DR that has impact limits fatigue (i.e., reduced participation if called upon too often) Is offered a no-lose proposition compared to a fixed rate (e.g., by debiting a shaping charge against an up-front advance credit) Is provided a simple, intuitive, semantic interface to automate their response – KISS principle highly applicable Translated to price elasticity parameters in virtual thermostat Is presented a unified engagement & value proposition for DR & efficiency More Comfort More Savings

7. 7 4. Fast-Acting, Short-Term Low/No-Impact DR Can Provide Ancillary Services Using DR to provide short-term (minutes) regulation is a simple, inexpensive byproduct of an RTP network Easily synchronizes natural load cycles to follow need for regulation Excursions from customers desired thermostat set points are small Minimal, if any, discomfort means cost to buy response are very low Autonomous under-frequency load shedding from Grid Friendly appliances was reliable and not noticed by users Hour normal fluctuations in load Demand management to a capacity cap with real-time prices eliminated load fluctuations for 12 hours!

8. 8 5. Leverage DR Network to Provide Efficiency and Carbon Benefits Measure & verify customer- specific efficiency and carbon savings with unprecedented precision, in real-time Use time-series, end-use detail to disaggregate load, provide much higher validity to savings estimates Provide remote diagnostics for AC, heat pumps, commercial HVAC Mine for site-specific DR and efficiency opportunities Use the regulation capability of DR to ease operation and expense of high penetration of intermittent wind resources, especially regulation

9. 9 Engaging DR Continually (Rather than Intermittently) is the Key to Delivering More Value with the Same Investment A DR network is a valuable asset and a substantial investment – keep it productive Use it continually to maximize return on that investment Ensuring less obtrusive impacts and maintaining a sense of control by customers are pre-requisites for more continuous use