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by Bob Shively, Enerdynamics President

In continuing our discussion of Smart Grid applications, another key function of the Smart Grid is to use communications, monitoring and control technologies to enable a host of new services. Such services allow customers to more actively participate in electricity markets through use of demand response and distributed generation. 

Historically, demand response primarily has been limited to two types of utility-run programs: The most common are curtailable rate schedules for large commercial and industrial customers whereby rate discounts are given in return for the right to call up and order a customer to interrupt service under emergency conditions. Less common have been programs associated with residential and small commercial customers whereby the utility can remotely switch off hot water heaters or air conditioners in return for a small fixed payment. Distributed generation has been mostly limited to large cogeneration plants at industrial customer sites or to back-up generation that is only used during power outages.  Implementation of the Smart Grid introduces the possibility of significantly expanding market participation among all customer sectors from large industry all the way down to homeowners.  

Several new technologies are either available or in design phase to allow customer participation in hourly and even sub-hourly electric markets. Such participation has historically been limited to large wholesalers.  These technologies include: 

• roof-top photovoltaic installations
• controllable appliances and thermostats
• home gateways easily programmed with consumer preferences that dictate when and how to reduce power usage based on economic signals from the grid
• electric vehicles that buy power when prices are low and provide power back to the grid when prices are high
• smart meters that keep track of everything
• software programs that allow aggregators to build blocks of customer generation and demand response to resemble characteristics of a large centralized generator

The potential exists for individual consumers to make price-based decisions on when and how to use and/or produce power with minimal attention or effort.

So if the technology is available, what’s the missing link?  It simply requires further development of actual markets that make it worthwhile.  We’ve seen such beginnings in some of the ISO markets, especially New York, New England, and PJM, where aggregated loads have participated in markets including capacity, energy and ancillary services.  

In time, as technologies and markets further develop, we are likely to see new Smart Grid-enabled services leading to a radically different industry.