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Energy and Demand Resource Soup

By February 20, 2017November 6th, 2021Energy Rant
Energy and Demand Resource Soup, Michaels Energy

The AESP 2017 National Conference is in the rear view mirror. While I was, unfortunately, not able to attend many sessions, most of that time was spent talking with a lot of people. I absorbed a lot of information and hopefully some wisdom. This post discusses the increasingly complex and intertwined electric grid.

Shifting Role to Grid Managers

My findings from the conference jive with a recent article I read in Public Utilities Fortnightly (PUF). The subject of that article was the Power of Innovation, a utility executive’s roundtable that included representatives from Edison International, Exelon, Duke Energy, Oncor, Southern Company, and Optimum Energy.

Electric utilities, from the old-school vertically integrated ones to transmission and distribution utilities in deregulated states, are becoming grid managers to ensure the lights stay on in a shifting generation mix. One knowledgeable gentleman from a huge western utility told me this point blank, and I completely agree.

Utilities are forced to take intermittent supply, sometimes in huge volumes, as a result of policies that are almost overwhelming the system in some areas of the country. I’m talking about renewable energy; huge volumes of small scale solar PV and large doses of utility-scale wind energy.

Experts from two huge western utilities also told me point blank that their system already has no need for more PV because it does nothing for their systems’ peak demand. Touché. I mentioned this numerous times, and most thoroughly in Utility Death Spiral? The Duck has Your Back. Large doses of PV in states like California and Arizona do nothing to reduce conventional supply requirements. They actually require the shift from cost effective base load plants to intermittent natural gas peaker plants.

In Defense of Nukes

Nowadays, we hear that nuclear power is expensive, but is this really true? The answer is, yes, when policy, through lucrative tax incentives, add huge amounts of electricity onto the grid at zero incremental cost[1]. Levelized cost of delivery is substantially shifted from ratepayers to taxpayers as described in Regulating Deregulation and Wind’s Other Subsidy. Once built, wind and solar come onto the grid with a peaky supply curve with troughs filled in by natural gas generation. This leaves too little for nukes to be profitable. I should also mention that:

Energy and Demand Resource Soup, Michaels Energy

I.e., the carbon emissions from renewables plus natural gas electricity production is greater than that of nukes, which is equal to zero.

Managing a Dynamic Grid

Ok. Back to the PUF article and discussions and findings from last week’s AESP conference.

For most of its existence, energy efficiency programs have had one primary focus: to reduce energy consumption. It didn’t matter when. It is still that way in some states, but it is changing fast.


In recent years, ComEd began to focus on savings load shapes (I guess that’s more like a resource shape) and peak demand savings as participants in PJM’s forward capacity market for energy resources. Similarly, Michigan utilities are more focused than ever on demand savings as many coal plants will be shutting down in coming years. These states have also moved to more aggressive program spending to make it happen. California is more extreme in all of the above.

Demand Response

Demand response is another rather obvious tool for managing a dynamic grid. Demand response includes a broad basket of resources including:

  • Interruptible rates where customers agree to reduce demand by a certain amount or drop below a certain demand cap in exchange for lower demand rates.
  • Time of use rates where prices are higher during grid-peak periods.
  • Direct load control where wireless networks automatically shut down or cycle major electric loads like air conditioning or water heating.
  • Demand rates for smaller users including residential customers, making a substantial portion of electric bills depend on customer energy demand during grid peaks.
  • Automatic and voluntary demand response, with or without payment.

Conventional Distributed Generation

The following are some sources of distributed generation, other than small-scale (customer owned) renewable energy. Some are dispatchable resources that can add to grid stability.

  • Backup generators that are idle nearly all the time. These can become dispatchable resources supplying the grid with energy during peak loads.
  • Combined heat and power is not a dispatchable resource. Instead, utilities will have to serve as backup, and that is a costly barrier.
  • Self-generation can include CHP, but to meet loads at all times, these resources need extra heat rejection capacity. The grid serves as backup. CHP decreases carbon emissions, sometimes substantially, depending on grid sources of power. Buyers often pay a premium for low-carbon products.

Smart Grid

Smart grid and auto DR (demand response) are enabling technologies for both efficiency and demand response.

Smart grid, aka advanced metering infrastructure, has many benefits, the main one of which is remote meter reading, again through a grid of radio communication systems. It is also being used for outage management and recovery. We help customers use it for energy information systems and energy management. It also provides a means for engaging customers with graphical interfaces and engagement platforms.

Necessitations of Intermittent Renewables

In summary, the tail that provides 10-20% of our electricity is driving a lot of secondary activity that we in energy efficiency and related services can be thankful for, as summarized in the following table.

[1] No fuel or operating cost

Jeff Ihnen

Author Jeff Ihnen

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Join the discussion 2 Comments

  • Christopher Russell says:


    Your commentary hits it out of the ballpark, as usual. Please accept some pushback on a couple of minor points. I refer to the table at the end of this post.

    1. To say that wind and solar does not save energy is somewhat misleading. More to the point, wind and solar are an infinite commodity that displaces finite commodities. Intermittencies not withstanding, this is a “good” outcome.

    2. Do wind and solar offset peak grid demand? Maybe not in huge quantities, but they currently do (e.g. solar powered whole-house fans). The potential for deploying more applications like this–and others– is great.

    3. Again, wind and solar: Dispatchable? By themselves, no. With battery back-up? yes. Are batteries perfected as of today? No. But gains are made daily.

    4. Smart grid: “saving energy” is only secondary? To the extent that commuting to work is “secondary” to earning an income. No commute, no paycheck. No smart grid means more stealthy waste of energy. Smart grid is a FACILITATOR for saving energy. The same could be said for the smart grid “reducing peak demand” and every other benefit listed on the table.

    And to be fair…

    5. Efficiency reduces energy cost? Usually, unless the consumer is forced to do so to comply with a cost-INeffective mandate. But hopefully, such mandates are scarce. It also depends on the consumer’s total cost of energy-saving asset installation, which reflects tax treatment and capital cost amortization– dimensions that may dwarf energy cost savings.

    Good stuff, keep it coming. Thanks

    • Jeffrey Ihnen says:

      Thanks for the pushback, Christopher.

      Regarding wind and solar saving energy, I had a one track mind from the demand side of the equation. Your line of thought is legit. In fact, in PUF recently, I read that Xcel Energy’s CEO considers wind to be an energy, not a load-meeting resource.

      For solar and wind offsetting demand peaks, we should consider old-fashioned ice storage (for solar), which could work nicely for residential, especially. For wind, we need more transmission build-out. The wind is always blowing somewhere.

      Regarding purpose for smart grid, I read recently that AMI is cost justified mainly for remote meter reading. Utilities can “rate-base” it and earn money on it to some extent. That is the primary driver. Certainly, it opens a lot of opportunities for DR and EE.

      Lastly re efficiency reducing cost, I was thinking in terms of ACEEE’s resource costs comparing efficiency to other generation, conventional and renewable. It’s the cheapest resource.

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