Demand Response Providing Ancillary Services A Comparison of Opportunities and Challenges in the US Wholesale Markets

TitleDemand Response Providing Ancillary Services A Comparison of Opportunities and Challenges in the US Wholesale Markets
Publication TypeConference Paper
LBNL Report NumberLBNL-5958E
Year of Publication2012
AuthorsMacDonald, Jason, Peter Cappers, Duncan S. Callaway, and Sila Kiliccote
Conference NameGrid-Interop 2012
Date PublishedDecember 2012
Conference LocationIrving, TX
Keywordsdemand response, electricity markets, market and value, market sectors, power system reliability, renewable generation integration, smart grid
Abstract

Interest in using demand response (DR) resources to supply low cost reliability products to the bulk electricity system is on the rise due to the uncertain impacts of increasing penetrations of intermittent generation and recent rulings supporting demand side participation in wholesale markets from the Federal Energy Regulatory Commission. However, organized electricity and ancillary services markets are just beginning to support DR resources for ancillary services, and the set of rules and requirements for participation are unique to each market. This paper discusses the opportunities that exist in the ancillary service markets in each US Independent System Operator territory and identifies challenges to market participation for demand response resources. It compares resource requirements, limits to aggregation, measurement and verification, bidding requirements, market timelines, and the types of organizations that can play in the markets. Additionally, it uses market clearing prices and market size to compare what value may be extracted from these markets, and identifies how these prices are currently determined. Using these criteria, PJM and ERCOT have the most favorable conditions for demand response participation in ancillary service markets, and changes to rules that effect aggregation and minimum resource size could promote more participation in other AS markets across the US.

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