This section presents the value of DSM implementation in modern power systems. The deregulation and restructuring of the electric power sector in many countries have created more competitive energy markets. A simplified structure of a power system in a deregulated market is shown in Figure 1.3 [44]. The flows of energy, money and information between the entities are indicated by different types of line. In a restructured power system, power generation is separated from transmission and distribution operations to encourage fair competition among the generation companies. An independent system operator oversees the operations of the whole power system to maintain the balance in supply and demand. It also ensures that an open and equal access of transmission and distribution facilities is provided to relevant network entities. Generation companies bid to supply electricity to a wholesale market which retailers buy from at spot prices. Consumers are free to choose the retailer who provides the best combination of price and services.
Staying cost efficient while ensuring supply security is a major challenge all the stake-holders in a power system face. DSM programs offer the opportunity to improve operational efficiencies and provide financial gains for the stake holders in a power system [45]. Besides, the reduction in energy consumption through various DSM efforts provides an overall prospect to reduce the net carbon emission produced in a power system.
Chapter 1: Introduction
Figure 1.3 The simplified structure of a deregulated power system.
1.5.1
Value of DSM in power generation
Improved energy efficiency and reduced peak demand achieved through DSM efforts enable power generators to defer or avoid building new plants. This opportunity represents major cost reduction and potentially leads to lower energy prices.
Under normal operating conditions, significant generation reserves at a plant must be planned for and provided by standby resources to ensure security in supply. However, such generation resources planned for contingencies are rarely utilized and represent inefficient utilization of investments. With the growing integration of fundamentally intermittent renewable energy sources into modern power systems, conventional back-up generators are essential to ensure supply security by maintaining the balance of supply and demand at all times [46]. The availability factor of a generator is defined as the percentage of operational time over a period of one year [47]. As an example, Figure 1.4 shows the availability factor of four high- wind stations in Taiwan for a period of 12 months.
Chapter 1: Introduction
Figure 1.4 Monthly availability factors for four high-wind stations in Taiwan [47].
The intermittent nature of wind generation is obvious in Figure 1.4, where the
availability factor varies from below 0.35 to close to unity. As a comparison, the
availability factor of a combined cycle gas turbine power generator ranges from 0.87 to 0.97 [48].
DSM represents a significant capacity that can be utilized as an alternative reserve to reduce a portion of required back-up resources in generation. For example, the study in [49] estimates there was about 38 GW of demand response capacity in the USA in 2008. As reported in [31], autonomous responsive loads provide substantial benefits to a power system in frequency control during contingencies. Hence, DSM has the potential to replace part of the conventional back-up generation and allow substantial cost savings in a power system [45].
1.5.2
Value of DSM in power transmission systems
Preventive security is traditionally designed into the capacity of a transmission network to enable it to remain operational in a secure condition under an N−1 contingency [50]. N−1 contingency refers to the worst single contingency scenario following the outage of the most important transmission or generation facility. With the advancements in smart grid enabling technologies, [45] argues that swift DSM 14
Chapter 1: Introduction
action in curtailing specific loads after outages can provide an effective corrective security measure, which enables the transmission network to operate at a higher loading with the existing capacity. Hence, effective DSM programs potentially allow a transmission system operator (TSO) to operate a transmission network at an augmented utilization while maintaining the existing level of security. Furthermore, the implementation of effective DSM programs reduces the peak load flow on a transmission network. As a result, network congestions are relieved and transmission losses are reduced.
1.5.3
Value of DSM in power distribution systems
DSM programs are effective means to reduce peak loads and relieve overloads in distribution networks. As a result, the effective implementation of DSM programs provides financial and operational benefits to DSOs. DSOs have the opportunity to defer costly infrastructure upgrades and capacity expansions, while retaining the existing level of security [45]. At the same time, the author in [45] proposes that with reduced load flow over the distribution network, a higher number of distributed generations (DGs) can be integrated into the network. Distributed generations are small scale generations of low carbon energy sources (e.g. photovoltaic, small wind turbine etc.) and they are located near the loads. The main benefits of DG are reductions in carbon emissions, power delivery costs and energy losses [51].
1.5.4
Value of DSM to consumers
Most of the time, consumers receive financial incentives for their participation in DSM programs organized by the supplying utility companies. The financial incentives are offered as discounts on energy bills or cash payments [30]. For example, [3] reports that a discount of up to A$0.39 per kWh is offered to households charging their hot water storage systems during off peak hours in New South Wales (Australia). Meanwhile, [3] also reveals large commercial and industrial customers receive bill discounts and dispatch payments for voluntarily shedding non time- sensitive loads on short notifications. Hence, it is expected that DSM programs offering incentives to consumers will encourage active participation and achieve better results.
Chapter 1: Introduction