Utilities, regulatory agencies, and independent system operators (ISOs) have begun to explore and implement innovative methods for managing demand as a means to lower power costs to consumers, improve system reliability, meet environmental standards, and ensure resource adequacy. As part of these efforts, power companies have announced initiatives and partnerships that will lay the groundwork for their involvement in the development of the smart grid.
The smart grid encompasses virtually all facets of the electric industry, with benefits ranging from expanded generation resource alternatives to decreased energy consumption. At the leading edge of these initiatives is a new crop of customer-focused programs that use technology and dynamic pricing signals to manage customer demand during critical time periods. Specifically, several critical peak pricing pilot programs are taking place in a handful of states around the U.S. and Canada. These pilots test several design elements including: customer response to different pricing levels, frequencies, and durations; customer acceptance of a critical peak price versus a critical peak rebate; whether to employ an opt-in or opt-out deployment strategy; and the role of different enabling technologies. The Brattle Group has assisted utilities in designing, evaluating, and implementing various customer-side smart grid initiatives.
Since most smart grid plans begin with the deployment of smart meters, it is often necessary to perform a cost benefit analysis to assess whether the capital costs associated with meter deployment will be offset by operational benefits and demand response (DR). We are an industry leader in addressing opportunities and market barriers associated with DR. We design and evaluate programs to reduce peak loads and develop energy efficiency (EE) programs to lower customer bills and protect the environment. In addition to the load, reliability, energy, and environmental benefits, well-designed programs can improve customer satisfaction, an important regulatory benchmark for judging the success of utility operations. We also assist clients with the evaluation of implemented DR programs, which requires an accurate assessment of baseline customer behavior absent the DR program. We understand how to construct the necessary “but for” scenarios, and provide reliable forecasting methods and energy economic consulting expertise in benefit-cost analysis.
Furthermore, traditional load management programs, such as direct load control, are being integrated with dynamic pricing programs. These retail-market programs are complemented by incentive-based wholesale market programs including load curtailment, demand bidding, emergency demand response, capacity market programs, and ancillary service programs. Our economic consultants evaluate such programs.