Financial benefits of implementing Demand Response in CAISO market

Demand Response (DR) provides mechanisms and incentives for utilities, business and residential customers to reduce energy use (and costs) during time of peak demand or when system reliability is at risk. DR is considered by CPUC, DOE and FERC as one of high-priority Smart-Grid Functionalities. FERC has developed a national action plan on demand response, recognizing that a more extensive use of demand response could cut peak demand by 20% by 2019. The state of California "Loading Order" puts DR and energy efficiency as the first resources to be used before the construction of new power plants. One of the main challenges in California is the majority of existing DR resources cannot participate directly in the CAISO market using the existing DR model. With the Market Design and Technology Update (MRTU), CAISO is now proposing several new models to fully integrate Demand Resources in the California market. This presentation will summarize Pacific Gas and Electric Company (PG&E)'s experience with implementing DR and discuss the financial benefits for DR models in the CAISO market.