Customers can help avoid blackouts if they are given better information and prices.
Even if you don’t live in California, you probably heard about the rotating power outages we had on August 14 and 15 due to insufficient electricity supplies. While the outages were less than 1000 MW when demand was over 40,000 MW, and lasted for 1-3 hours, any gap in reliable electricity is a problem. But these blackouts were just as important for what they say about California’s electricity planning process as for the direct hardship they imposed. One thing they highlight is how little progress we’ve made towards incorporating demand responsiveness in the transformation of our electricity system away from fossil fuels.
The outages show what can go wrong if we don’t pay sufficient attention to the new constraints from changes in the grid: increasing peak electricity usage due to climate change, more solar and wind generation, closing gas-fired plants and nuclear plants, and, in the future, widespread electrification of vehicles and homes. Some critics are saying the blackouts demonstrate that California can’t pull off a renewables-dominant grid, but that’s the wrong lesson.
Given what a simplistic, rule-of-thumb based approach California has taken to assuring there is sufficient capacity on the grid (known as “resource adequacy”), it’s actually surprising that we haven’t had any system-wide energy shortfalls in the last 19 years. During that time, we’ve ramped up to getting about one-third of the grid’s energy from renewables while also accommodating widespread adoption of customer-side solar and beginning to grow electric vehicle charging. But to keep that momentum going, we need to redesign the way we do resource adequacy planning. We must take a much more granular and empirically-verified approach to planning for supply/demand balance every hour of the year.
There are many ways to make the system balance with high levels of renewables. We could build a lot of storage, including batteries and/or pumped hydro storage. We could keep gas-fired plants online for very occasional use. We could build nuclear plants, like in South Carolina and Georgia. We could do a little of each of these – OK, not the nukes, at least until they come up with something much more cost-effective than the boondoggles in SC and GA.
But the fastest and cheapest contribution to keep supply in sync with demand when the weather is variable and much of generation is intermittent is to reshape demand to more closely track supply. California policymakers talk about demand responsiveness, but efforts so far have been pretty halfhearted.
The most prominent attempt to reshape the state’s demand when there might be a supply shortage is the Flex Alert program, in which the state puts out pleas for voluntary conservation. The state has used this program during the roughest days this month, and it probably helped, though it is difficult to tell intentional conservation from changes in the weather or other factors. The best research suggests that these sorts of voluntary conservation measures can be somewhat effective if used infrequently, but lose their punch with repeated use. I’m not aware of any credible studies on the impact of California’s Flex Alert program. if we are going to continue to rely on it, we need reliable evidence on what it delivers.
Get Pricing Right
Research on demand programs suggests that a better, and more long-lasting, approach is price incentives. Critical peak pricing (CPP) programs give customers lower prices throughout most of the year, but impose a much higher price when supply is tight. Numerous careful studies, covering both residential and commercial customers, have demonstrated that CPP yields substantial demand reductions in response to the high price. And one study by Catherine, Meredith and co-authors demonstrates that making CPP the default gets very high participation and also high satisfaction among customers.
[To respond in advance to those who argue we should pay customers to reduce their demand rather than charging them for peak usage, I addressed that problematic approach in a 2014 blog, which I stand by today. Back in 2009, the Market Surveillance Committee of the California Independent System Operator also evaluated this approach and came to a similar negative view.]
Getting customers to make small demand changes is a cost-effective way to reduce the need for additional grid hardware, whether it is more generation, more storage, or more transmission. California’s demand on the hottest days of the year is about 50% higher than on a typical summer day, and that difference is virtually all cooling. If the outdoor temperature is 95 degrees, it takes about 20% less electricity to keep a building at 78 degrees rather than 74 (details of calculations in this blog are at the end).
And the savings are even larger if you keep the house at 74 until the critical time period begins and then let it gradually drift up to 78. Or, better yet, pre-cool the building to below 74 prior to the critical time and get even more reduction during the peak from this thermal mass form of storage. When you do the math, those sorts of changes in cooling could cut more than 3000 MW, probably much more, when California needs it most.
But to make demand adjustments work, we need to give customers the right signals. It’s time to change the antiquated time periods used for some critical peak pricing, or even for messages about conservation. Many of the programs encourage demand reductions until 6 PM or 7 PM, but that is exactly the wrong time for customers to crank up electricity usage. With so much solar generation now on the grid, the biggest supply crunch comes later in the evening as the sun is setting, typically between 6 PM and 8 PM in the most challenging months, July through September. On most hot days, the best conservation window is more like 5 PM-9 PM than the 2 PM-7 PM that we were hearing from many authorities last week.
And Get Communication Right
Then we have to make clear to customers what actions are important. Air conditioning matters, as does shifting use of electric clothes dryers, dishwashers and ovens, and shift EV charging. Unplugging your cell phone or ipad doesn’t.
Over four hours, changing your A/C setting 4 degrees will probably cut electricity usage by more than 2 kWh. Not charging your phone will save about 0.03 kWh, and unplugging your charged devices will save, well, about zero (Sorry, but it’s true. Test it out with your own watt-meter.) So why are these often put on the same “things you can do” list? (Along with keeping the refrigerator door closed? What household without teenagers needs to be told that? And what household with teenagers would be helped by that suggestion?)
As for turning off lights, it’s always a fine idea if no one is in the room. But over the four-hour peak period, four strong LED bulbs (surely you don’t light anything with incandescent hogs anymore, right?) use about 0.2 kWh.
We will still need more storage, and some of the gas plants will play a critical role for at least another decade, but reshaping demand is the most agile strategy. That’s particularly important given the uncertainties that climate change is throwing at us. It is time to take demand response as seriously as we take the hardware solutions to grid reliability.
DISCLOSURE: I am a member of the Board of Governors of the California Independent System Operator (CAISO). CAISO dispatches power on the California grid and was the entity that required utilities to institute outages when supply ran short on August 14 and 15. CAISO does not determine or make investments in generation and is not part of the policy process that sets retail rates.
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“If the outdoor temperature is 95 degrees, it takes about 20% less electricity to keep a building at 78 degrees rather than 74”. In steady state, the amount of energy required to keep a building X degrees below the default level is linear in X, as explained here, which I confirmed consulting with two engineers. There is some subtlety about the default level, based on sun exposure and thermal mass of the building, but a simple calculation would use the outdoor air temperature. So, energy savings would be 1-(95-78)/(95-74)=0.19.
“When you do the math, those sorts of changes in cooling could cut more than 3000 MW, probably much more, when California needs it most.” Assume that all of the load between a 32,000 MW weekday and a 48,000 MW week day is cooling and the calculation in the previous paragraph applies. Then, 0.19*(48000-32000)=3040. This does assume that demand response comes from all of that incremental cooling, but it ignores the fact that much of the load at 32,000 MW is also from cooling and could also respond to peak pricing (as could as many other uses). And, as mentioned in the blog, all of this understates the savings if buildings are kept at 74, or pre-cooled to an even lower temperature, and allowed to drift up to 78 during the beginning of the critical period.
“Over four hours, changing your A/C setting 4 degrees will probably cut electricity usage by more than 2 kWh.” If a customer has central air conditioning, a reasonable estimate is that it pulls 6000 W when operating. I assume that it would be cycling on for half the time during the critical period – likely to be an underestimate during the worst days of the year – which implies 3000 W over four hours or 12 kWh. 0.19*12=2.28 kWh saved.
“Not charging your phone will save about 0.03 kWh, and unplugging your charged devices will save, well, about zero”. My iPhone 6 (yes, I know it’s time to get a new one) uses 7w when charging. So, even if it charged for all four hours of the critical period, it would use 28 Wh or 0.028 kWh. But that overstates the potential savings, because even if my phone is nearly dead, it reaches full charge in less than four hours. As for leaving charged devices plugged in, I tried this with both my iPad and my laptop computer, as well as my phone. In all cases it was 1-2 Wh per day or less. Now, getting your idle computer, and particularly your screen, to go to sleep when they aren’t in use, that actually amounts to something, about the same as turning the LED lights off in a room.
“But over the four-hour peak period, four strong LED bulbs use about 0.2 kWh.” Replacements for 75 W incandescent bulbs typically use 13w or less. 4bulbs*13w*4hours=204 Wh or 0.204 kWh.
Severin Borenstein is E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business and Faculty Director of the Energy Institute at Haas. He has published extensively on the oil and gasoline industries, electricity markets and pricing greenhouse gases. His current research projects include the economics of renewable energy, economic policies for reducing greenhouse gases, and alternative models of retail electricity pricing. In 2012-13, he served on the Emissions Market Assessment Committee that advised the California Air Resources Board on the operation of California’s Cap and Trade market for greenhouse gases. He chaired the California Energy Commission's Petroleum Market Advisory Committee from 2015 until its completion in 2017. Currently, he is a member of the Bay Area Air Quality Management District's Advisory Council and a member of the Board of Governors of the California Independent System Operator.