Thursday, November 26, 2009

A Tale of California Electricity

In 40 minutes, Ron Hofmann gave a good introduction to the players, recent history and a few of the problems facing California electric utilities and consumers, at the last Citris talk of the UC semester.

The 1970s oil shock gave rise to the California Energy Commission (CEC) which helped put into place policies and programs that enabled California to have flat per capita electricity use since, with economic and population growth, while the US had an increase of about 2% per year.

But deregulation in 1996 was not so successful as 'gamers' - legal or otherwise, and just Enron - quickly took advantage of new separation of wholesale (supply-side) market. Previously, the electricity industry had been a "vertically integrated industry" (production, distribution, transmission). Hofmann described the rolling blackouts in 2000-1 as deliberate lack of supply, i.e. withholding of capacity.

California's energy load, of course, peaks with summer air-conditioning load - at about 50% above the year round average (i.e. an additional 40,000 MW) which requires inefficient, dirty "peaker" plants be brought online.

This is hardly a new problem but technology now exists to manage this load - it is "low-lying fruit."

Pre-deregulation utilities offered customers incentives to allow the utility to control supply to each home. (Anyone know more about this?) After deregulation, this could not be done.

The technology the industry now wants to implement is called "Demand-Response or (DR)" and uses pricing and signals (e.g. smart meters) to manage load, summer or not. "In crisis, people cooperate, but is not sustainable," said Hofmann, who added "the process must be automated." With prices and signals (DR), the price of electricity will rise on hot afternoons.

The customer will decide (in advance) what should happen next. With smart meters now going in (PG&E for example expects to finish the change over by 2012), the hardware, software, protocols now need to be created.

There are plenty of stakeholders in the electricity industry: regulators (federal, state), the energy suppliers (Calpine?), the grid operator (Cal ISO), the utilities and, oh yes, us. Hofmann said regulators should decide the WHAT (the rules for DR) and the utilities decide HOW to implement the rules. Unfortunately, the "us" is not so well represented. With DR or generally.

What he is referring to is the software, hardware, wires etc. from the smart meter to the appliance (washing machine) or thermostat in your house, part of the demand-response apparatus. [It sounds a bit like the 1980s when we tried to add fax and answering machines to our home telephone line and AT&T said, "whoa, that's our equipment - you can NOT just plug stuff into it."]

The electric industry is promoting a proprietary DR protocol and hardware called "Zigbee" for connecting appliances to the smart meter. Hofmann, however, spoke highly of open source alternative from PIER (the research arm of California Energy Commission) which is developing open source openADR and wifi for interconnections between appliances and meter.

Please don't misunderstand - this is about hardware, software,wires, how two machines talk to each other and the size or shape of the plugs. In Demand-Response (DR), the customer still decides - but in advance - what will happen during peak times, but DR is the way process is then automated. If you decide, in advance, you want to run the washing machine and air conditioner when it is 100 degrees, you still can - you will just pay a lot more for it. If, on the other hand, you decide allow the utility to control when the washing machine goes on, that too will happen, and you will pay less for it.

We will see how Demand-Response evolves and the appliances in our homes are operated.

More on Ron Hofmann:
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Please join us for the next CITRIS I4energy lecture at the Banatao Institute at Berkeley this semester:

"A Perspective on Energy Challenges in California"
Ron Hofmann [Senior Advisor, CIEE]

12:00 p.m., Friday, November 20
Banatao Auditorium, 3rd floor, Sutardja Dai Hall, UC Berkeley
http://www.citris-uc.org/events/i4e-Nov20

The full seminar schedule for the fall can be found at http://www.citris-uc.org/events/i4e-fall2009. As always, these talks are free, open to the public and broadcast live online at mms://media.citris.berkeley.edu/webcast, and questions can be sent via Yahoo IM to username: citrisevents.

Abstract:
In 1996, California deregulated its wholesale electricity market and left it up to the regulated investor-owned utilities to manage retail electricity costs for consumers.

Four years later, this paradigm fell apart in large measure because consumers had no incentive and timely mechanisms to reduce load when electricity supply prices began to rise.

Mr. Hofmann will provide a brief overview of the California electricity crisis of 2000-2001, a history of what the PIER program has been funding in demand response over the past 8 years, and a perspective on California's energy challenges going forward.
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