Identifying and enabling new mechanisms for balancing fluctuations in VRE supply is essential for maintaining reliability of T100RE grids and by extension for supporting societal decarbonization through electrification. Section 1 considers the entire range of flexibility sources; in this section, we focus on exploiting demand-side flexibility, which is central to efficient operations and now exhibits huge opportunities due to increasing adoption of controllable DERs, but whose potential benefits are largely unrealized despite many efforts to promote demand response and retail competition. Repeated failures have been observed globally, and concerns of consumer advocates regarding inequitable distribution of winners and losers hinders progress. This section has two efforts focusing on enabling regulators and operators to accelerate adoption of demand and DER flexibility solutions.
The first effort will draw lessons for regulators and operators on coordination of efforts to encourage demand and DER flexibility across jurisdictions and scales. Consumer-based flexibility, local and regional planning for transport and building decarbonization, and power grid planning increasingly interact, creating uncertainties in roles and responsibilities across scales. While there is emerging research on the optimized design, planning and operation of more locally integrated energy systems, there is a lack of knowledge on the most appropriate regulatory programs to support customer participation. Drawing on socio-technical transition literatures, and extending, this research will investigate the conditions under which policymakers, regulators and grid operators can accelerate the delivery of demand-side flexibility and local integration. Specifically, it will go beyond technological innovation to examine the transformative governance strategies needed to integrate large amounts of consumer flexibility, which is of interest to our Project Affiliates Electric Power Research Institute (EPRI), National Renewable Energy Lab (NREL) and University of Victoria (UV). The research will: carry out policy mapping and analysis of emerging coordination challenges for accessing DER and demand flexibility at, and between, the distribution and transmission levels; conduct an international review with T100RE stakeholders on emerging business models and policy needs for smart flexibility; develop cross country comparators (e.g., UK, US, Australia, Denmark, and Ireland) examining the organizational and institutional factors affecting the T100RE transformation. Outputs will provide policymakers and regulators with learning on the decision support and governance frameworks for demand-side flexibility, including international learning on equity and business models under different regulatory, operator, and consumer protection arrangements.
The second effort, linked to the G-PST’s Tasks Force on DERs, will develop economic programs that incentivize flexibility from DERs (e.g., batteries, often paired “behind the meter” with rooftop PV) and newly electrified loads (e.g., EVs or heat pumps) to match demand with supply; while considering regulatory concerns about consumer protection together with operators’ concerns about reliable performance. State-of-the-art research recognizes the challenges of dynamic pricing and suggests that effective designs will likely include multiple mechanisms with complementary functions such as hedging/insurance programs along with dynamic pricing and novel ancillary services. That research also concludes that recognizing customer heterogeneity in terms of capabilities, socio-economic characteristics, and risk preferences is key for effective design and assessment of programs for motivating demand-side flexibility. Our aim here, overlapping with Project Affiliate Berkeley, is to develop mathematical frameworks that recognize the range of timings for electricity procurement and capture customer diversity in terms of consumer income, price responsiveness, and risk attitudes. Using these frameworks, we will identify designs that strike socially acceptable balances between exposure to real-time price signals and equity concerns, while addressing pressing questions on effective ways to combine programs. Tradeoffs between cost efficiency and distributional equity will be studied for program designs that control exposure to price volatility, such as socially-aware storage dispatch and hedged rates that apply real-time prices only for consumption beyond a minimum level. We will leverage findings from the first research focus in this RD, together with advanced operating models from Thrust 1, to assess how the proposed designs address broader societal concerns.
