The Legal Battle Over Demand Response
If you’re looking for proof that we live in an absurd world, here’s one for you: the U.S. Supreme Court has been called to rule on the authority of the Federal Energy Regulation Commission (FERC) regarding its order that demand response (DR) be included in the tools available to meet peak energy loads. To summarize this briefly: DR means that grid operators can make agreements with their customers to cut power usage in times of peak load, and then use those agreements to meet peak demand, as opposed to building and running peaker plants.
Recently, an appellate court agreed with power generators, who had sued, claiming that DR should not count as an energy resource. Generators are paid in relation to the cost of the plants they build and the amount of power they make, usually by burning fossil fuels, and claim that FERC doesn’t have the legal jurisdiction to order that DR be admitted into the mix.
FERC argues that allowing demand response resources to enter electricity markets results in lower prices for consumers, which is obviously correct. One hopes that this would win the day, given that providing low-cost electricity is part of the power utilities’ mandate.
But here’s another truth: allowing demand response resources to enter electricity markets results in cleaner air, a healthier environment for people and all life forms, less ocean acidification, greater biodiversity, and a more stable climate. Doesn’t that matter—at least a little bit?
Just when you thought you’d seen it all.
Craig,
How do you figure that DR would result in cleaner air? You’re shifting from peak load to baseload, but you aren’t reducing load. In fact, you’re adding losses to the generated baseload energy by inserting adding a storage step to the energy transmission.
That means that a net greater amount of energy must be generated using off-peak (baseload) rather than peak. Even given the fact that the last-utilized peaker plants are the most ineficient NG plants, and the stabilization of the baseload coal plant (via reducing the overnight tamp-down) slightly increases the efficiency of the coal plant… it’s still not going to be a net benefit for the environment.
I’m all for DR – especially in high wind regions. But it’s only in select high-wind regions that this works as a good thing for the environment.
I should add that I believe the lawsuit is a petty one, and I hope that the apellate ruling will be overturned, but I’m not familiar enough with the specifics of the case to know what I think about how the court will or should rule.
Well, as usual, the case hinges not on what’s clearly good for the people, but the technicalities of law the way it’s written, in this case, the limits to the jurisdiction of FERC. I don’t know any more about this than you do.
Even reading and interpreting the law isn’t straightforward, as I wrote here: http://2greenenergy.com/2014/12/04/definition-of-sustainability/, which I excerpt here:
…..Our Supreme Court has agreed to re-consider the constitutionality of the Affordable Care Act (“Obamacare”), based on the fact that the actual words in the law may result in an unacceptable burden on the states vs. the federal government–even though it is 100% clear that this was a simple error, i.e., the lawmakers’ mistaken choice of words; it was certainly not part of the intention of the law.
Now you might be one of the people (like me) everywhere who say, “Well, if you’re so sure that the authors of the law intended X, why don’t you simply ask them? Wouldn’t that put an end to any doubt that might exist in anyone’s mind? This was just two years ago in 2012; just ask them to clarify what they meant. It’s not like you’re trying to interview the people who wrote the Bible—or even the Constitution itself. Just walk across the street (First Street Northeast in Washington, DC) and ask them.
Most people interpret the Constitution this way (above), though not all. For example, Antonin Scalia (pictured above), who I believe played a pivotal role in the decision to re-hear the case, is what is called a “textualist.” This means that to him, the intention of the law doesn’t matter in the slightest; the only thing that counts is the precise words that appear in the law themselves.
This strikes me as extremely backward; it sounds like some relic of jurisprudence from before Hammurabi’s time. Yes, it’s given the academically appealing name “textualism,” but it seems more like “obstructionism” or “regressivism,” or some other word that means “a doctrine that facilitates attempts to block civilization’s efforts to make itself more civilized.”
I would say that 1) Less the DR means more construction of peaker plants, which can’t possibly be good, and 2) I’m swayed by the arguments here: http://2greenenergy.com/2015/03/22/baseload-power-myths/.
Craig,
It’s terribly unlikely that more peaker plants will be brought online in most regions. The solar PV market serves as a check on this, as the production curve of solar aligns well with the most significant peak demand loads in most regions… and FERC has already clarified that distributed generation can be counted towards minimum generation capacity. So every time the peak energy needs start tightening enough to increase peak energy prices, the market for distributed solar energy starts ramping up, and the fact that the solar energy is installed means the power companies don’t have to put up a new peaker plant… This is a positive cycle.
But baseload is still baseload. The concept cannot ever become obsolete, even as the balance will indeed shift to load following power rather than constant baseload power. The idea of baseload is: this is the minimum amount of power that this region will need, so we’ll generate THIS in a steady, uninterrupted manner in the cheapest way possible, then look towards more variable energy generation to follow demand load for the remaining power.
DR serves to shift the balance back towards baseload and away from load following.
The only regions where it’s environmentally beneficial are regions where wind is being curtailed – so allowing some of your demand to shift to load following would allow more wind to be utilized.
That said, I’m still a big fan of demand response. It should work to dramatically reduce the cost of O&M on the electric transmission grid at large, it should help balance last mile congestion issues, it should allow for “cleaner” delivered power (less electronics-frying frequency modulation), eliminate brownouts, etc… and just help make the system work better. But only in regions where there is high wind penetration will you see an environmental benefit.