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2004-05 Seminars

Demand Response as a Substitute for Electric Power System Infrastructure Investments

Jason W Black
Massachusetts Institute of Technology

Abstract
I will discuss the system-wide implications of regulatory policies to promote demand response as a substitute for investments in system capacity (generation, transmission, and distribution). Investments in demand response technologies, such as smart thermostats for thermal energy storage, have the potential to improve the efficiency of operations and investments in the electric power system. Reducing the magnitude of demand fluctuations will allow the utilization of the generation, transmission, and distribution systems to be increased and the levels of ancillary voltage and frequency support and reserves reduced. An analysis of the long term effects of demand response on electricity pricing and generation investment is modeled. This analysis enables a general comparison of the potential for avoided costs in generation, transmission, and distribution that could be expected from active regulatory support of demand response investments.