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Posted on October 30, 2014

How PG&E is Using Demand Management to Make Smarter Use of the Grid

By Jonathan Marshall

In a report issued last year, California’s state power grid operator envisioned that “new, more flexible and responsive” demand response and energy efficiency programs “will further advance California’s goals of a more reliable and cleaner power system — with the added potential of replacing or deferring investments in more expensive energy infrastructure.”

Demand response programs offer customers incentives to alter their demand at special times — for example, to avoid stressing the power grid on hot summer afternoons when air conditioning loads are especially high. PG&E has been offering such programs for years as part of its approach to building a 21st century smart grid.

Now the utility is experimenting with sophisticated technologies to deliver peak demand reductions on a targeted local basis, rather than system-wide, to help relieve distribution or transmission bottlenecks and ultimately save customers money.

The concept is simple: If existing wires and substations are well equipped to handle customer demand 99 percent of the time, it may make more sense to simply reduce peak demand during the remaining few hours of the year rather than spend millions of dollars on capacity upgrades.

PG&E has launched a pilot project to test this concept in Yuba City, Jackson, Tracy and Fresno where projected growth in peak customer demand might trigger millions of dollars in system capacity upgrades over the next few years. The goal is to reduce peak demand at each local substation in order to defer or reduce the need for the capacity expansion spending in these areas.

By deferring planned capacity investments at each of the substations for three to five years, PG&E might save up to $2.5 million to spend on other projects, says Richard Aslin, a demand response expert at the utility. “This will allow us to enhance reliability for customers with the same level of spending,” Aslin says.

To reduce local demand, PG&E is doing intense local marketing with enhanced incentives for residential and small business customers, targeting measures that reduce peak demand including air conditioning, pool pumps, advanced lighting, and whole-house efficiency upgrades.

Large commercial, industrial and agricultural customers in the targeted areas are also being approached with enhanced marketing for peak load reduction through a wide variety of offerings including energy efficiency, demand response, permanent load shifting, energy storage and on-site generation.

One key to that marketing effort is data from PG&E’s SmartMeter™ deployment, the biggest in North America.

“With SmartMeters, it’s a lot easier for us to understand which customers are contributing to peak loads and market to them,” says Aslin. “Before we had that data, we could guess but didn’t know.”

PG&E is also offering (and testing) enhanced incentives and marketing for local residential customers to participate in the SmartAC program.  The goal is to double to the current penetration of SmartAC customers in the targeted areas by the end of 2015.

In return for a one-time $50 sign-up bonus, 150,000 residential and 5,000 small and medium business customers currently allow PG&E to install radio controlled devices on or near their air conditioner or thermostat. The utility can cycle the air conditioning off and on to reduce demand during times of extreme stress on the power grid.

Small control devices cycle air conditioners on and off for customers who enroll in the SmartAC program

In all, the SmartAC program can provide about 100 megawatts of load reduction across PG&E’s system. According to surveys, most customers never feel the difference.

PG&E used the SmartAC program four times last year in local markets, demonstrating that the program can be used to relieve demand in targeted locations.

In order to get near-real-time visibility into electricity usage by its SmartAC customers, PG&E is installing sophisticated data loggers at about 200 customer locations. That small number offers a sample big enough to extrapolate accurate results for the entire system, according to SmartAC program manager Wendy Brummer.

This demand response pilot is just one of many ways that PG&E is building a smarter electric grid to support its mission of providing customers with safe, reliable, affordable and clean energy. For more information, see this summary of PG&E’s latest smart grid annual report.

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"PG&E" refers to Pacific Gas and Electric Company, a subsidiary of PG&E Corporation.
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