Demand Flexibility as the Key to an Efficient Grid

Demand flexibility can be a lower-cost, less-polluting alternative to natural gas-fired power plants for balancing renewable energy on the grid, according to the Rocky Mountain Institute (RMI).

The organization’s new research report, “Demand Flexibility: The Key to Enabling a Low-Cost, Low-Carbon Grid,” shows how demand flexibility can be a lower-cost, less-polluting alternative to natural gas-fired power plants for balancing renewable energy on the grid. RMI modeled the use of demand flexibility across a large geographic area to shift electricity consumption from times of the day with high demand but low renewable supply to times with high renewable supply, and found that the strategy can significantly reduce customer costs, curtailment of renewable energy, peak demand, and carbon emissions compared to relying on natural gas-fired generation.

 Highlights of the report include:

• Wind and solar energy costs are at record lows and are forecast to keep falling, leading to greater adoption, but the mismatch of weather-driven resources and electricity demand can lead to lower revenues and higher risks of curtailment for renewable energy projects, potentially inhibiting new project investment.
• Using an hourly simulation of a future, highly-renewable Texas power system, we show how using demand flexibility in eight common end-use loads to shift demand into periods of high renewable availability can increase the value of renewable generation, raising revenues by 36% compared to a system with in flexible demand.
• Flexible demand of this magnitude could reduce renewable curtailment by 40%, lower peak demand net of renewables by 24%, and lower the average magnitude of multihour ramps (e.g., the “duck curve”) by 56%.
• Demand flexibility is cost effective when compared with new gas-fired generation to balance renewables, avoiding approximately $1.9 billion of annual generator costs and 20% of total annual CO2 emissions in the modeled system.
• Policymakers, grid operators, and utility program designers need to incorporate demand flexibility as a core asset at all levels of system planning to unlock this value.

“The U.S. grid is at a crossroads,” the report brief states. RMI estimates that approximately half of existing coal, nuclear, and gas-fired power plants are likely to retire in the next 15 years, creating a gap in capacity that needs to be filled. At the same time, renewable energy prices are dropping much more quickly than expected, leading to their accelerating adoption. Investing in new gas plants to replace retiring capacity and balance the variability of new renewables will lock in significant cost and carbon emissions for decades to come. RMI research shows, however, that demand flexibility can be a cleaner, less-costly option, “promising to unlock new value for renewable energy and utility customers alike.”

The 3rd Annual Environmental Leader & Energy Manager Conference takes place May 15 – 17, 2018 in Denver. Learn more here.