The State of Demand Response in California

Citation:

Faruqui, Ahmad, and Ryan Hledik. “The State of Demand Response in California.” In, 2007.

Abstract:

By reducing system loads during critical‐peak times, demand response (DR) can help reduce the threat of brownouts and blackouts. DR is also widely regarded as having an important role in lowering power costs—and customer bills, by making organized wholesale power spot markets more competitive and efficient and less subject to the abuse of market power.  Consequently, there is common agreement among California’s energy policy makers, utilities, independent system operator and other interested parties that DR should be a key resource option.   The Brattle Group was engaged by the California Energy Commission—as part of the 2007 Integrated Energy Policy Report (IEPR) process—to gather inputs from a broad array of sources and to assess the accomplishments and shortcomings of DR activities in California. This assessment will explore the Energy Commission’s “load management” authority as a way to achieve higher levels of cost‐effective DR. The California Energy Action Plan II (EAP II) places DR at the top of the resource procurement loading order with energy efficiency (EE). It specifies that five percent of system peak demand be met by DR in 2007. However, despite significant past and continuing efforts by all of the parties, this goal is unlikely to be achieved.   How soon and whether the goal can be achieved are open questions. Despite California’s accomplishments in DR, the question remains: are new policy instruments necessary to expedite, extend and solidify the adoption of DR? This draft white paper is the first deliverable from this project. Its purpose is to define the current state of DR in California, laid out in this chapter, report key stakeholder observations and comments on DR policy, draw lessons learned from DR policy outside of California, both in the U.S. and internationally  and lay out ideas that could help move California forward.  

Last updated on 09/07/2021