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Impacts of Responsive Load in PJM: Load Shifting and Real Time Pricing

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  • Kathleen Spees
  • Lester Lave

Abstract

Load Shifting and Real Time Pricing Kathleen Spees* and Lester Lave** In PJM, 15% of electric generation capacity ran less than 96 hours, 1.1% of the time, over 2006. If retail prices reflected hourly wholesale market prices, customers would shift consumption away from peak hours and installed capacity could drop. We use PJM data to estimate consumer and producer savings from a change toward real-time pricing (RTP) or time-of-use (TOU) pricing. Surprisingly, neither RTP nor TOU has much effect on average price under plausible short-term consumer responses. Consumer plus producer surplus rises 2.8%-4.4% with RTP and 0.6%-1.0% with TOU. Peak capacity savings are seven times larger with RTP. Peak load drops by 10.4%-17.7% with RTP and only 1.1%-2.4% with TOU. Half of all possible customer savings from load shifting are obtained by shifting only 1.7% of all MWh to another time of day, indicating that only the largest customers need be responsive to get the majority of the short-run savings.

Suggested Citation

  • Kathleen Spees & Lester Lave, 2008. "Impacts of Responsive Load in PJM: Load Shifting and Real Time Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 101-122.
    • Handle: RePEc:aen:journl:2008v29-02-a06
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    2. Sahraei-Ardakani, Mostafa & Blumsack, Seth & Kleit, Andrew, 2012. "Distributional impacts of state-level energy efficiency policies in regional electricity markets," Energy Policy, Elsevier, vol. 49(C), pages 365-372.
    3. Ketter, W. & Collins, J. & Reddy, P. & Flath, C., 2011. "The Power Trading Agent Competition," ERIM Report Series Research in Management ERS-2011-011-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    4. Krishnamurti, Tamar & Schwartz, Daniel & Davis, Alexander & Fischhoff, Baruch & de Bruin, Wändi Bruine & Lave, Lester & Wang, Jack, 2012. "Preparing for smart grid technologies: A behavioral decision research approach to understanding consumer expectations about smart meters," Energy Policy, Elsevier, vol. 41(C), pages 790-797.
    5. Greening, Lorna A., 2010. "Demand response resources: Who is responsible for implementation in a deregulated market?," Energy, Elsevier, vol. 35(4), pages 1518-1525.
    6. Blumsack, Seth & Fernandez, Alisha, 2012. "Ready or not, here comes the smart grid!," Energy, Elsevier, vol. 37(1), pages 61-68.
    7. Haghnevis, Moeed & Askin, Ronald G. & Armbruster, Dieter, 2016. "An agent-based modeling optimization approach for understanding behavior of engineered complex adaptive systems," Socio-Economic Planning Sciences, Elsevier, vol. 56(C), pages 67-87.
    8. repec:eee:rensus:v:82:y:2018:i:p3:p:3323-3332 is not listed on IDEAS
    9. Nabavitabatabayi, Mohammadreza & Haghighat, Fariborz & Moreau, Alain & Sra, Paul, 2014. "Numerical analysis of a thermally enhanced domestic hot water tank," Applied Energy, Elsevier, vol. 129(C), pages 253-260.
    10. Katz, Jonas & Andersen, Frits Møller & Morthorst, Poul Erik, 2016. "Load-shift incentives for household demand response: Evaluation of hourly dynamic pricing and rebate schemes in a wind-based electricity system," Energy, Elsevier, vol. 115(P3), pages 1602-1616.
    11. Block, C. & Collins, J. & Ketter, W. & Weinhardt, C., 2009. "A Multi-Agent Energy Trading Competition," ERIM Report Series Research in Management ERS-2009-054-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    12. Vardakas, John S. & Zorba, Nizar & Verikoukis, Christos V., 2014. "Scheduling policies for two-state smart-home appliances in dynamic electricity pricing environments," Energy, Elsevier, vol. 69(C), pages 455-469.
    13. Tsitsiklis, John N. & Xu, Yunjian, 2015. "Pricing of fluctuations in electricity markets," European Journal of Operational Research, Elsevier, vol. 246(1), pages 199-208.
    14. repec:gam:jsusta:v:10:y:2018:i:11:p:4019-:d:180103 is not listed on IDEAS
    15. Alagoz, B.B. & Kaygusuz, A. & Karabiber, A., 2012. "A user-mode distributed energy management architecture for smart grid applications," Energy, Elsevier, vol. 44(1), pages 167-177.
    16. Galo, Joaquim J.M. & Macedo, Maria N.Q. & Almeida, Luiz A.L. & Lima, Antonio C.C., 2014. "Criteria for smart grid deployment in Brazil by applying the Delphi method," Energy, Elsevier, vol. 70(C), pages 605-611.
    17. Shira Horowitz and Lester Lave, 2014. "Equity in Residential Electricity Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    18. repec:eee:appene:v:235:y:2019:i:c:p:487-494 is not listed on IDEAS
    19. repec:eee:energy:v:165:y:2018:i:pb:p:709-726 is not listed on IDEAS
    20. Salah, Florian & Ilg, Jens P. & Flath, Christoph M. & Basse, Hauke & Dinther, Clemens van, 2015. "Impact of electric vehicles on distribution substations: A Swiss case study," Applied Energy, Elsevier, vol. 137(C), pages 88-96.

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    JEL classification:

    • F0 - International Economics - - General

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