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Avoided cost estimation and cost-effectiveness of permanent load shifting in California

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  • Sreedharan, P.
  • Miller, D.
  • Price, S.
  • Woo, C.K.

Abstract

Two intersecting events of the last two decades have transformed the electricity industry: (1) market restructure designed to introduce wholesale market competition; and (2) renewable energy development fostered by government policies, including renewable portfolio standards (RPS). There is, however, little research to answer the question: what is the avoided cost of demand response (DR) in a restructured market with RPS? This paper offers an answer to this question, which is critical for determining the cost-effectiveness of DR and its program design and implementation. We illustrate the answer’s usefulness with five real-world examples of permanent load shifting (PLS) in California. These examples show that a PLS system’s cost-effectiveness depends on its site-specific characteristics, including location, installation cost and performance, thus affirming the use of a targeted approach to DR design and implementation.

Suggested Citation

  • Sreedharan, P. & Miller, D. & Price, S. & Woo, C.K., 2012. "Avoided cost estimation and cost-effectiveness of permanent load shifting in California," Applied Energy, Elsevier, vol. 96(C), pages 115-121.
    • Handle: RePEc:eee:appene:v:96:y:2012:i:c:p:115-121
    DOI: 10.1016/j.apenergy.2011.08.029
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