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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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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Woo, C.K. & Shiu, A. & Liu, Y. & Luo, X. & Zarnikau, J., 2018. "Consumption effects of an electricity decarbonization policy: Hong Kong," Energy, Elsevier, vol. 144(C), pages 887-902.
    2. Suomalainen, Kiti & Pritchard, Geoffrey & Sharp, Basil & Yuan, Ziqi & Zakeri, Golbon, 2015. "Correlation analysis on wind and hydro resources with electricity demand and prices in New Zealand," Applied Energy, Elsevier, vol. 137(C), pages 445-462.
    3. Biegel, Benjamin & Hansen, Lars Henrik & Stoustrup, Jakob & Andersen, Palle & Harbo, Silas, 2014. "Value of flexible consumption in the electricity markets," Energy, Elsevier, vol. 66(C), pages 354-362.
    4. Woo, C.K. & Milstein, I. & Tishler, A. & Zarnikau, J., 2019. "A wholesale electricity market design sans missing money and price manipulation," Energy Policy, Elsevier, vol. 134(C).
    5. Yushchenko, Alisa & Patel, Martin Kumar, 2017. "Cost-effectiveness of energy efficiency programs: How to better understand and improve from multiple stakeholder perspectives?," Energy Policy, Elsevier, vol. 108(C), pages 538-550.
    6. Behboodi, Sahand & Chassin, David P. & Crawford, Curran & Djilali, Ned, 2016. "Renewable resources portfolio optimization in the presence of demand response," Applied Energy, Elsevier, vol. 162(C), pages 139-148.
    7. De Coninck, Roel & Helsen, Lieve, 2016. "Quantification of flexibility in buildings by cost curves – Methodology and application," Applied Energy, Elsevier, vol. 162(C), pages 653-665.
    8. Murphy, M.D. & O’Mahony, M.J. & Upton, J., 2015. "Comparison of control systems for the optimisation of ice storage in a dynamic real time electricity pricing environment," Applied Energy, Elsevier, vol. 149(C), pages 392-403.
    9. Woo, C.K. & Sreedharan, P. & Hargreaves, J. & Kahrl, F. & Wang, J. & Horowitz, I., 2014. "A review of electricity product differentiation," Applied Energy, Elsevier, vol. 114(C), pages 262-272.
    10. Woo, C.K. & Chen, Y. & Olson, A. & Moore, J. & Schlag, N. & Ong, A. & Ho, T., 2017. "Electricity price behavior and carbon trading: New evidence from California," Applied Energy, Elsevier, vol. 204(C), pages 531-543.
    11. Woo, C.K. & Chen, Y. & Zarnikau, J. & Olson, A. & Moore, J. & Ho, T., 2018. "Carbon trading’s impact on California’s real-time electricity market prices," Energy, Elsevier, vol. 159(C), pages 579-587.
    12. Seier, Maximilian & Schebek, Liselotte, 2017. "Model-based investigation of residual load smoothing through dynamic electricity purchase: The case of wastewater treatment plants in Germany," Applied Energy, Elsevier, vol. 205(C), pages 210-224.
    13. Woo, C.K. & Ho, T. & Zarnikau, J. & Olson, A. & Jones, R. & Chait, M. & Horowitz, I. & Wang, J., 2014. "Electricity-market price and nuclear power plant shutdown: Evidence from California," Energy Policy, Elsevier, vol. 73(C), pages 234-244.
    14. Sreedharan, P. & Farbes, J. & Cutter, E. & Woo, C.K. & Wang, J., 2016. "Microgrid and renewable generation integration: University of California, San Diego," Applied Energy, Elsevier, vol. 169(C), pages 709-720.

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