New England fully integrates demand response into wholesale markets

Dive Brief:

ISO New England says it launched a price-responsive demand (PRD) structure last week that completes the operator's integration of active demand resources into the regional wholesale electricity marketplace.
It has been seven years since FERC Order 745 declared demand response resources should be paid market price for electricity for their help in balancing supply and demand. New England says it is the first regional operator to complete a full integration.
Demand response resources in New England can now participate in the full range of wholesale electricity markets: energy, reserves and capacity.

Dive Insight:

New England's grid expects declining energy use and peak load over the next decade, largely due to efficiency and behind-the-meter solar.

While gas and nuclear generation make up the bulk of New England's supply, efficiency is expected to save the region 2,059 GWh annually, on average, the ISO said in its 2018-2027 Forecast Report of Capacity, Energy, Loads, and Transmission, released last month. Solar PV is expected to produce 2,162 GWh of total annual energy savings in 2018, rising to almost 4,800 GWh in 2027.

Thanks to the PRD structure, active demand resources can now receive wholesale market payments comparable to that of generating resources for providing energy, operating reserves, and capacity to the New England electric system. They will also be able to submit day-ahead and real-time energy markets bids and can be committed by the grid operator day-ahead.

Buy-in from grid operators on full integration of demand response has been slow, as the FERC order was litigated all the way through the Supreme Court. Even then, said ISO New England, the scope and nature of the required changes meant it took years to fully comply.

The grid operator first implemented programs for active demand resources in 2003. Its Forward Capacity Market was implemented in 2010.

With PRD fully implemented, demand response resources may participate in energy and reserve market systems and are dispatched economically based on energy market offers, Henry Yoshimura, director of demand resource strategy for ISO New England, said.