- 1 - Presentation reference Demand Side Bidding - an IEA Development Project for Competitive Electricity Markets Presentation to Metering Europe 2002 Steve Holmes EA Technology Limited UK

- 2 - Presentation reference Demand Side Bidding Aims of project –‘DSB in a competitive electricity market’ Overview of project –tasks –results Future work

- 3 - Presentation reference The objectives of the IEA Initially: –to represent major energy consuming nations –to work for stability in world energy markets The 3 E’s Have now broadened to: energy security environmental protection economic development

- 4 - Presentation reference IEA Shared Goals (1993) Diversity, efficiency, flexibility Prompt and flexible response in energy emergencies Improved energy efficiency Undistorted energy prices

- 5 - Presentation reference Implementing Agreements Fields of collaboration: Energy technology information centres and modelling Fossil fuel technologies Renewable energy technologies Efficient end-use technologies Nuclear fusion science and technologies

- 6 - Presentation reference Implementing Agreement on Demand Side Management Technologies and Programmes “to promote energy efficiency and DSM for global sustainable development and for business opportunities” Future: Products & services Kyoto mechanisms - need for evaluation Certificates trading Metering & pricing De-centralised generation Current: Communications Technologies Market Transformation Demand Side Bidding Role of Municipalities Performance Contracting Completed: Database on Technologies and Programmes Methods for IRP Mechanisms for promoting DSM

- 7 - Presentation reference Demand Side Bidding Aims & Objectives To promote DSB as a means of improving the global environment –evaluation of current DSB schemes –analysis of strengths and weaknesses –guidelines for the development of new DSB schemes

- 8 - Presentation reference Work programme - overview Stage 1 Stage 2 Tasks Definition of DSB Market Survey market operators system operators regulators suppliers / traders Tasks Consumer Survey Technologies for DSB Analysis / evaluation Jan 1999 Mar 2000 Stage 3 Nov 2001 Tasks Workshop Technical issues Practical guide

- 9 - Presentation reference WHAT IS DSB? “ DSB is a mechanism that enables the demand side to actively participate in the trade of electricity “

Presentation reference Definition of DSB continued Market driven Improves market efficiency Mostly regulatory driven Long term environmental benefits Opportunity to earn money Potential environmental benefits Cost savings for consumers DSB : Encouraging consumer flexibility DSM : Encouraging load reduction or other long term changes to consumption patterns DSB Short term, discrete actions DSM Sustainable & permanent changes Overlap Shared technologies Cross fertilisation of ideas

Presentation reference Definition of DSB continued DSB categories time of delivery within day tradingday ahead tradingdays/months ahead trading Access to market prices Balancing Market Network constraints Quality of Supply DSB for price setting ‘Spot’ market closure

Presentation reference Market Survey market operator, system operator, network owner, regulator, government Experiences –types of DSB products available –number of participants Opinions –is DSB viewed positively or negatively Barriers –types of barriers –are these barriers real or perceived

Presentation reference Market Survey continued Experiences DSB to maintain the quality of supply

Presentation reference Market Survey continued Experiences balancing market

Presentation reference Market Survey continued Experiences access to market prices / price setting

Presentation reference Market Survey continued Opinions New business opportunities Increased participation from the demand side Improved network efficiency

Presentation reference Market Survey continued Barriers Technical barriers Structural barriers Ignorance Financial Tradition

Presentation reference Market survey conclusions Wide range of DSB products available Mostly restricted to large consumers Barriers –many! Participants unaware of potential benefits

Presentation reference Consumer Survey AIM:- –to try to identify the potential for DSB –to obtain views / opinions from consumers RESULTS:- –country specific

Presentation reference Consumer Survey continued Options for consumers include: –switching off a process –fuel substitution –standby generation

Presentation reference Consumer Survey continued Load duration curve 90% of maximum demand < 2% of year

Presentation reference Consumer survey conclusions Potential for DSB –differs from country to country Length of interruption time important –‘process is king’ –DSB must not impact on ‘business’ Consumer must understand implications of DSB –not just a way to earn ‘money for nothing’

Presentation reference Technologies for DSB continued Generic Requirements Rapid load shedding Ahead of delivery Within day After delivery Need for load shedding detected Notification that OK to switch process on Determine load available and times it is available Agree contract Availability payments Process switched off Process switched on Monitoring Settlement

Presentation reference Technologies for DSB continued UK - Frequency Response Provided by: –Part-loaded generating plant operating in frequency sensitive mode –Demand tripping by frequency activated relay –Pumped storage plant in “spin-in-air” mode with frequency initiated generate mode –Estimate 29% of response is held on demand

Presentation reference Technologies for DSB continued Frequency Control by Demand Management (FCDM) Delivery within 2 seconds Provide for 30 mins, Firm service Provide for 15 mins, for Probabilistic Payment made for Availability 3MW but can be aggregated for a site

Presentation reference Technologies for DSB continued FCDM - firm service Contract for a predictable demand –Plant is available continuously and consumes the contracted load –Provision of response upon a fall in frequency to below the relevant pre set frequency level –LF relay settings all at 49.70Hz Example –cement production

Presentation reference Technologies for DSB continued FCDM - Probabilistic Service Probabilistic Service –Demand which is unpredictable - random or cyclic –A single plant cannot provide a consistent service –Several sites can provide a base level of reliable demand Example –steel works / arc furnace

Presentation reference Technologies for DSB continued Arc Furnace Load Load (MW) Time

Presentation reference Technologies for DSB continued Arc Furnace Load Three Furnaces Load (MW) Time 90% Reliable Demand

Presentation reference Technologies for DSB continued Smaller Consumers?

Presentation reference Technologies - conclusions Control / Monitoring / Communication technologies –already exist –costs make it more favourable for larger consumers consumers not ‘tied in to their supplier’ –technology for smaller consumers available in future

Presentation reference Analysis / Evaluation DSB has potential to: –increase demand side participation –improve market efficiency –improve market liquidity –improve network efficiency –improve use of energy and power  BUT FEW DSB PRODUCTS

Presentation reference Where next? Successful DSB products exist – operate within a ‘well-defined’ set of rules Main barrier to DSB: –market structure / technical rules –  NEED TO EXPLORE THESE ‘RULES’ Real time metering “project extension”