Demand-side Integration for System Reliability

In various regions worldwide, electric power systems are becoming over-stressed. Reserve margins are shrinking, elevating electricity costs and risk of supply shortages in many developed countries. Increased permitting difficulties and financial risks in bulk power system expansion compound the problem. These issues contribute to growing interest in integrating demand-side resources into electric power and market systems. Many system operators have established demand-side programs, procedures, and associated tariffs supporting utilization of demand-side resources. However, numerous forms of implementation and inconsistencies in regional terminology complicate analyses required for resolving industry challenges. This paper introduces a simplified framework for analyzing forms of demand-side integration designed to coordinate end-use response with system or market conditions. Incentive structures, methods of actuating demand-side response, and information exchange requirements are analyzed. The framework is applied to identify an implementation form that can address both reliability and price risks inherent in a restructured electric power industry. Implications on tariffs and reliability standards that could foster widespread demand-side integration are also discussed.