How to reduce peak demand

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Demand Response
and Pricing in France
EDF’s experience
New regulation
Main goals
10/11th April 2007
1
R&D
How to reduce peak demand:
Already an old story in EDF’s tariffs
 Tariffs based on marginal cost of production (fixed part and
variable part)
 Introduction of Time of Use tariffs : a fixed rate with
different time units depending on hours and seasons
- « Green tariffs » (1956) for large firms or buildings (La Defense): Many
prices options according to season/hour and localisation/ use
- « Off-peak hours » tariffs for residential market and business (1965)
(10 PM to 6AM week days, Sundays) = 2,000 hours/summer ( +
2,000/winter)
- « Peak day step back » (EJP) (1982) for residential market : reduce
consumption at critical times (22 days of 18 hours between 1st November
and 31th March) high price during this period –low price the rest of the
year. Replaced by TEMPO (6 price’s levels according to hour and season–
SMS or email signal)
2
R&D
How to reduce peak demand:
Already an old story in EDF’s tariffs
Good results :
« off-peak hours » tariffs reduce peak
consumption by about 20%
 Customers with « Peak day stepping back »
tariffs reduce their consumption by 50% during
peak period (4% of total residential consumption)
3
R&D
New regulation in France is stimulating DR
• French Regulatory Energy Commission (CRE) :
« Load reduction rules » for retail electricity market (Dec 07) in cooperation with :
• Load management Providers : Voltalis, Ergelis
• Energy Suppliers : EDF, GDF, Electrabel, Endesa France, Poweo, Direct energy
• Distribution network : a subsidiary of EDF (ERD)
• French Senate :
“New metering associated to dynamic pricing for supply security” (June 07)
• French Government (Environmental issue)* and Business Organisation (Medef)
“Introduction of smart metering to reduce peak demand and develop competition”
•Grenelle de l’environnement (September 2007)
• Smart Metering development :
 2010 –2015 : goal to replace all actual meters by new smart technology
 A tool for demand response (but not sufficient)
4
R&D
Demand response :
A new opportunity
in the present situation
Present situation
Past situation
• TOU pricing because of
production constraint
• Wholesale market (price volatility) : reduce peak
price and market power
• A global constraint (planned
system equilibrium)
• Local constraint: renewable energy integration
(wind, biomass…)
• Regulated tariffs (still exist)
• A monopoly supplier
• Retail prices are bound to change to take into
account demand peak (dynamic pricing as default
pricing ?)
• Oligopoly and competition : new offers on bill
decrease, automated home services …
• Basic metering with limited
communication
• New technical progress : Smart metering (more
interactive) interconnexion of electrical and telecom networks
with AMR
•CO2 reduction goals
• Peak demand increasing strongly
5
R&D
Peak Demand Increase in France due to retail market
• 10 historical peaks in the last 7 years
• Each new year brings a new record peak
• Demand peaks : bigger and more often
(even in summer)
• Household consumption is responsible for
global increase (increase of more than 75%
since 1990)
• … due to « brown product » use
(electronic and communication e.g. : cell
phone, computers…)
Source : RTE (Transmission Network organisation)
6
R&D
Goals of Demand Response
• Reduce investment cost and operation cost (production,
transmission) due to peak demand
Past
issues
still exist • Cut down energy bill of consumers
News
Markets
issues
• Reduce price volatility and peak prices on wholesale markets
(and limit market power of suppliers)
• Improve the link between wholesale and retail markets
• Develop competition and switching in retail market (customized
new offers, new entrant…)
• Develop renewable energy (solar, wind, biomass) : correlate
News
the consumer’s real consumption profile with production of
Environet
« green energy »
issues
• Reduce
CO2 emissions (from coal or fuel power plants)
R&D
7
Pricing with Demand Response :
a link between the markets
Wholesale market
Retail market
Fixed price
contracts
Procurement strategy
Wholesale
Price
Reduce
volatility and
peak price
Environmental pricing
(External costs, CO2
emissions permits)
8
R&D
Competitive strategy
Wholesale
Cost
Retail
Price
Demand response
pricing (Dynamic
pricing, RTP, CPP…)
Economy
of Scale
Economy of
Diversity
« Green Pricing »
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