Integrating Demand Response and Distributed Resources in Planning for Large-scale Renewable Energy Integration

The electricity grid is transitioning from a centralized and uncoordinated set of large generators and loads to a framework that also includes decentralized and coordinated "distributed energy resources" (DER). Advances in renewable generation, energy storage, efficiency, and controls technology present a significant opportunity for demand-side investment that is matched to the needs of the future grid infrastructure and operations, but the complex interplay of controls technology and grid operations makes estimating and realizing the potential of DER a significant challenge. Supply curves for conserved energy have long been used to synthesize energy efficiency opportunities for electricity system planners and show how demand side resources compete with building new power plants. We have developed a similar approach for supporting policymakers who now face a range of technology options for DER, with a focus on describing the potential for demand response (DR) to provide flexibility to the grid. We describe our modeling approach using supply curves for demand response across four key dimensions: reshaping with rates, shedding at critical time, shifting to capture renewables, and fast-response "shimmy" to balance the grid. In a California-focused study, we find a significant potential for DR to support the grid, and a need for integration between DR and energy efficiency. The combined efficiency benefits from a better-controlled and commissioned facility can lead to significant reductions in the cost of DR, increasing the quantity that is cost competitive by 5-200%. The benefit stream from DR can alternatively be framed to "buy down" the cost of EE investment.