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Why New Daedalus?

Daedalus was the mythical great architect and artificer of the classical world. Today, embedded intelligence is enabling the most profound changes in the way we create and use buildings since his day.

Building Intelligence meets the Intelligent Building. The Intelligent Building negotiates with the Intelligent Grid. How will this transform how we interact with the physical world?

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Thursday
Aug122010

Moving beyond Demand Response (DR) – Pricing Services

Utilities and Regulatory commissions are obsessed with demand response (DR). All want to know how to get more of it. I could, with little effort, attend a national conference on DR every week. A large share of the standards priorities of the National Institute of Standards and Technology (NIST) to support smart grids support DR. And yet, almost everyone recognizes that DR is a short-term solution. Plans are just now underway to move beyond DR.

The most expensive electricity comes from the dirtiest generating facilities used for only a few hours a year. If consumers would use less energy, i.e., reduce demand, in just those few periods, then those expensive dirty plants could be turned off permanently. To do this, electricity suppliers need to anticipate when those moments are coming and take steps to reduce demand. We call this Demand Response.

At its simplest, DR is just turning things off. Rolling black-outs are the simplest form of DR. They make consumers very unhappy. Utilities have worked for years to improve on this model through direct load control. They have been installing remote switches on home heat pumps since the ‘70s. Today, they are developing SEP to control homes device by device using software installed in smart meters. Consumers like it in off-months, when they get a bill reduction and the utilities do nothing. In summer months, when the utilities do something, things get turned off in the home. They make consumers very unhappy.

In the commercial building world, utilities pay per incident. The energy use is greater, the number and complexity of systems on the premises are bigger, and the possible DR per incident is larger. In the most expensive markets, this pays for the custom integrations needed to respond to price signals. This is probably good enough for today’s grid. Tomorrow’s grid will be much less predictable, and the need for more participants will be greater.

Just as there are times when there is a shortage of electricity, there are times when there is a superabundance. Buildings that take responsibility for storing energy in advance are better able to manage demand reductions when asked. If the markets offer fixed prices except for the peaks, then it will be cheaper to ignore storage and DR. Sooner or later Markets must follow availability. The most important feature of smart grids will be to recognize scarcity and abundance faster, and to thereby price better.

In the future, then, a Pricing Service will be the essential load management service that operates the grid. A grid pricing service must be able several questions:

  1. What is the price of Electricity now?
  2. What will it be in 5 minutes?
  3. What was the highest price for electricity in the last day? Month? Year?
  4. What was the lowest price for electricity in the last day? Month? Year?
  5. What price will electricity have for each hour of the day tomorrow?
  6. What was the high price for the day the last time it was this hot?

The answer to each of these questions has another component “How sure are you?” Those prices may be fixed tariffs absolutely locked down. Those prices may be fixed tariffs, “unless a DR event is called.” Those prices may be wild guesses about free markets.

At its core, OpenADR must have price services in the future.

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