Wind energy, like many renewable energy technologies, is highly variable. The consequence of that variability to utilities is a constant struggle to integrate varying levels of energy production into a complex grid because utilities must match variable energy supply with variable energy demand at all times.
To date, utility wind integration studies have focused on flexible generating technologies (hydro and natural gas are the predominant flexing resources used by utilities) to balance supply and demand.
The costs of integration range from the opportunity cost of holding extra generation capacity to increased wear and tear on equipment from cycling up and down to more nuanced costs from meeting regulatory requirements for reliability. These costs add to the overall cost of wind energy.
In contrast to changes in energy supply, demand response uses changes in energy demand to match load. For example, electric water heaters are remotely switched off for brief periods of time during peak loads, effectively treating an individual hot water tank like a battery. Many utilities use some type of demand response to help balance load in especially high peak or unique circumstances.
Bonneville Power Administration recently signed a contract with EnerNOC to provide demand response services to better integrate wind into the electric grid. Using demand response specifically to integrate wind is a nascent idea and the BPA – EnerNOC partnership will be one of the first tests of the concept.
There are challenges still to overcome: demand response is often difficult to verify and requires early notification. The day ahead market (meaning calls are sent from the utility one day in advance for demand response customers to reduce load) is well functioning but obviously requires excellent forecasting, which is difficult for wind energy.
Rapid demand response (under 10 minutes) is extremely difficult to verify and requires high payments to the energy consumer limiting their demand.
Efforts like the recent partnership between BPA and EnerNOC will provide excellent learning opportunities for both utilities and demand response aggregators. Demand response will not immediately solve the challenges of wind integration, but, with time it should provide one more tool for utilities to use to lower the final costs of renewable energy resources.