Lawrence Berkeley National Laboratory

Demand response programs are often quickly and poorly crafted in reaction to an energy crisis and disappear once the crisis subsides, ensuring that the electricity system will be unprepared when the next crisis hits. In this paper, we propose to eliminate the event-driven nature of demand response programs by considering demand responsiveness a component of the utility obligation to serve. As such, demand response can be required as a condition of service, and the offering of demand response rates becomes a requirement of utilities as an element of customer service. Using this foundation, we explore the costs and benefits of a smart thermostat-based demand response system capable of two types of programs: (1) a mandatory, system-operator controlled, contingency program, and (2) a voluntary, customer controlled, bill management program with rate-based incentives. Any demand response program based on this system could consist of either or both of these components. Ideally, these programs would be bundled, providing automatic load management through customer-programmed price response, plus up to 10 GW of emergency load shedding capability in California. Finally, we discuss options for and barriers to implementation of such a program in California.