Is Deferrable Demand an Effective Alternative to Upgrading Transmission Capacity?

With high penetrations of variable generation from wind turbines in remote locations, transmission capacity may be inadequate to transfer this relatively inexpensive source of generation to demand centers. The major reason is that transmission corridors into load centers are often congested when the system load is high, and additional wind generation is effectively shut out. In contrast, when the system load is low and the wind is blowing, wind generation may be able to meet most of the load throughout the network subject to the specific limitations of the network’s topology. This paper compares the system costs of two very different ways of reducing congestion on the network to increase the annual amount of potential wind capacity dispatched. The first way uses the standard supply side solution of upgrading transmission capacity on the network. The second way uses a demand-side approach in which deferrable demand shifts the system load from on-peak periods to off-peak periods. In addition, the deferrable demand can be used to offset the inherent variability of wind generation and reduce the amount of reserve generating capacity needed to maintain operating reliability. In fact, reducing the total amount of conventional generating capacity needed to maintain system adequacy for a given amount of installed wind capacity is a major source of cost savings with deferrable demand. The simulation is based on a multiperiod (24 h), stochastic, security constrained optimal power flow (SCOPF) and a reduction of the Northeastern Power Coordinating Council (NPCC) network. This framework includes stochastic forecasts of potential wind generation at multiple sites as inputs as well as deferrable demand (e.g., thermal storage) at different load centers. It determines the optimum patterns of dispatch, reserves, and ramping to maintain reliability over a set of credible contingencies. The results demonstrate that deferrable demand can effectively (1) lower the average wholesale prices for energy;, (2) reduce the installed generating capacity needed to maintain system adequacy; and (3) mitigate the ramping costs associated with wind variability. With a sufficient amount of deferrable demand, the typical daily pattern of load can be flattened, and all the variability of wind generation can be mitigated. The overall conclusion is that deferrable demand reduces the total annual cost of the conventional system substantially more than upgrading transmission capacity, and it is an effective alternative to the standard supply side solution.