Promoting the role of power demand response

Last summer, the power load of 18 provincial power grids including Beijing hit a record high. In May this year, the load of Guangdong Province's power distribution exceeded 100 million kilowatts. On July 4, the load of Beijing's power grid exceeded 20 million kilowatts. The peak power load of Shanghai's power grid this summer is expected to increase by about 8.27% compared with last year.

The power load in various regions is likely to reach new highs. According to the research and forecast of the State Grid Planning and Design Institute, the power supply and demand situation in most provinces and regions in the country will become tighter in the next three years. Among them, 16 provinces in the country need to increase power supply and start the preliminary work of a number of thermal power projects in a timely manner.

There are different opinions in the industry about the future power supply and demand situation and whether it is necessary to start thermal power projects. However, what should be considered is that under the current situation of power market reform and energy Internet technology progress, increasing installed capacity should no longer be the only and primary option to meet the growth of power demand. Deepening the potential of power demand is not only a more economical option, but also an effective way to optimize the power system and improve efficiency.

In the past, the main function of power demand side management was to reduce peak loads and fill valleys, and the main means were administrative methods such as power outages and load control. The functions of the power generation side and the power consumption side were clearly defined, one was "supply" and the other was "use", and the identities of the two were not interchangeable.

Now, power demand side management is moving towards power supply and demand coupling, and the planned compulsory approach will gradually be replaced by market-based power demand response. Power demand response is no longer a simple peak shaving and valley filling, but has a price, which can be traded in the auxiliary service market and the spot market, giving users the right to choose electricity in a market-based manner. Under price incentives, user-side resources can be aggregated into a "virtual power plant" to participate in regulating power balance. At the same time, power demand response can also perfectly match the new models and new formats such as the "Internet +" smart energy and integrated energy services that are in full swing.

In terms of the practice of power demand response, my country has organized pilot construction work in Beijing, Jiangsu, Shanghai and other places. The State Grid Jiangsu Power has also set a world record of 3.52 million kilowatts of single response. In terms of marketization, Jiangsu and Shandong have actively tried the market bidding model of demand response. The construction of pilot projects and a series of related explorations have accumulated useful experience for power demand response.

But objectively speaking, my country's power demand response is still in its early stages. Judging from the practices of several provinces, demand response is mainly concentrated in time-of-use electricity prices, peak electricity prices, interruptible loads, etc., and users are not very enthusiastic about actively participating. Judging from the work arrangements for power demand response in Guangdong, Zhejiang and other provinces with large electricity consumption this year, administrative means are still more than market means. In the future, if power demand response is to realize its due value, it should also focus on price mechanisms, subsidy mechanisms, platform construction, and the introduction of market entities.

First, establish a mechanism for market-based price formation. If electricity prices are fully market-based, users will naturally adjust their electricity consumption behavior according to market prices. In the current market environment, demand response resources have no way to participate in the market, and it is difficult to accurately price the value of demand response. In the "Electricity Demand Side Management Measures (Revised Edition)" issued by my country in 2017, it is mentioned: "In conjunction with the advancement of electricity market construction, promote the inclusion of demand response resources in the electricity market." In a mature electricity market environment, demand response can participate in both the ancillary service market and the electricity market and capacity market, and can be both retail and wholesale.

Secondly, improve the existing subsidy incentive mechanism. In the early stages of electricity demand response, users are still mainly attracted to participate by subsidies, and there is currently no market-based mechanism for formulating incentive subsidies. The subsidy standard is set by local governments, and it is difficult to conduct a scientific social cost-benefit assessment. If the subsidy standard is too high, it will cause unnecessary fiscal expenditures. If the subsidy is too low, it will not attract enough users to participate, making it difficult to optimize the allocation of resources.

Secondly, promote technical support and platform construction. Electricity demand response requires advanced software and hardware technologies as support to achieve functions such as information interaction and sharing, online monitoring of electricity consumption, data statistical analysis, electricity decision support, demand response and orderly electricity consumption. At the same time, it is necessary to use advanced concepts and technologies such as big data and cloud computing to build a comprehensive platform for electricity demand response, and to form sufficient user-side platform support so that electricity users can make appropriate responses based on platform data and price incentives.

Finally, more market players should be introduced to participate in demand response. At present, the scope of participants in power demand response is small and the interactivity is not strong. The implementation entities are mainly power grid companies, and the response targets are mainly industrial users. There are no third parties involved in demand-side response, such as load integrators and power sales companies. It should be guided to form a situation where multiple entities such as power grid companies, power service agencies, power sales companies, and power users participate and achieve win-win results.

The original article was first published in the 25th issue of "Electric Power Decision-making and Public Opinion Reference" on July 5, 2019