California regulators weigh actions to expand storage, demand response roles in state’s grid
California regulators are weighing several important decisions ahead of their July business meeting. Besides addressing concerns of utility bankruptcy and wildfire prevention, they could be voting on two separate proposals to help expand the roles of demand response and energy storage on the grid.
California’s demand response auction mechanism (DRAM) has been “successful to a certain extent,” but must still be improved before regulators can make it permanent, according to one of the proposals, published Friday in a draft order by the state’s Public Utilities Commission (CPUC).
The proposed decision, written by Administrative Law Judge (ALJ) Kelly Hymes, concludes the auction mechanism “requires several immediate critical changes to address its shortcomings in order for the commission to continue its operation.”
The commission launched the DRAM pilot in 2015, allowing utilities to begin procuring aggregated demand response for resource adequacy. In a 2018 decision, the PUC determined results of the pilot were “too complex” to be tackled in an informal review process, and extended the review, which will now continue.
“To be clear, we cannot expand the role of the Auction Mechanism or adopt it as a permanent mechanism until improvements are evident,” the proposed decision says.
Regulators created DRAM to encourage new participation in the demand response market while improving the resource’s reliability. The proposed decision notes positive indicators resulting from the auction mechanism, including an “encouraging” number of new customers and providers.
The DRAM program is a “pay-as-bid” solicitation through which California’s large investor-owned utilities seek monthly demand response system capacity, local capacity and flexible capacity, which contributes to their resource adequacy obligations. Participants in the auction mechanism are required to bid aggregated demand response directly into the CAISO energy markets.
