Benefit of Customer Load Shift

[saladhawks]

The utility I work for just completed a Smart Grid Business Case. One of the identified benefits of the Smart Grid is having customers shift usage from on to off peak periods.

For each KW of on peak demand shifted, consulant used a deferred T&D capital benefit of $685 / KW - Year based on a 2007 DOE Study on The Potential Benefits of Distributed Generation. This value sounds very high to meet based on the cost for substation and distribution capital projects I have been involved with to date.

How are other utilities quantifying the benefit of shifted KW peak?

 

[bacon4life]

The example the RUS Guide for Evaluation of Large Power Transformer Losses used a value of $130/kW for transmission plus $1000/kW for generation.

http://www.usda.gov/rus/electric/pubs/1724e301.pdf

 

[jghrist]

The example the RUS Guide for Evaluation of Large Power Transformer Losses used a value of $130/kW for transmission plus $1000/kW for generation.

Note that these are not annual costs. You would multiply by the fixed charge rate of 14.6% to get an example annual cost of $165 for generation and transmission. This doesn't include distribution and substation transformer capital costs.

 

[redfurry]

$685/yr/kw = $0.078 / kwh

That's above wholesale price, but less than retail for residential customers.

Could be reasonable, depending on who's counting.

 

[jghrist]

$685/yr/kw = $0.078 / kwh

That's above wholesale price, but less than retail for residential customers.

Could be reasonable, depending on who's counting.

Comparing the benefit of shifting peak kW demand with the cost of energy is not proper. Shifting the operation of 1 kW of load from 4 pm to 8 pm does not reduce energy use by 8760 kWh. It doesn't reduce energy use at all. It reduces cost by allowing lower investment in distribution, substation, transmission, and generation if the investment is needed to meet demand at 4 pm. It may also result in the use of lower cost energy, but that's different from the "deferred T&D capital benefit." It may not be proper to include the investment in generation if it is only T&D capital benefit.

Also consider that you have to count high in order to justify using tax-payer provided money for smart grid stuff.

 

[redfurry]

Comparing the benefit of shifting peak kW demand with the cost of energy is not proper.

Oops. You're right. Guess I should think before I post. I was thinking about the cost of reduced losses.

The crudely calculated cost benefit of shifting load should be something like A + B where:

A = Reduced generation cost due to reduced need for investment in peaking generation, lower cost generation
B = Reduced cost of building/maintaining smaller T&D system

[A] can be calculated with some degree of accuracy, but I suspect this number is fairly small.

is a very subjective number. It's like asking how much more it costs to add a sweater to an old soft-sided suitcase. You know you can't keep adding clothes forever without buying a new or bigger suitcase, but there's no clear cost.

 

[jghrist]

is a very subjective number. It's like asking how much more it costs to add a sweater to an old soft-sided suitcase. You know you can't keep adding clothes forever without buying a new or bigger suitcase, but there's no clear cost.

About the only thing you can use an average cost. You might save $1,000,000 by shifting 100 kW on an overloaded line but save nothing for 1,000 other lines. If the load is growing, you could determine the present value of delaying an upgrade, but this kind of analysis gets tricky to implement.

 

[stevenal]

Where does the year come in? Shouldn't the units be $/kW (demand charge) rather that $/kW-year (energy charge) to speak of capital costs?

 

[jghrist]

Where does the year come in? Shouldn't the units be $/kW (demand charge) rather that $/kW-year (energy charge) to speak of capital costs?

You would use cost per year to determine the benefit per year.