Two Models, Two Outcomes for Demand Response in PJM, California

Two different models yielded two very different outcomes for demand response in PJM territory and California recently. The results illuminate the pros and cons of how distributed energy resources are treated in both markets.

In PJM’s most recent annual capacity auction, for delivery in 2021-2022, demand response was a big winner, with PJM Interconnection awarding Enel X subsidiary EnerNoc, more than $180 million in capacity payments for demand response resources.

Meanwhile, in California, regulators put on hold for a year a Pacific Gas & Electric request for approval of a demand response auction mechanism, or DRAM, highlighting how California is struggling to create a plan in the wake of its botched attempt to deregulate in the late 1990s.

The initial results of a study by the California Public Utilities Commission (CPUC) into a pilot DRAM found “issues that are too complex to be addressed in the informal resolution process,” as directed by an earlier decision. In addition, the pilot has demand response budgetary implications, the commission said in its order.

Doug Staker, vice president of global business, Enel X, said that the different outcomes reflect the different models for auctioning demand response. He noted that both models have advantages; California is doing a great job of cutting greenhouse gases with renewables.

“In California, they’re trying to re-shape the market,” he said. The state was the first...Continue reading Lisa Cohn's article on Microgrid Knowledge.