Advocating for a Modified Proxy Demand Resource Model at CAISO
Crediting exports is needed to fully integrate batteries with wholesale market.
This blog is based on the presentation given by Leap, Renew Home (which used to be OhmConnect) and California Efficiency Demand Management Council (known as CEDMC) at the April 24, 2024, CAISO Annual Policy Catalog Roadmap Process 2024 Working Group meeting.
As the California Independent System Operator (CAISO) continues to navigate the evolving energy landscape, the integration and efficient utilization of Distributed Energy Resources (DERs) become increasingly critical. One area ripe for improvement is the treatment of behind-the-meter (BTM) battery storage within the current Proxy Demand Resource (PDR) construct. The introduction of a Modified Proxy Demand Resource (mPDR) model presents a promising solution that can better accommodate BTM batteries and enhance CAISO's ability to leverage these resources effectively. This blog advocates for the adoption of the mPDR model, highlighting its benefits and the pressing need for such a modification.
Source - CEDMC presentation
The Current Challenge with BTM Batteries
Under the existing PDR framework, BTM batteries face significant limitations:
Lack of Credit for Exported Energy: DR participants with battery storage do not receive credit for the energy they export to the grid. Current measurement options often require additional meters or assign a zero value to intervals with exports, effectively hiding a substantial amount of potential capacity from the market.
Visibility Issues: CAISO currently lacks visibility into exporting BTM assets participating in demand response (DR). This invisibility means that a considerable amount of residential battery capacity remains untapped and unutilized in the wholesale market.
These issues not only diminish the potential contributions of BTM batteries to grid stability and reliability but also disincentivize further adoption and integration of these technologies.
Source - CEDMC
The Rise of DERs and the Need for Change
DERs, including battery storage, are rapidly proliferating due to falling prices and increasing adoption rates. For instance, California is expecting a 770% increase in BTM battery deployments from 2019 to 2030. However, the current market integration mechanisms are inadequate for harnessing this growing capacity. The following points underscore the urgency of adapting our frameworks:
Battery Capacity Growth: In 2023, California had 843 MW of residential battery storage, but less than 10 MW participated in third-party wholesale integrated programs. This discrepancy highlights the inefficiency of the current system.
Hidden Capacity: A significant portion of BTM battery capacity remains hidden from CAISO's view. In 2024, an estimated 620 MW of residential battery capacity will be hidden, with projections suggesting this could grow to 1.4 GW by 2030.
The Modified Proxy Demand Resource (mPDR) Model
The mPDR model, introduced by the Energy Division in August 2023, offers a viable solution to these challenges. The model allows individual Service Accounts to export energy as long as the total load at the SubLAP (Sub-Load Aggregation Point) level remains positive. This approach provides several key benefits:
Visibility and Dispatchability: By allowing and crediting exports, CAISO gains visibility into these resources, enabling better grid management and dispatchability.
Enhanced Energy Supply: Crediting exported energy can increase the compensated output for each battery by over 3.5 times, significantly enhancing the available energy supply.
Increased Participation: Recognizing exports can drive higher participation rates in DR programs, unlocking more capacity and improving grid resilience.
Performance and Reliability
The mPDR model addresses performance and reliability concerns through careful design:
Positive Net Load: DR providers ensure that the aggregation load remains positive at the SubLAP level, preventing net exports to the transmission system.
Interconnection Standards: Resources interconnected under Rule 21 will adhere to reliability standards, ensuring no adverse impacts on the distribution system.
These measures eliminate the need for additional studies, such as a WDAT study, streamlining the process and reducing barriers for DER participation.
Conclusion
The adoption of a Modified Proxy Demand Resource model at CAISO is not just a technical adjustment; it is a necessary evolution to fully integrate and capitalize on the growing deployment of DERs, particularly BTM battery storage. By modifying the current PDR construct to credit battery exports, CAISO can enhance grid stability, increase energy supply, and drive greater participation in demand response programs. As California moves towards a more decentralized and sustainable energy future, embracing the mPDR model will be a critical step in ensuring that all available resources are effectively utilized for the benefit of the grid and its consumers.