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Tuesday, December 15, 2009

Real Time Energy Pricing

real time pricing and automated price response service

One may think that the cost of electrical energy is the same, independently form the day of the year and the time of the day. This is not the case. Because of the usage habits and necessities of both residential and industrial users, the demand for electrical energy changes during the day and during the year, peaking for example in the hot summer afternoons.

For this reason, power plants do not run continuously all day long: they are scheduled to start and stop at some times, on the basis of a day ahead prediction. This means two things:
  1. when the demand peaks, all the generation units have to be started, including the most polluting and expensive ones
  2. when the demand is low, most of the generation units are turned off, even renewables like wind power, that works so well in windy winter nights!
This issue is going to become even worse if we assume that a larger number of renewable energy sources will enter the market in the next years!

How can we deal with this?

The main idea is that users (both industrial and residential users) should have an incentive to use electrical energy when the demand is low.

As you can easily imagine, the easiest way to convince customers to use energy in a wise way, is to price it depending on the demand. This is exactly what has been proposed by the ComEd Residential RealTime Pricing Program. This program is made of two parts:
  1. an architecture that tells you the price of energy in real time. What they do is to install new smart meters at participating users' house, that show the real time price of energy to them. Moreover, they can always go online and look at the current price of energy and at the prediction for energy price of tomorrow, hour by hour. Or they can have it emailed  or messaged to their phone. See the graph below, for example!
  2. once the users know the price of energy, they have to be able to change usage habits according to it. One can always look at the energy price and decide, for example, to wait until night before starting the dishwasher. However, real savings start when electrical appliances automatically decide when to run and when to stop. This is what they call "Load Guard", or "Automated Price Response Service". Take air conditioning: with this system, you can decide to put it in an energy saving mode every time energy price goes above a threshold!
predicted energy prices and real time price

Quite a nice project, isn't it?
Keep in mind that real time pricing of energy won't be an option, if we want renewable energy sources to be used for a significant amount of our energy production.

Sun is not shining every day and wind is not blowing every night.
We got to adapt!

The good news is that we can also save some money.