Should Storage-Centric Tariffs be Extended to Commercial Flexible Demand?

TL;DR

This paper investigates whether extending storage-centric tariffs to commercial flexible demand can improve operational flexibility and reduce peak demand and bills, using a case study of PG&E's tariff.

Contribution

It demonstrates that extending storage-centric tariffs to flexible demand can effectively reduce peak demand and bills, enhancing utility operational flexibility.

Findings

Extending tariffs reduces net demand ramp rates during peaks.

High flexibility consumers see decreased peak demand and bills.

Tariffs can be more effective when applied to flexible demand.

Abstract

Further electrification of the economy is expected to sharpen ramp rates and increase peak loads. Flexibility from the demand side, which new technologies might facilitate, can help these operational challenges. Electric utilities have begun implementing new tariffs and other mechanisms to encourage the deployment of energy storage. This paper examines whether making these new tariffs technology agnostic and extending them to flexible demand would significantly improve the procurement of operational flexibility. In particular, we consider how a commercial consumer might adjust its flexible demand when subject to Pacific Gas and Electric Company's storage-centric electric tariff. We show that extending this tariff to consumers with flexible demand would reduce the utility's net demand ramp rates during peak hours. If consumers have a high level of demand flexibility, this tariff also reduces the net demand during peak hours and decreases total electric bills when compared to the base tariff.