Energy Analysis Department Electricity Markets and Policy Group
DOE Smart Grid Investment Grant Program: Dynamic Pricing & Consumer Behavior Studies
Lisa Schwartz, Regulatory Assistance Project
Consultant to Lawrence Berkeley National Laboratory
Pacific Northwest Demand Response Project Meeting
July 15, 2010
Energy Analysis Department Electricity Markets and Policy Group
This presentation was prepared by Chuck Goldman,
Lawrence Berkeley National Laboratory, and
originally presented at the National Town Meeting
on Demand Response and Smart Grid in
Washington, D.C., on June 24, 2010.
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Energy Analysis Department Electricity Markets and Policy Group
Dynamic pricing pilots & AMI deployment
Dynamic Pricing pilots: Past experience
- Experimental designs of varying quality and with differing
objectives (e.g., technology trials, customer acceptance)
- Small sample size for some/many pilots
- Focused on answering a limited set of questions• How much peak demand savings occurs? Net energy savings?
• What role does enabling technology play in increasing peak
demand savings?
• How satisfied are customers with particular rate designs?
“Business case” for AMI may depend on benefits from
dynamic pricing; yet results from prior studies are often
viewed skeptically by PUCs & stakeholders
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Energy Analysis Department Electricity Markets and Policy Group
Deeper questions remain unanswered about
the transforming capabilities of AMI
New studies should investigate the power of AMI in
seamlessly integrating pricing, technology, and
information feedback to induce a change in behavior
Pricing
• Customer acceptance
• Market segmentation
• Character of response
• Rate design
Technology
• Customer acceptance
• Market segmentation
• Character of response
Information Feedback
• Market segmentation
• Delivery mechanisms
• Persistence
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Energy Analysis Department Electricity Markets and Policy Group
SGIG: Advancing our understanding of customer
response & acceptance of dynamic pricing
June 2009: DOE issued Funding Opportunity Announcement
(FOA) for Smart Grid Investment Grant (SGIG) program
DOE interested in advanced metering projects that involve
dynamic pricing within the framework of a controlled
experiment
- Focus on dynamic pricing tariffs that come closest to aligning
customer incentives with true costs of providing power (i.e., RTP,
CPP)
- Emphasize the need for randomized control trial in the
experimental design
- Provide highly granular customer-level consumption and
demographic data to DOE at end of project
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Energy Analysis Department Electricity Markets and Policy Group
Role of dynamic pricing in retail service
offerings
Changes in retail pricing required to capture full value of AMI
DOE SGIG FOA clearly states preference for making dynamic pricing
the required default service offering
- Not all jurisdictions will immediately embrace this strategy
- DOE expects the results of these studies will help make the case for
transitioning there over time
- Approaches to rate offerings such as “opt-out” or “opt-in” are viable
alternatives that will require a different experimental design than those
prescribed in the FOA
Opt-
In Voluntary Service
Opt-
Out
Default Service(Also Voluntary)
Manda
tory Default
Service
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Energy Analysis Department Electricity Markets and Policy Group
SGIG Dynamic Pricing Projects: Role of
Technical Advisory Group (TAG)
DOE selected ~10 projects where utilities proposed
dynamic pricing with consumer behavior study
DOE (LBNL) established TAG to work with each utility:
- Review and provide feedback on proposed Consumer Behavior
Study Plan
- Work collaboratively with utilities to ensure well-designed,
methodologically sound studies consistent with FOA guidelines
- Review interim and final evaluation studies
TAGs comprised of industry experts
- National Lab: LBNL
- Consultants: FSC Group, The Brattle Group, KEMA, Regulatory
Assistance Project, Theresa Flaim, Roger Levy, Karen Herter
- Academics: UC Berkeley Energy Institute at Haas, Dr. Ben Hobbs
(John Hopkins), Dr. Richard Feinberg (Purdue University)7
Energy Analysis Department Electricity Markets and Policy Group
SGIG Dynamic Pricing Projects:
Data Collection and Reporting
Utilities conducting consumer behavior studies on their
dynamic pricing projects will collect & provide:
Project Data
- Customer-level hourly interval consumption data
- Customer characteristics
Historical Data
- Hourly (or monthly) customer-level data
- Ideally covers period 12-18 months prior to commencement
of study
Benefits and Metrics Data
- Customer-level (or customer-cohort level) impact metrics
- Customer (or customer-cohort) characteristics
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Energy Analysis Department Electricity Markets and Policy Group
SGIG Dynamic Pricing Projects:
Evaluation Studies
Each participating utility will produce consumer behavior
study of their dynamic pricing project
DOE will also prepare Report that provides meta-analysis
of all projects
- Goal is to provide policymakers and regulators with set of studies
that are methodologically sound and rigorously evaluated
- Better understand what may drive common results across
projects, regions, customers (e.g., low-income, seniors)
- Better explain unique results of individual projects
DOE intent is to create publicly accessible database (with
appropriate controls for masking customer identity)
- Allow academics, consultants & industry stakeholders to
access this rich data set to analyze issues/questions
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Energy Analysis Department Electricity Markets and Policy Group
SGIG Dynamic Pricing Projects:
Likely timeframe for Evaluation Studies
Most utility dynamic pricing projects have proposed to:
- Get into the field by or during 2011
- Run for two summers (i.e., summer 2011 & 2012)
- Provide DOE with interim report & final evaluation study (by early
2013)
DOE Reports on SGIG dynamic pricing projects
- Meta-analysis of results from SGIG Dynamic pricing projects:
Interim report (2012) and Final Report (Late 2013)
- Targeted studies (e.g. role of enabling technologies and
information feedback, customer acceptance by targeted
populations)
- Customer-level data will be made publicly available
commensurate with the release of DOE Evaluation studies
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