Development of a Comprehensive / Integrated DR Value Framework

This report addresses the research and development objectives of the Research Opportunity Notice RON – 1 issued by the Demand Response Research Center (DRRC). The DRRC was created by the California Energy Commission (ENERGY COMMISSION) and charged with conducting and disseminating near-term research that advances the multi-institutional needs for demand response (DR) in California. The objective is the description of a “comprehensive DR conceptual evaluation framework” (from RON – 1 R&D Objectives). This will involve developing and describing approaches, processes, and procedures for making good decisions regarding the role of DR in regional California electric markets. The framework that is described in this document uses as its organizing focus the investment decision in DR, i.e., what information is needed to make good decisions regarding the appropriate investment in DR to lower overall system costs and achieve market-wide objectives. This method is also designed to be able to address different stakeholder objectives. The report develops a “problem statement” for the valuation of DR, and an assessment of needs and objectives that should be met by a comprehensive valuation framework. The report presents an approach to developing a comprehensive valuation framework that consists of four Task Work Areas: 1) Price effects from DR portfolios; 2) Transmission investment avoided/deferred costs; 3) Distribution investment deferred costs; and 4) Market effects focusing on hard to quantify benefits.