Measurement and Verification for Demand Response

Electric grid operators and planners, as well as their regulators, must have confidence that demand response resources will be there when they are needed, just as power plants and power lines must be ready when needed. The working group looked at the status of efforts to measure and verify demand response resources, and provided a path forward towards credible, widely accepted demand response (DR) measurement and verification protocols or best practices.

Measurement and verification (M&V) for DR involves methods for determining demand reduction quantities. This report addresses M&V for DR in 2 broad contexts:

1. Settlement, meaning determination of the demand reductions achieved by individual program or market participants, and of the corresponding financial payments or penalties owed to or from each participant.
2. Impact estimation, meaning determination of program-level or participant segment demand reduction that has been achieved or is projected to be achieved, used for ongoing program valuation and planning.

This document provides common language, generally following the terminology and framework of the NAESB DR Business Practice Standards for DR. The guidance in this report:

• Describes DR M&V methods that work best in various market and program contexts, including wholesale capacity or energy markets, and DR programs in retail markets, all with varying operating rules and participant characteristics.
• Identifies the types of inaccuracies to which different methods are subject, and approaches to mitigate these inaccuracies, in different contexts.
• Identifies areas for further work to enhance guidance on DR M&V best practices.