July 10, 2009

Getting paid not to use

electricity just got easier

Utility Integration Solutions (UISol) is approaching ISOs and RTOs in the US with a software system that will let big power customers sell on those regional markets the results of their own DR.  The idea of winning financial value for cutting power use isn't new but selling it on the market is a nascent idea that just needs the right constructs in place to make it work.

          The software is proving itself now at huge RTO PJM.  The RTO takes its name from Pennsylvania, New Jersey and Maryland but covers parts of 13 states and the District of Columbia.  It just started using the UISol system to string together and automate wholesale power market transactions that involve PJM, utilities and DR aggregators -- such as Enernoc, UISol CEO Ali Vojdani told us yesterday.

          ISO/RTOs manage huge sections of grid covering multiple utilities over big regions of the country, usually with wholesale markets that allow power to enter the region on one place to serve consumers in another part.

          UISol is a business-integration specialist and is forging alliances with firms that do business internationally, thus it can sell its Demand Response Business Network (DR Biz Net) software abroad.  The firm has a strategic partnership with Areva in France (SGT, Jun-18), for example, and is extending its software solution to other utilities, Vojdani reported.

          “We've essentially created a scaled demand-response management [DRM] platform that can be used by any participant in the DR value chain.”

          FERC this year issued a ruling that gives demand resources including DR a chance to play in the wholesale power markets where utilities have for years shopped for cheap power, Vojdani explained.

          The Safeways and Sheratons of the world will soon be able to choose between providing DR to a wholesale market and providing DR at a distribution or retail level by partnering with a particular utility.  In the former case, Vojdani noted, grocery chains and hotel groups plus churches and school systems and the like will have a megawatt resource that “goes and competes with the generators,” including coal-fired units from other states in wholesale markets.  These demand-side market participants will be paid to cut power use.

          The number of demand resources is growing dramatically, Vojdani said.  PJM singularly provides open access to the transmission system it covers and is now juggling over 7,000 demand resources.

          Automation of these DR management business processes is essential in part since “every transaction needs to be tracked, verified and settled -- and could be disputed by various parties,” Vojdani warned.

          FERC's ruling stimulated a great deal of software development activity such as UISol's plus activities by ISOs and RTOs to comply with the ruling.

          Lafayette, Calif-based UISol spent seven years developing its DR Biz Net and it first delivered it to PJM last month.  Vojdani declined to say how much the PJM contract was worth.

          Generally speaking, Accenture, IBM, Cap Gemini and SAIC are among UISol's competitors.

          UISol is, Vojdani asserted, “several years ahead of our competitors,” as many of them have yet to fully appreciate the complexity of scaled DR management.

          The number of DR resources is bound to grow as intelligent home appliances and electric vehicles are linked in to the supply chain connected to the wholesale markets.  “Our vision is to automate the workflow and information processing among all market participants,” Vojdani said, “to accommodate such growth.”

          UISol's DRM software lets service providers register demand resources such as a group of schools, supermarkets or churches, into a wholesale market to help avoid blackouts and cut peak energy prices.  Validation and verification of load reductions are automated.  All participants are told of changes automatically and in a timely manner.  The software adds efficiency and transparency to DRM and that's considered essential to the growth of DR.

          The DR lab at the California ISO features UISol's DRM software.  That installation demonstrates secure communication with DR resources and automation of customer response through so-called intelligent agents.

          The inclusion of customers as distributed resources in wholesale power markets, such as at PJM, “is a very key element of introducing intelligence” to the grid, Vojdani noted.  “We're just doing things a smart way, which is automation of transaction processing.”

          UISol's DR Biz Net is “a tool that essentially helps power pools like PJM to treat DR resources on par with central generation resources,” he added.