4Q 2021

Load Flexibility Valuation Is Critical to Grid Reliability

The energy industry is undergoing a foundational and necessary transition away from fossil fuels. The growth of variable renewable energy sources has increased supply-side volatility resulting in new net load shapes. Jurisdictions around the world are implementing aggressive clean energy targets and emissions reductions goals along with new market regulations for distributed energy resources (DER). The transportation and buildings sectors are increasingly electrifying end uses that once relied on fossil fuels, and advancements in digitalization are being used in the energy sector to improve operations.

As a result, load flexibility has been exposed as a valuable grid resource in the path to achieving zero emissions in the energy sector. Load flexibility plays a critical role in maintaining grid stability by reducing strain on the grid and allowing for continued reliable operation as the supply-side landscape trends toward renewables. To ensure load flexibility reaches its true potential and the grid remains balanced, load flexibility must be accurately valued in energy markets. Accurate valuation of load flexibility is expected to lead to fair competition with traditional generation sources as well as innovation.

This Guidehouse Insights report discusses the ongoing shift in the energy industry from fossil fuel sources to renewable sources, its impact on grid operations, and the ways in which load flexibility can address that impact. The report provides a formal definition for load flexibility and recommendations to key stakeholders for incorporating and valuing load flexibility in their portfolios.

Pages 17
Tables | Charts | Figures 2
  • What is driving the need for load flexibility as a resource?
  • How can load flexibility be used as a grid resource?
  • What can be done to determine the value of load flexibility? 
  • Why is it important to accurately value load flexibility in energy markets? 
  • What effect does load flexibility have on traditional utility business models?
  • Grid operators
  • Utilities (vertically integrated, TDU, and distribution) 
  • Regulators
  • Building equipment and DER manufacturers
  • Investor community




Supply Volatility Increases with More Renewable Sources

Fossil Fuel Power Plants Have Historically Provided Grid Stability

Clean Energy and Emissions Goals Drive Renewables Growth

Electrification and Digitalization Add Flexible Loads to the Grid

New Market Regulations Lead to Flexibility as a Resource

Load Flexibility Plays a Larger Role in Balancing the Grid

Load Shifting Reduces the Slope of Multi-Hour Ramps

Load Flexibility Reduces Daily and System Peak Demand

Load Flexibility Must Be Accurately Valued in Energy Markets

Traditional Utility Business Models Need to Be Reformed

Load Flexibility Technology Must Be Correctly Classified and Regulated

Load Flexibility Must Be Integrated into Normal Grid Operations

Grid Operators and Utilities Must Develop Unique Load Flexibility Impact Metrics

Measure the Slope and Magnitude of Multi-Hour Demand Ramps

Case Study: CAISO Flexible Ramping Product

Track Curtailed Potential Renewable Energy Output

Measure the Carbon Intensity of Electricity Production

Regulators Must Identify New Methods to Determine Utility Revenue

Grid Operators and Utilities Must Adjust Expected Demand Profiles

Case Study: Recurve’s Load Impact Analysis of OhmConnect’s DR Event in August 2020

Building Equipment and DER Manufacturers Must Ensure Their Products Enable Load Flexibility

  • California Independent System Operator Net Load Chart (Duck Curve)
  • Theoretical Net Load Curve in a High Solar Generation Area
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