Department of Economics
Avoided cost estimation and cost-effectiveness of permanent load shifting in California
Two intersecting events of the last two decades have transformed the electricity industry: (1) market restructure designed to introduce wholesale market competition; and (2) renewable energy development fostered by government policies, including renewable portfolio standards (RPS). There is, however, little research to answer the question: what is the avoided cost of demand response (DR) in a restructured market with RPS? This paper offers an answer to this question, which is critical for determining the cost-effectiveness of DR and its program design and implementation. We illustrate the answer's usefulness with five real-world examples of permanent load shifting (PLS) in California. These examples show that a PLS system's cost-effectiveness depends on its site-specific characteristics, including location, installation cost and performance, thus affirming the use of a targeted approach to DR design and implementation. © 2011 Elsevier Ltd.
Avoided cost, Cost-effectiveness, Permanent load shifting, Renewable portfolio standards
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Sreedharan, P., Miller, D., Price, S., & Woo, C. (2012). Avoided cost estimation and cost-effectiveness of permanent load shifting in California. Applied Energy, 96, 115-121. https://doi.org/10.1016/j.apenergy.2011.08.029