Building virtual power plants to reduce emissions and increase economic efficiency

Abstract: 

Active demand management is a crucial tool for balancing electricity markets and managing the increased volatility caused by intermittent renewable generation. While much of demand management is focused on large industrial users, we focus on the potential of household customers to contribute to such load balancing. In collaboration with TATA Power - India’s largest energy retailer - we installed WiFi connected power switches in over 1000 households in Delhi and Mumbai. Households could choose which appliances to connect to those switches with most opting (80%) for air conditioning units. Randomized and remotely triggered switch-off events led to an average reduction of household electricity demand by up to 15% depending on the hour of the day. Surprisingly, there was no rebound effect in periods following a switch-off, which points to inefficiencies in electricity use (e.g. air conditioning units operating without thermostats or being set at too low temperatures). Households were offered varying reward rates for participating, however, there is no evidence that higher rewards led to increased participation.

To assess the viability for scale up we examine the potential cost and carbon impact of shifting energy consumption to periods with lower marginal emissions that often coincide with lower marginal generation costs as well using automated demand control like in our setup. We find that this could lead to  negative carbon mitigation costs: -$23 per tonne of CO2 on average with mitigation costs being as low as -$94 for some. Hence, this could be scaled up profitably even without carbon pricing.