Harnessing the Potential of Flexible Demand Response in Emerging Markets : Lessons Learned and International Best Practices - Technical Report (English)

Table of Contents

• Abbreviations 9
• Acknowledgments 10
• Executive Summary 11
• Demand Response And Its Role in the Energy Transition 14
• The Need for Demand Response 15
• Defining Demand Response 16
• Demand-Response Applications 17
• Demand Response as a Climate Asset 18
• Classifying Demand-Response Instruments 22
• Price-Based Demand-Response Instruments 25
• Quantity-Based Demand-Response Instruments 33
• Increasing the Uptake of Demand Response: Enablers and Barriers 40
• Enablers 41
• Barriers and Challenges 48
• Integrating Demand Response into Power Systems 52
• Contracting Framework: Price-Based Demand Response 53
• Contracting Framework: Demand-Side Offers for Wholesale Energy Provision 54
• Contracting Framework: Demand-Side Offers for Capacity 56
• Contracting Framework: Demand-Side Offers for Ancillary Services 59
• Lessons Learned for Demand Response in Developing Countries 62
• Demand Response in India 63
• Demand Response in China 66
• Demand Response in South Africa 69
• Demand Response in Brazil 71
• Demand Response in Vietnam 74
• Demand Response on Small Islands 76
• Demand Response in the United States: Best Practices from Advanced Frameworks 80
• Comparative Analysis of Demand-Response Programs 85
• Roadmap for Implementing Demand Response in Developing Countries 88
• Summary of the Roadmap 89
• System Diagnostic 90
• Mechanism Assessment 91
• Implementation Design 96
• Conclusion 102
• Bibliography 105
• Appendix A Definitions of Key Ancillary Services 117
• Appendix B Additional Information on the Case Studies 119
• Spanish Time-of-Use Residential Tariff 119
• Demand Response in India: Additional Information on Pilot Programs 122
• Demand Response in South Africa: Additional Information on ESKOM Programs 123
• Demand Response in the United States: Additional Information 126
• Appendix C Possibilities for Load Control 128
• BOXES 19
• Box 1.1 Data Centers and Demand Response 19
• Box 2.1 Time-of-Use Tariffs for Commercial and Industrial Consumers in Costa Rica 26
• Box 2.2 South Africa’s Experience with Critical Peak Pricing 29
• Box 2.3 SmartHours Variable Peak Pricing, 2023 30
• Box 2.4 Hybrid Price-Based Instruments in Spain 31
• Box 2.5 India: Load Control for Large and Medium Customers 35
• Box 3.1 Control of Hot Water in Botswana 42
• Box 3.2 Electric Vehicles and Vehicle-to-Grid 44
• Box 4.1 Business Model: OCTOPUS ENERGY Tailored Tariff Provider 55
• Box 4.2 Business Model Example: Virtual Power Plants 57
• Box 5.1 Pennsylvania-New Jersey-Maryland Interconnection: A Frontrunner in Demand-Response Deployment 82
• FIGURES 15
• Figure 1.1 Electricity System Flexibility by Source 15
• Figure 1.2 Objectives of Demand Response 18
• Figure 2.1 Types of Demand-Response Mechanisms According to the Nature of Incentives 23
• Figure 2.2 Types of Price-Based Instruments 25
• Figure 2.3 Share of Countries with Time-of-Use Rates, by Customer Class 27
• Figure 2.4 Average Peak Reduction from Time-Differentiated Rate Pilots 33
• Figure 2.5 Elia’s Same-Day Adjustment Process 39
• Figure 3.1 Price Responsiveness With and Without Emerging Technology 43
• Figure 4.1 Contracting Framework for Price-Based Demand-Response Providers 54
• Figure 4.2 Contracting Framework for Demand-Side Energy Offers 56
• Figure 4.3 Contracting Framework for Demand-Side Capacity Market Offers 57
• Figure 4.4 Contracting Framework for Demand-Side Offers to Ancillary Service Markets 60
• Figure 5.1 Time-of-Use Tariffs Available in South Africa 69
• Figure 5.2 Peak and Off-Peak Comparison of Large, High-Voltage Clients 72
• Figure 5.3 Curtailment Events on Jeju Island 78
• Figure 5.4 Eurelectric’s Millener Project: Two Setups 79
• Figure 5.5 Evolution of Demand-Response Mechanisms in the United States 81
• Figure 6.1 Summary of Roadmap for Demand-Response Implementation within a Country 89
• Figure 6.2 Guidance Questions for the Diagnostic of the Power System 90
• Figure 6.3 Drivers of the Need for Demand Response 91
• Figure 6.4 Approach to Mechanism Identification and Assessment 92
• Figure 6.5 Matrix of Demand-Response Challenges and Some Mechanisms to Meet Them 94
• Figure 6.6 Implementing a Demand-Response Program in Four Steps 96
• TABLES 24
• Table 2.1 Spectrum of Demand-Response Interventions 24
• Table 2.2 Time-Differentiated Modalities in Various Energy Markets 28
• Table 2.3 Loads that can be Controlled According to Customer Segment 35
• Table 5.1 Time-Differentiated Tariffs in India, by State 64
• Table 5.2 Demand-Response Pilot Projects in China 68
• Table 5.3 Innovative Time-Differentiated Designs in South Africa 70
• Table 5.4 Redução Voluntária da Demanda (RVD) Bids and Prices 73
• Table 5.5 Implemented Demand-Response Programs in Vietnam 75
• Table 5.6 Defined Demand-Response Programs 75
• Table 6.1 Matrix of Demand-Response Challenges and Some Mechanisms to Meet Them 93
• Table 6.2 Summary of Key Selection Guidance of Different Demand-Response Mechanisms 93
• Table 6.3 Factors to Consider in the Mechanism Design Phase 97
• Table 6.4 Elements of Supportive Policy, Legal, and Regulatory Frameworks for the Implementation of the Chosen Demand-Response Mechanism 98
• Table 6.5 Non–Demand Response Measures in Support of Implementation 99
• Table 6.6 Key Aspects of the Demand-Response Implementation Roadmap 99