California explores real-time retail pricing to enable more renewables


Real-time retail pricing of electricity, which can make room for more renewables on the grid by increasing demand flexibility, is one element of a draft proposal presented by the California Public Utilities Commission’s (CPUC’s) Energy Division. The commission is considering opening a rulemaking aimed at achieving widespread demand flexibility.

Such a system could include scheduled charging of electric vehicles and distributed storage, and remote control of space heating and water heating, said CPUC Commissioner Darcie Houck in remarks during a recent workshop.

Opt-in real-time pricing for retail electricity, which involves “sending prices to devices,” is a central element in the Energy Division’s draft proposal.

Real-time electricity pricing has been proven to work in a pilot program funded by the California Energy Commission that involved customers of California utility SCE. Participating customers reduced their electric bills mostly by shifting air conditioning loads.

CPUC Energy Division staff member Aloke Gupta said the SCE pilot’s pricing scheme could inform a pricing scheme for California as a whole, as could San Diego Gas & Electric’s hourly dynamic rate for electric vehicle owners.

Smart devices receiving and responding to price signals, Gupta said, could include thermostats, heat pumps, heat pump water heaters, and smart plugs.

If California moved to bi-directional pricing, Gupta said, a utility customer could either consume or export electricity at the current price, with exports coming from storage or from rooftop solar. Alternatively, a customer could choose a fixed-price subscription, he said.

Flexible demand

The California Solar & Storage Association asked the CPUC in 2018 for a rulemaking on opt-in real-time pricing, in a joint petition with the Solar Energy Industries Association and others. CALSSA and others followed up that request in 2020, asking the CPUC to allow customers in the San Diego area to choose real-time pricing.

Houck said in the workshop that communications and power control systems are now available to automate demand flexibility, “so customers can spend as much or as little time as they want thinking about their energy.”

“Reshaping demand to flex with supply” is as important as deploying more renewables, Houck said, as the state works to reach 100% clean electricity by 2045.

Energy Division staff plans to release a white paper this summer on widespread flexible demand management. The staff expects to recommend at that time that the CPUC open a rulemaking to consider the proposal.

If the bid for a rulemaking is adopted, any changes would likely occur in a stepwise fashion, said Paul Phillips of the Energy Division. Infrastructure recommendations being developed by the California Energy Commission will help facilitate the CPUC’s work, he said.

Representatives from four other organizations contributed to the workshop. Karen Herter of the California Energy Commission spoke on load management standards. Delphine Hou of CAISO, California’s grid operator, spoke on renewable integration and grid needs. Sarah Moskowitz and Jeff Zethmayr with the Citizens Utility Board in Illinois spoke on that state’s experience with hourly pricing. And Carmen Best of ­­­­software developer Recurve spoke on expanding distributed energy resources.

Presentations from the CPUC’s “Advanced DER & Demand Flexibility Management” workshop, and a video recording, are available online. Informal written comments are invited through June 11.

This article was updated June 8 to reflect a change in the due date for written comments on the proposal.


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