New York utility Consolidated Edison will offer nearly $1,000 per kilowatt per year for assets used to shed electrical load in Queens and Brooklyn in an effort to delay construction of a $1.2 billion substation.
The auction for Con Edison’s Brooklyn Queens Demand Management project ran in late July to provide relief for the 2017 and 2018 summer seasons. The demand response program will shed a total of 22 megawatts from 4 p.m. to 12 a.m. for the next couple of summer seasons.
The project is the largest modern non-wires alternatives undertaking in the nation, leveraging everything from more efficient LEDs to combined-heat-and-power to behind-the-meter batteries.
Unlike California’s Demand Response Auction Mechanism (DRAM), the Con Edison program is targeted for a single purpose: to delay construction of a very expensive substation. Con Edison needs relief in certain areas from noon to midnight. But the biggest need is at night, when the system peaks around 9 p.m. to 10 p.m.
To meet the varying need, the auction had two time frames ( 4 p.m. to 8 p.m. and 8 p.m. to 12 a.m.). The auction started with ceiling prices for roughly a dozen bidders, who then offered lower prices. Each bid had to be lower than a previous bid.
Once the auction was over, however, every winner was awarded the higher clearing price, even if the demand response provider had put in a lower bid.
For 2017, the prices for the two time increments had ceilings of $250 per kilowatt-year and $1,250 per kilowatt-year. In 2018, the ceilings were $750 per kilowatt-year and $1,250 per kilowatt-year. The clearing price for both years during the evening period were similar, about $985.
There were 10 winners in all, although Con Edison has not yet released the names of the companies. Four were already working with Con Edison in other demand response programs, but six bidders were to the process.
They were a mix of traditional demand respond providers and new entrants, such as behind-the-meter battery companies.
A winner that pledges 100 kilowatts would be paid $98,500 after the entire season, assuming the company provided that capacity.
There will be more opportunities for vendors outside the auction. Con Edison has spent about $24 million of a total $200 million on BQDM load relief programs so far, according to its 2016 Q1 report.