July 13, 2012

Claims diesel generators will

not run more under settlement

EnerNOC President David Brewster told us yesterday that a pending settlement his firm and other DR providers have with the EPA on backup generation will not lead to any added use of diesel generation.  A group of DR firms filed an appeal of an earlier version of the rule that would have limited the use of emergency, backup generators in DR programs to just 15 hours/year -- thus ineligible for many programs.

          Eventually EPA came out with a new proposal to let such generators run in DR programs for 100 hours/year.  Under the existing rules emergency, backup diesel generators can only run for 100 hours and if they exceed that, they no longer have the "emergency" designation and have to comply with tighter standards.

          The proposed settlement with DR providers will keep that 100 hour limit but will let the generators respond to emergency DR calls made by ISO/RTOs and utilities, said Brewster.

          "It's a no brainer that the EPA is doing the right thing," he added, "and why I say that is these back-up generators have always been able to run for 100 hours/year for testing and maintenance purposes.  And so the other side of this issue, particularly the independent power producers who have vested interests in not having as much DR in the market, would have you believe that this proposed rule is relaxing rules and is allowing these units to be run more, which is absolutely false."

          EPSA led the charge against the settlement, which would align EPA rules with ISO/RTO capacity-based, emergency DR rules.  Some leading environmental groups oppose the settlement, too (RT, May-25).

                It's for emergencies only

The EPA proposal only deals with emergency situations.  It will only apply in situations where a grid operator is trying to avoid a blackout, said Brewster.  When a blackout happens, all of the backup generators in an area are running, sometimes for days, along with other safety, health and economic concerns that power outages lead to.

          DR's peak season follows the broader industry's and summer is also the season where ozone levels can get too high and set off regulations where engines and generators are shut down.

          "I really commend the EPA because they spent two years really digging into the data and understanding this issue," said Brewster.  "And there's actually no correlation between emergency demand response and what you call 'ozone exceedance days.'" Emergency DR can be called up at any time of the year.  Often the shoulder months, the spring and the fall, can be more challenging for grid operators as power plants, Brewster noted, are down for maintenance and a stray heat wave or other incident can easily lead to reliability issues.

                It's not about supply stack

          While many argued that the settlement is putting EPA's thumb on the scale of the energy markets in favor of DR, Brewster argued that the "supply stack" has nothing to do with the proposal.  "The only time these emergency DR events are called is when there is not enough supply to meet demand and we are about to have a blackout," said Brewster.

          EPA tightened the trigger for emergency DR that uses backup diesel generators so that they can only be used when NERC issues an energy emergency level two alert or when the system has a voltage cut of 5% or more.

          More economic DR can use backup generation too but it would not fall under the settlement pending at EPA now.  That means a customer wanting to take part in Order 745 and other measures using a generator extensively would have to meet the hazardous air pollutant standards in question, Brewster said.