Demand Response (DR) Programs are being actively implemented widely in many countries. The goal of the DR Programs is to help optimize the operation of the power system - electricity market, reduce investment pressure, thereby contributing to ensuring uninterrupted and stable power supply, improving power quality and efficiency. electricity usage. The DR program is a trend in the world, but it is still a relatively new program and solution in Vietnam. This article will introduce concepts related to the DR Program, development trends in the world, and then make recommendations and recommendations for Vietnam.

According to a report of the US Energy Information Administration (EIA), in the next three decades, world energy consumption is expected to increase by more than 50%, which is mainly due to the growth of developing countries (The International Energy Agency, October 2021). In the context of increasingly exhausted primary energy sources in contrast to the increasing requirements for energy consumption, energy security and for environmental protection after the COP26 Conference (held at the end of 2021), countries will pay more and more attention to the research and implementation of modern technologies, programs and solutions to develop renewable energy sources, improve energy efficiency, especially programs and solutions focused on electricity loads (electricity users).

1. DR PROGRAM OVERVIEW IN THE WORLD

a) Concept of the DR Program

Fig 1. Illustrate the meaning of implementing DR Programs

The DR program has been implemented in many countries around the world in recent years. However, the concept of the DR Program has many different approaches, some of which are expressed as follows:

- DR is virtual power: The DR program treats customers' electrical loads as virtual power sources by proactively adjusting their power consumption needs during specific times to reduce peak loads of the power system instead of compulsorily mobilizing capacity from high-cost power plants to meet load demand. Through the DR Program, customers can participate in the process of balancing electricity supply and demand, thereby contributing to stable and optimal operation of the power system together with grid dispatching and operation management units;  customers could receive incentive payments for downsizing their own electricity demand (McAuley, 2017).

- DR is to adjust electricity usage habits in a smarter, more efficient way: DR can be understood to use electricity more intelligently, not simply providing enough power to meet peak load demand of power system in a short period of time. Implementation of the DR Program does not mean a power cut or a passive reduction, but rather a delay or adjustment of electricity usage from one point in time (usually peak hours, corresponding to high prices) to another point in time (usually normal, off-peak hours, corresponding to the appropriately low price) (Heinzelman, 2016).

Fig 2. The total time the power system reaches maximum capacity

(90-100% Pmax) in a year is only 1 to 2%

- DR is a change in electricity demand and usage habits in response to electricity price signals or receiving direct incentive payments, thereby reducing electricity demand during a time when electricity prices are high on the electricity market or at the request of the Dispatching Unit in case the power system is at risk of overload or failure (Federal Energy Regulatory Commission, 2012).

Although there are many different ways of expressing the concept of the DR Program, most of the approaches are similar in nature. In Vietnam, there is also a similar approach when defining DR Programs as one of the Demand Side Management (DSM) Programs to encourage customers to actively reduce their electricity demand according to the signals of electricity prices or according to incentive mechanisms when be required to contribute to reducing the peak capacity of the power system during peak hours, reducing grid overload or improving the economic efficiency of the power system (Circular No. 23/2017/TT-BCT).

According to international experience, DR programs are generally classified under 2 mechanisms including DR Programs that are moderated (Incentive-based, i.e. based on incentive/direct financing mechanism) and non-moderate DR (Time-based rates, i.e. based on time-based electricity pricing mechanisms). Incentive/financial mechanism-based DR Programs are usually applied to large electricity users (i.e. industrial and commercial customers) who have the ability to flexibly adjust their electricity demand in a short period of time when receiving a request from the power system dispatching, operating unit or power supply unit. In that case, participating customers will receive an incentive payment depending on the power savings during the DR events. Meanwhile, DR Programs based on electricity tariff mechanisms are suitable for small electricity users (i.e. domestic customers, buildings, etc.) or customers who can adjust their electricity usage habits according to signals on electricity prices to reduce electricity consumption costs.

b) Benefits of the DR Program

          The implementation of the DR Program brings many overall benefits, specifically as follows:

          - For society: Contributing to reducing investment pressure on power source and grid projects and increasing the ability to use existing resources; Contributing to reducing the pressure of increasing electricity prices; Raising social awareness about the use of natural resources, economical and efficient use of electricity; Reducing environmental pollution – ensuring sustainable development etc.

          - For electricity users: Receiving incentive payments while saving on electricity costs; Reducing the number of unplanned outages or unexpected power cuts; Increasing their  initiative in management and improve production and business efficiency.

          - For power companies: proactively responding to customers' demand for electricity; Coordinating and interacting more closely with customers in electricity supply; Improving the reliability of power supply; Extending the work progress, reducing investment pressure to renovate and upgrade the power system under their management; Improving service quality, improving the efficiency of production and business activities.

          - For the operation of the power system: Reducing overload/blockage during peak times of the power system (in short term) and contributing to improve the reliability of power supply; Optimizing the balance of electricity supply - demand; Being a solution to improve the operational efficiency of renewable energy sources, especially distributed power sources and effectively exploit the functions of the smart grid.

          - For the power market: Contributing to limit fluctuations in electricity prices in the competitive electricity market during the peak period of the system and reducing electricity transmission and distribution costs.

c) Summary of experience in implementing the DR Program in the world

- Regarding the mechanism, policy and implementation organization:

+ Regarding the financial mechanism: The cost to implement the DR Programs is supported from the state budget or calculated and recovered directly through the expenses and costs for electricity production and business of the power companies.  Besides, some countries have established power-sector infrastructure funds to implement DR Programs (For example, in Korea the power-sector infrastructure fund is supplied from the fee of 3.7% of the electricity price).

+ Integration of the DR Program in the electricity market: Some countries such as Korea, Australia and Singapore have piloted or officially implemented the integration of the DR Program in the electricity market. This is also a very interesting model for Vietnam in the near future when operating the competitive retail electricity market.

+ Aggregator Units: To implement the DSM/DR Program, some countries have allowed the establishment of DSM/DR service providers (called DSM Aggregator or DR Aggregator). This is the intermediary between electricity customers and electricity sellers during the implementation of the DSM/DSR Program. Many countries have successfully applied this model such as the UK, Australia, Singapore, Thailand, Japan etc. This unit is responsible for signing contracts with parties to implement DR Programs when receiving requests from electricity sellers or electricity system operators and making incentive payments to customers when participation. In some countries, the DSM/DR Aggregator model can be combined with the Energy Service Companies (ESCO) model into a common service provider in Power Demand Management and Energy Efficiency.

- Regarding technical infrastructure development:

To implement the DR Program, two most important and indispensable applications are the metering system (capable of measuring and collecting measurement data remotely) and the SCADA/EMS/DMS system, in which the system SCADA/EMS/DMS systems play an extremely important role in load forecasting, load research to determine potential DR (capacity, area, time), target customers, planning, coordinating implementation among dispatching units, power supply units and participating customers. In addition, it is necessary to equip customer-information management systems (CMIS, CIS), information and communication systems to collect customer's measurement data and send it to the store system and process measurement data (MDMS).

In the world, especially in the United States, Japan, Singapore and some European countries, the Automated DR (ADR) system has been widely applied on the basis of the modern metering infrastructure system (Advanced Metering Infrastructure - AMI) and softwares such as DR Automation System (DRAS) in the US, DRMS ​​(DR Management System) in Singapore, ADRS (Automated DR System) in Korea for management , monitoring and implementation of the DR Program.

Fig 3. Overall model of Automated DR (ADR) system

- Difficulties and problems

          In the initial stage of implementing the DR Program, countries also faced a number of difficulties, focusing on the following issues:

          + Mechanisms, policies, incentive mechanisms are not synchronized or not attractive to encourage and attract customers to actively participate.

          + Customers are still not really enthusiastic to participate: A relatively important issue when implementing the DR Program is that relevant agencies and units, especially the power companies need to develop and implement communication programs for the community, disseminate knowledge, benefits and contents of DR Programs to persuade and attract customers to register to participate. In addition, there should be interactions and maximum support for customers when participating

          + The rate of customers using electricity according to the Time-based rate is still low, which leads to difficulties in implementing DR Programs applying the time-based electricity price mechanism, especially is a group of household-residential customers. This depends a lot on the electricity price mechanism and metering infrastructure. 

          + Method and technology to connect signals and communication during the implementation of the DR Program (electrical price signals, customer information, interaction and coordination between the implementing units of the DR Program and participating customers etc.) is still inconsistent.

          + Methods and tools for forecasting, calculating and simulating unfinished DR programs: Forecasting, calculation and simulation of demand for power load adjustment, ability to respond to customer's load adjustment in real time is not really accurate.

2. PROPOSALS FOR VIETNAM

Since 2019, Electricity of Vietnam (EVN) has gradually organized the implementation of DR Programs and has achieved some positive results. For example, in 2019 ten DR events were done with reduced capacity of 6,373,301 kWh, of which the event with the largest adjustable capacity reduction is 514 MW (on September 10^th, 2019), saving about 24 billion VND for EVN (compared to the case of compulsory mobilizing power plants running DO). In the period of 2020-2021, due to the impact of the Covid-19 pandemic, there is no need to implement DR Programs. Although the actual implementation has also had some positive results and shows that the potential of DR Programs is great, it is necessary to consider solving the following problems in order to effectively and practically implement DR Programs:

a) Firstly, complete and promulgate fully and synchronously the incentive mechanism and financial mechanism: Currently, the legal framework (including Law, Government Decrees, Decisions of the Prime Minister, Decisions and Circulars of the Ministry of Industry and Trade) related to the implementation of DR Programs in Vietnam have been issued but only at the overall and orientation status. DR Programs and events that has implemented since 2019 were mainly non-commercial and based on the cooperation of customers. The financial mechanisms include direct financial incentive mechanism and electricity price mechanism (for example, two-component electricity prices, CPP critical electricity prices, etc.) have not been realized by the provisions of law.

In Decision No. 279/QD-TTg dated March 8, 2018, one of the solutions to implement the National Program on DSM is to develop and issue fully and synchronously a financial mechanism, incentive mechanism in the direction that the incentive expenses for electricity users participating in the implementation of DSM/DR Programs will be reasonable costs and be included in the electricity production and business expenses of the power units. Therefore, in order to do this, there should be close coordination between ministries and agencies such as the Ministry of Finance, the Ministry of Industry and Trade, the Committee for the Management of State Capital at Enterprises in reviewing, adjusting, supplementing  regulations related to the Law on Corporate Income Tax, the Government's Decree on Financial Management Regulation of EVN. Besides, it should apply soon the two-component electricity pricing mechanisms, flexible electricity prices (i.e. Dynamic pricing, Real Time Pricing, Critical Peak Pricing).

          b) Secondly, in terms of implementation organization: DR Programs need to be organized and implemented synchronously, throughout from state management agencies (in charge of legal framework development and implementation guidelines) to local authorities, electricity units (responsibility in implementation) and participating customers. It should consider and clearly define the responsibilities of each unit participating in the implementation of the DR Program. In addition, it is necessary to combine the DR Programs with the development orientation of distributed renewable energy sources, the Smart Grid development program to ensure synchronous deployment and maximize the efficiency of all programs, projects, applications in power systems.

          c) Thirdly, on the implementation of communication programs to raise public awareness: International experience shows that, for programs of a community nature or programs requiring the voluntary participation of customers like DR Programs, in addition to attractive mechanisms and policies, the activities such as information and  communication work, training and knowledge dissemination will have a significant influence on the success of the programs. Therefore, information and propaganda work needs to be developed and implemented methodically, widely, regularly and continuously. Large-scale attractive advertising and marketing programs in the mass media are necessary to increase awareness among the people, electricity users and implementing agencies of the DR Program.

          d) Fourthly, regarding the consideration of establishing Aggregator units: The permission to establish Aggregator units is also a very noticeable issue in the process of developing and implementing DR Programs in Vietnam. The Aggregator units will carry out communication and marketing programs on behalf of the electricity units. They are  intermediaries to connect the power companies with customers, conduct investing, equipping with automatic DR systems (if necessary), apply software, develop information technology infrastructure to implement DR Programs, calculate and pay incentive amounts for participating customers. In addition, the participation of Aggregator units will increase objectivity, transparency and improve the performance of DR Programs.

          f) Fifthly, about technical - technological solutions:

          - Continue to sanitate, improve and upgrade SCADA/DMS, mini SCADA systems; increase the proportion of electronic telemeters equipped for electricity customers, especially residential customers; focus on implementing and improving the efficiency of load research to assist power units in estimating and determining DR needs, identifying potential customers, customers' ability in demand response/adjustment and create a reliable input database for cost-benefit assessment.

- Gradually develop and equip smart applications and modern technologies on power system and customers' load in sync with the development and implementation of DR Programs: Actual implementation of DR Programs on the world shows that DR Programs can be widely implemented and highly effective when implemented synchronously with the development and equipment of Smart Grid applications such as Smart City, Smart Home, storage system (BESS), smart vehicles (EV) etc.

Mr. Nguyen Quang Minh, ERAV

& Vietnam Energy Conservation and Energy Efficiency Association

1) Decision No. 279/QD-TTg dated March 8, 2018 of the Prime Minister approving the National Program on DSM for the period to 2030.

2) Report on Demand Response (DR) Program, 2019, Electricity of Vietnam (EVN).