Increasing penetrations of intermittent renewable energy resources will require additional power system services. California recently adopted an energy storage mandate to support its renewable portfolio standard, which requires 33% of delivered energy from renewables by 2020. The objective of this paper is to estimate the amount of energy storage that could be provided by residential thermostatically controlled loads, such as refrigerators and air conditioners, and the amount of revenue that could be earned by loads participating in ancillary services markets. We model load aggregations as virtual energy storage, and use simple dynamical system models and publicly available data to generate our resource and revenue estimates. We find that the resource potential is large: 10–40GW/8–12GWh, which is significantly more than that required by the mandate. We also find that regulation and spinning/non-spinning reserve revenues vary significantly depending upon type of load and, for heat pumps and air conditioners, climate zone. For example, mean regulation revenues for refrigerators are $11/year, for electric water heaters are $24/year, for air conditioners are $0-32/year, and for heat pumps are $22–56/year. Both consumer choices, such as appliance settings, and policy, such as the design of ancillary service compensation and appliance standards, could increase revenue potentials.

This paper presents a new method for estimating the demand response potential of residential air conditioning (A/C), using hourly electricity consumption data (“smart meter” data) from 30,000 customer accounts in Northern California. We apply linear regression and unsupervised classification methods to hourly, whole-home consumption and outdoor air temperature data to determine the hours, if any, that each home׳s A/C is active, and the temperature dependence of consumption when it is active. When results from our sample are scaled up to the total population, we find a maximum of 270–360MW (95% c.i.) of demand response potential over a 1-h duration with a 4°F setpoint change, and up to 3.2–3.8GW of short-term curtailment potential. The estimated resource correlates well with the evening decline of solar production on hot, summer afternoons, suggesting that demand response could potentially act as reserves for the grid during these periods in the near future with expected higher adoption rates of solar energy. Additionally, the top 5% of homes in the sample represent 40% of the total MW-hours of DR resource, suggesting that policies and programs to take advantage of this resource should target these high users to maximize cost-effectiveness.