Tennessee Valley Authority (TVA) developed an integrated resource plan in 2011 that recommended a strategic direction that focuses on a diverse, balanced mix of energy sources. A key element of this plan was to initiate an energy-efficient demand-response (DR) program capable of providing up to 2,600 MW of peak demand reductions through demand-side management. The DR component can be used to alleviate financial constraints associated with serving the load or for maintaining reliability, and to provide ancillary services in the balancing authority (BA) area.

Utilities normally call on their DR programs on an hours-ahead or day-ahead basis because of forecasted system load or market conditions. Since small temperature errors or unexpected thunderstorm activity can dramatically impact the system load and necessity of calling on the DR resource, TVA has focused on reducing the notification period so these important decisions can be made close to the time DR is needed to maximize value.

TVA exercises its DR programs for both economic and reliability curtailments through an internally developed demand-response management system (DRMS), which provides the system operator with the necessary information and tools to manage a diverse portfolio of DR resources effectively. These products are viewed as virtual power plants, integrated into the daily resource plan, and are dispatchable by the BA.

DR as a Virtual Power Plant

TVA dispatches resources, from the least to most expensive, based on the load requirements. This dispatchable stack is managed by an application called the block pricing compendium, which provides the BA with a quick overview of the generation resources that should be called on to increase or decrease as the load rises and falls. Units with low operating costs, such as hydroelectric and nuclear resources, are typically at the bottom of the stack with more expensive coal-fired plants and combustion turbines (gas and oil) at the top.

Current TVA Demand Response Portfolio

Product Description MW
Reserve preservation Curtailment of large commercial and industrial (C&I) customers upon 30-minute notice 443
Instantaneous response Instantaneous curtailment of customers with discrete blocks of nonconforming load (greater than 50 MW), such as an arc furnace 200
Dispatchable voltage regulation Day-ahead notification to power distributors to reduce load via voltage reduction (This product is the principle component of a smart grid pilot with 16 participating distributors nominating some 168 MW.) 50
Third-party aggregation 30-minute notification to demand service providers that aggregate load from medium and small C&I customers 166
5-minute response Curtailment of large C&I customers upon 5-minute notice 585
60-minute response Curtailment of large C&I customers upon 60-minute notice 99

Future TVA Demand Response Portfolio

Product Description MW
Direct load control - C&I EnerNOC Direct load control of C&I customers for economic (40 hours) and emergency (unlimited) dispatch with a 30-minute notification 255
Direct load control - residential and small commercial Smart grid pilot with 13 PLCs controlling air conditioning and water heating with 100 maximum call hours, 2- to 6-hour daily event period, and day-ahead notification 14
Critical peak price Smart grid pilot program using pricing signals to determine load control capability; currently under review NA
Low-impact demand response Direct load control program targeting commercial customers with building energy management systems already installed with 30-minute notification, 2- to 4-hour events, 200-hour maximum for economic, unlimited for reliability 28.5 (estimate)
Conservation voltage regulation CVR will deliver roughly 2.2% energy reduction, 3% demand reduction and 7% reactive demand reduction on each installed feeder; active 24/7/365 168
Residential premise energy management Using programmable communicating thermostats and in-home displays, communicate peak demand events with 2 to 6 hours, day-ahead notice, 250-hour economic call limit 0.6 summer 0.8 winter
Residential and commercial shift and store Program will shift off TVA's time-of-use demand in both winter and summer with 2 to 5 hours during peak months, 4 to 6 hours during transition months, and a minimum of 1,320 hours; store control in the afternoon and evening is distributed from 3 a.m. to 5 a.m. every day 55
C&I premise energy management Same conditions as residential PEM but with C&I as target 0.4

For DR to be viewed as a virtual power plant by the BA, it needs to be viewed within the same context as other resources so it will be used as load increases. This brings DR into the operational realm and optimizes its value as a true power plant and not just a day-ahead resource. To include DR as a dispatchable resource, the costs for each product must be calculated by TVA's power trading organization and coded in the DRMS.


In 2011, TVA evaluated the various DRMSs available on the market. It became evident these systems were designed for day-ahead, economic-based DR programs and not for implementing DR as an operational virtual power plant. To meet its vision for DR implementation, TVA decided to develop a custom solution using TVA personnel. To date, TVA has implemented several of the functional highlights:

  • Integration between the DRMS, BA and power trading

  • Near-real-time view of current load by product

  • Calculation of curtailable load

  • Event history of DR participant performance

  • Integration with telephony notification system

  • Post-operative financial evaluation of DR events

  • Mobile view of system and products.

Integration of Tools

The DRMS automates coordination functions between the BA and power trading. All reliability curtailments in TVA are initiated by the BA, while economic curtailments are approved by the BA but executed by the power trading organization. When power trading schedules a day-ahead economic curtailment in the DRMS, a request-for-approval window immediately appears on one of the BA displays. The BA can approve, cancel or acknowledge the request using the DRMS. Once an event is approved by the BA, it automatically goes into scheduled status, and the DRMS initiates notifications and monitors the actual load during the event.

Near-Real-Time View

The BA needs a near-real-time view of load available for curtailment to operate DR as a true virtual power plant. The DRMS real-time monitor uses four sources of data to obtain real-time or near-real-time information:

  • Supervisory control and data acquisition (SCADA). Most large TVA customers have SCADA measurements that are sent to the TVA SCADA system every two seconds and passed into the DRMS.

  • Inter-control center communications protocol (ICCP). All customers who sign up for the dispatchable voltage regulation product are required to transmit their current load (by feeder) to TVA through their ICCP connection. This information is then passed to the DRMS.

  • Meter data management (MDM). DR customers who do not have SCADA or ICCP connectivity have their billing meter interrogated every 15 minutes and passed to the DRMS.

  • Load forecast. If the SCADA, ICCP or MDM data does not come in on schedule, the DRMS uses the customer's load forecast as a proxy for the actual load.

Calculation of Curtailable Load

Prior to implementing the DRMS, the BA had only a rough estimate of megawatts available to interrupt. TVA DR products are designed to meld TVA system needs with customer operational attributes, which creates complex business rules for curtailment. These complex rules compounded establishing an interruptible load estimate.

Since the DRMS brings in near-real-time data, the actual number of curtailable megawatts for each customer can be calculated at any point in time. For DR events, the curtailable megawatt would use the actual customer's load and the appropriate contractual baseline. For future DR events, it would use the customer's load forecast.

In practice, the DRMS calculation for curtailable megawatts has been very accurate, based on event actualities. This accurate forecast has given TVA's power operations and energy trading group confidence in the DRMS forecasts for curtailable load and makes DR credible as an actual virtual power plant.