In the field of electronics, the concepts of small and large signals are well understood. For example, a simple transistor audio amplifier must be designed for a combination of large and small signals to work. The large signal (also known as the bias in electronics) sets the operating range for the amplifier, while the small signal (the audio to be amplified) is superimposed on (rides on top of) the large signal. The large input signal may be measured in volts while the small (audio) input signal may be measured in millivolts. The amplified audio output may be as much as 20% of the large (bias) signal and so there is room for the small signal to vary both upward and downward.
The key point here is that the small signal part cannot work without the presence of the large signal.
This principle seems to have gotten lost with respect to at least two major grid concepts. The first is in the relationship between grid energy storage and demand response. By demand response we mean the adjustment of demand (load) to accommodate grid operations. Attempts on the part of system modelers to achieve a degree of abstraction in their models has led to the statement that “demand response IS storage.” While demand response could be modeled with equations similar in form to those that model storage batteries, this is a purely small signal view that fails when the large signal is not present. The large signal in this case is the normal grid power flow. To see why calling demand response storage is problematic, imagine two houses; one has a storage battery only and one has demand response only. When a grid outage occurs (say, at night) which house still has its lights on? Demand response cannot supply energy – it is only the small signal effect that gives the appearance of this happening when in fact the demand response is the small ripple on top of the large signal. Demand response does not work without the presence of the large signal – normal grid operation. Battery storage works regardless of the presence or absence of the large signal.
The second place where this concept is missing is in the discussion of organized wholesale “real time” electricity markets. The focus on the real time markets, market rules, and DER valuations frequently shows no recognition of the fact that the amount of energy involved in these markets is a minimal percentage of the total energy being supplied. The energy involved in the real time markets is a small signal superimposed on the large signal of the bulk energy flows. Without the bulk energy flow large signal, the real time electricity market small signal incremental variations cannot work, just as the transistor cannot amplify the small audio signal without the presence of the large bias signal.
The relationship between small signals and large signals is a general system concept, one that system modelers, electricity market economists, and DER integrators must understand and apply. Demand response and real time electricity market energy flows are small signals, providing incremental variations on the large signals of normal grid function and bulk energy flows. Losing sight of this leads to over-abstraction, incorrect generalizations, and ultimately misguided approaches to DER integration.