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All About Energy

Demand Response Program Hesitations Keeping you from Making Money

Jim Kordoban Jul 20, 2017 9:00:00 AM
Jim Kordoban
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Facilities that use large amounts of electricity have often heard of demand response programs, or are active participants.  Demand Response programs typically compensate facilities based on curtailment during a specified time period.  The utility or market operator will call an event during times when the electrical grid is under a considerable amount of stress from high demand or lack of adequate generation.  Ultimately, more generation is produced or curtailment is called to help prevent a rolling brownout or blackout.  For many organizations, the idea of shutting off, curtailing, or adjusting energy use can be a scary thought!  Whether you’re a building manager concerned about tenant comfort, a data center operations manager who is worried about uninterruptible power, or a plant engineer focused on product quality, you’ve got a business to run and your operations come first. 


The good news is an experienced demand response partner will work closely with you to build a customized energy reduction strategy that works for your facility and does not negatively impact your business.

In fact, demand response participation can help protect your business. Demand response programs are often called at times of grid instability, getting advanced warning of grid issues helps protect your business from sudden losses of power and gives you time to prepare your operation.

 

Facilities should take advantage of these programs and here’s why:

 

1) You can earn a new stream of revenue.

By simply acting like an “insurance policy” against grid failure, your facility earns money for something you may already be doing anyways (i.e. experiencing electrical outages). The average payments are about $2,500 and are typically paid monthly or quarterly, regardless of if a facility is called to curtail their committed electrical load or not. Use the added revenue to boost any part of your budget. Most facilities will use it to offset other capital expenses, buy back-up generation, or make overall capital improvements.

2) It can help save on your overall electricity spend.

Demand Response programs can also help you save money on your electric bill because events are usually called during times of the day when use and prices are high. Reducing electricity during these specific hours and/or shifting load to off-peak hours will generally lead to a lower monthly bill.

3) It doesn’t take long and the calls are relatively infrequent.

Most “emergency events” will last anywhere from 30 minutes to a couple of hours, so the impact to your operations will certainly be minimal. Many facilities will schedule other tasks around an event or use it as a “teaching moment” for employees and the community to show they are being good stewards to help prevent community-wide blackouts.

4) It’s good for your community.

When a facility participates in a demand response program, they are supporting their community. Curtailment events help your electric utility avoid costly (and dangerous) rolling blackouts which affect everyone on the grid. Ultimately, you are not just helping to keep the lights on for yourself, but for your entire community.

5) It’s good for the environment.

Emissions from fossil fuels are bad for the atmosphere! By taking part in a demand response program, you can even curtail carbon emissions. Utility providers are using demand response as an alternative to firing up dirty coal power plants. Power plants typically sit idle but can be run when needed to add electricity to the grid in emergencies. The plants are not cheap to operate but demand response is a much more lucrative option for both you and your utility.

 

We’ve only highlighted a few of the many reasons demand response can be an asset to any facility’s operations. Facility managers should communicate with tenants, engineers, fellow employees, and an experienced energy broker to evaluate energy use and form energy reduction plans where they make sense. Great candidates for demand response participation include: manufacturers, commercial office buildings, data centers, hospitals, cold storage facilities, schools, oil and gas pipelines / pump jacks, and any business or facility that uses a large amount of electricity. 

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Topics: Energy Cost, Demand Response