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All About Energy

Demand Response Just Got Even Better

Jim Kordoban Feb 16, 2016 12:05:27 PM
Jim Kordoban
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Energy managers often hesitate to enroll their company in a demand response (DR) program for two popular reasons:

  1.  They feel that they don't know enough about DR or how to manage it within their company
  2.  They don't know if they'll save enough money to warrant the effort.

I have only one response to these concerns: Can you really afford not to enroll in one?

Demand Response Savings per EIA

Demand response has been around for quite some time, and early adopters have been reaping the rewards for years. Given the recent Supreme Court ruling on FERC 745, demand response growth is "expected to result in faster growth in demand response in the wholesale electricity markets that cover about 60% of U.S. power supply" according to the EIA.

ERCOT Emergency Response Service

Here's the thing with the ERCOT ERS program - it is a reliable way to earn money. I can't think of another program that will pay you handsomely to be on stand-by to help ensure the stability of the electricity grid the way the ERCOT ERS program does.  

If you are able to shift your load to an alternate power source (i.e. back-up or an on-site generation system), then it's a slam dunk for your organization. If no event is called, you get paid. If there's an event, you get paid based on your performance. Either way, you get paid. The amount you get paid is strictly based on your performance and what was bid into ERCOT before the period begins by your Demand Response Provider.


Let's Break it Down:

  1. There are three periods a year: February (Spring), June (Summer), and October (Winter).
  2. The minimum requirement for enrollment is 100kW, but the more you're able to reduce your energy use, the larger your potential payout.
  3. There's a 10-minute and 30-minute program. The program you choose dictates how many minutes you have to respond when an event is called. For example, if you bid 2MW into the 10-minute program, then when ERCOT calls an event, you have 10 minutes to reduce or shift your energy use by at least 2MW. You must maintain the load reduction until the event is over or called off, generally lasting 30-60 minutes in length.
  4. There are now six different eligible business hour groups, meaning that more businesses will have a chance to participate.

Demand Response Eligible Hours

Business Hours 1-5 are for Monday-Friday except ERCOT holidays.

  1. Once ERCOT awards have been announced, you will be tested once in a 365 day period, and the test lasts only 25 minutes.
  2. Approximately 60 days after the end of the period, your DR Provider will receive notice of payment, and you will be paid shortly after.


How Many Times has an Event Been Called?

Three times. Since ERCOT started the program in 2008, only three events have been called and they have lasted less than an hour. I'm not a gambling man, but I'd say the odds are in your favor.


How Long Do These Events or Tests Last?

A test will only last 25 minutes, but it's possible, not probable, for events to last several hours. Since 2008, the longest event was still less than an hour. 


How Can I Make This Work Inside My Organization?

You need to find an energy agency that will work with you, your operators and management programs to organize and set up a process to ensure you will be able to perform if a test or event is called. Your agency will then analyze your usage and consult with you to determine what is the most reasonable and realistic amount of demand to put into the DR auction.


How Much Money are We Talking About? 

Demand Response Enrollments in 2014 per EIA


According to the EIA, " the average industrial incentive was more than $9,000".  As a DR provider, we have worked with companies that were able to reduce their load by as little as 500kW to as much as 10MW.  The payouts for the largest customers were as high as ~$160,000 since they were the largest load reducers. 

It's not too late to enroll in an upcoming auction.  Start the conversation on how you can begin earning DR revenue for your business today.


 Join demand response to earn compensation.



Topics: Demand Response, 4CP, ERS