Could a Demand Response Program Benefit Your Company?

What is a demand response program?

With increased pressure on the grid especially during peak times, reducing energy use is becoming more and more important.  One way system operators and utilities are urging companies to aid in this needed relief is through participation in a demand response program.  Demand response programs assist with balancing the supply and demand of electricity during peak times. Users are asked to reduce or shut off portions of their power, or use a generator, at specific times when there is a predicted emergency or if it is forecasted that there will be a high demand for electricity that may affect the transmission grid.  In response, participants are offered incentives for their involvement. As a business owner you may not think that it is feasible for you to shut down or reduce power at your company; however there are many options that make these programs attractive and most importantly, a realistic option for companies.

Below we have offered answers to some frequently asked questions regarding demand response programs that may help in deciding if your facility should pursue this opportunity.

What causes the need for a shut down?

Demand response days are declared when the probability that demand for electricity could exceed supply, in turn causing a disruption in service.  The most common time for electricity reduction off the grid is during hot summer weekdays.  Additionally, demand response days may be declared when generation facilities are closed for maintenance, transmission lines are damaged, or any other electricity related interference threatens to occur.

Will we be notified in advance that power needs to be shut off?

Yes, you will be notified in advance. Notification varies by utility and the program that you apply for, but can range anywhere from 30 minutes to 24 hours advance notice.  Most providers offer notification for power reduction via email, fax, phone, or text messaging based on your preference.

How often will we be required to reduce our electric use?

The frequency and number of times you will be asked to reduce usage varies depending on the program and market conditions. Some programs are designed to request electricity reduction only during critical situations while other programs ask participants to free up the grid during weather conditions, such as on very hot summer days.  Most programs aim to fall somewhere in the range of 2-3 reduction events per year with the maximum amount being around 10 times.

How will I be compensated for reducing energy use?

Each program is designed differently. Examples of incentive arrangements include: receiving a payment for becoming a participant in the program, payment for simply being on call and ready to respond to a dispatch during the month, compensation based on your company’s performance, or even a combination of more than one of these choices.

Are there risks involved for my company?

Some demand response programs have no financial penalties for participants not able to shut down during the designated times.  Other programs penalize participants with less compensation when called upon for the next event if they were unable to fulfill their commitment the time before.  It is important to speak with someone well educated about the details of the various available programs to determine which option would work best with your company’s operations.

How can I find out more information about demand response programs and if it is right for our company?

Every company has different capabilities to shut down or reduce power, incentives for participating in a demand response program vary by state and each provider has different guidelines for application so it is important to work with an expert like Power Management. Contact us today to learn more about having your facility partake in a program and if it’s right for you!