WHAT IS DEMAND RESPONSE?
Demand response programs pay individuals and companies to reduce their electricity usage during times of peak energy demand. The programs are run by utilities and grid operators with the aim of alleviating stress on the energy grid during these times of peak demand. On very hot or very cold days, when more electricity is demanded of the grid than normal, grid operators and utilities must deploy backup energy sources in order to cover the extra demand and ensure that the grid can handle customers’ needs.
However, the extra energy that is provided during these times of peak demand costs more than usual for the grid to provide. Engaging latent natural gas plants or burning extra coal incurs costs beyond the source of fuel and normal operational expenses. It costs a lot of money just to get power plants up and running, only to shut them down again a few hours later.
Demand response programs exist because grid operators and utilities have calculated that it can be cheaper to pay participants not to use electricity during times of peak demand than it is to pay the steep costs that would be associated with actually providing that electricity.
During demand response events, when the grid decides it is willing to pay to reduce demand, participating consumers are notified to implement energy demand reduction strategies for the duration of the event. They are then paid based on the amount of electricity they did not consume.
A curtailment service provider (CSP), such as Ecogy Energy, plays a key role in this process by serving as an intermediary between the grid operator or utility and the energy consumer. Ecogy is one of the few CSPs with the capabilities to address both generation and demand-side initiatives on behalf of our clients.
WHO BENEFITS FROM DEMAND RESPONSE?
Most immediately, demand response programs benefit participating energy customers because they get paid, and the programs benefit grid operators and utilities because they save money compared to providing the excess electricity required during times of peak demand. But demand response programs carry an even greater array of benefits.
In the United States, the grid infrastructure is outdated in many places. One consequence of this is that the grid oftentimes cannot accommodate the amount of electricity that must move through it. This problem is most severe during times of peak demand. If more electricity is needed than the grid is capable of providing, rolling blackouts become a possibility, endangering lives and stifling economic activity. Therefore, demand response programs benefit society at large by increasing grid resiliency and reducing the likelihood of blackouts.
Additionally, the extra energy supplied by the grid during periods of peak demand usually comes from high-carbon energy sources. While extra natural gas and extra coal can be burned on demand if needed, solar panels and wind turbines are intermittent resources, producing electricity at the whim of the natural environment. Therefore, reductions in energy demand during demand response events are especially beneficial to the environment and the fight against climate change.
Battery storage offers a potential solution to this problem. Batteries can be charged by renewable energy sources when demand is low and discharged when demand is high. In fact, some programs exist that pay for the development of batteries for this very reason. However, battery storage technology has not yet been deployed at the scale necessary to void the need for demand response programs.
IS DEMAND RESPONSE RIGHT FOR ME?
If your local utility or grid operator gives you the option, demand response programs can benefit energy consumers of any size. A single house can participate by turning off its lights or adjusting its thermostat by a few degrees. Such strategies would yield proportionally greater returns for an apartment building, an office park, or a skyscraper. The more electricity you can save, the more lucrative demand response will be for you.
Manufacturing facilities consume vast amounts of energy, and a series of other factors make them prime contenders for demand response programs. One step that electricity providers take in the event of an overburdened grid is reducing the voltage of the electricity they provide. This can damage critical equipment including variable frequency drives (VFDs), a central component of many commercial and industrial operations. Demand response programs allow facilities to insulate themselves from such fluctuations. During the demand response periods, facilities can use the time for things like routine maintenance or training—while simultaneously getting paid for reducing their electricity usage.
If your facility already has battery storage installed, it may be able to participate in demand response events while continuing normal operations, just drawing from battery power rather than from the grid.
Lastly, demand response is a green initiative, so participation in a demand response program can help your organization meet its sustainability goals, or help your organization fall in line with governmental sustainability regulations, such as those laid out by New York City’s Local Law 97.
WHY ECOGY?
Ecogy is proud to be a trustworthy partner to a wide variety of organizations, from affordable housing communities and houses of worship to multinational corporations. With our extensive experience in the renewable energy space, we understand that there is both a proactive and a reactive side to energy. There’s more to sustainability than just renewable energy generation; the demand response side of our businesses represents our commitment to energy efficiency as well.
Our proprietary and advanced energy monitoring device, the Econode, makes us a particularly strong demand response partner because it allows your facility to monitor, in real time, how much your business’s electricity is being reduced during demand response events, in addition to a host of other benefits. Our experience in solar energy means that the Econode and its accompanying software are tried-and-tested products that will make your participation in a demand response program as seamless as possible.
To see if demand response is right for you, and to get paid to reduce your energy consumption, contact us.