Getting Started with Demand Response (Energy Priorities)

Demand response is catching on around the world as a means of reducing the need for new power plant construction, lowering wholesale power costs, and cutting harmful emissions. It can also be a source of revenue for participating companies. If demand response is going to be part of your energy cost management strategy, then you have some options for how you go about it. (podcast)

by Denis Du Bois
March 19, 2007

Podcast

Listen to the Podcast (6-minute mp3)
Also available on iTunes
RSS Feed for Energy Priorities podcasts (What's this?)
Music by Chris Keister

1. Enroll with your utility or ISO

The first and most obvious approach is to enroll directly with your utility. If you've been happy with your interactions with your utility, and you have engineering expertise in-house, then this might be a good way to go.

When you reduce your load on-demand, the utility can apply the credit to your bill. About a fourth of the utilities in the United States offer a demand response program.

There might be more than one program available to you from your utility, or from the organizations that are one level up. The RTO or ISO in your state might offer programs of their own. Demand response at this level is more effective, because a peak power problem here triggers trouble down the line. And the RTO or ISO can create a bigger pool of participants from multiple utilities' territories.

2. Enroll with an aggregator

Another approach is to enroll with an aggregator. As their name implies, these companies sign up a pool of participants, and offer the combined load-shedding resource to the utilities.

There are several regional and national aggregators -- examples are EnerNOC, EnergyICT and EnergyConnect. The podcast includes a brief interview with an EnerNOC representative.

Some aggregators provide technology that ties into your building automation system, so you don't have to manually turn off lights or guess at energy savings. Some share in the risks of the programs -- penalties, for example -- and others pass those risks on to you.

Aggregators don't give you a credit on your power bill, they write you a check. The amount you get paid might be more than you would get from a direct program.

3. Join a coalition

A third approach is to join a non-profit coalition of businesses who participate in demand response. These organizations are advocates for their members, pushing for better terms and compensation from utilities. The Business Energy Coalition operates in Silicon Valley. The podcast includes a brief interview with their director.

Timing is everything

Whichever approach you take, you need to enroll at the right time of the year, or you'll miss out on the season with the highest compensation potential. In warm climates, that's the summer, and you should be enrolled by the end of April.