What is Demand Response?
Independent System Operators (ISOs), such as the NYISO and PJM, are responsible for stabilizing the electricity grid to create a balance between supply from generation sources and demand from end users. Historically, the focus of grid stability had been on the supply side being flexible enough to meet the growing demand from energy consumers. Fast forward to today, with the help of many of the great technological advances in both equipment and software, a new perspective has emerged where end use customers can contribute to this grid stability effort through programs known as Demand Response.
Demand Response is the act of reducing the consumption of electricity during periods of high demand (“peak events”).
For example, during the summer, hotter temperatures leave many of us adjusting the air conditioning to stay cooler. This sudden increase in consumption puts strain on the electric grid, which could potentially lead to service disruptions or even black out events.
Therefore, in an effort to reduce electricity consumption and help stabilize the grid during these high usage “peak events,” Independent System Operators (ISOs) and utility companies compensate businesses participating in Demand Response programs for “curtailing” energy usage when the grid is under stress. The amount of compensation you receive will depend on the amount of energy you are able to curtail during a peak event. Compensation may also vary depending on the market you are located in.
Demand Response programs are ideal for businesses with high energy usage, such as those within the education, manufacturing, and healthcare sectors, as well as retail and industrial processing plants. Participating businesses should also have the operational flexibility and agility to respond to peak events or explore using backup generation on site to meet the curtailment goals.
Demand Response programs create a win for all. The ISOs and utilities are able to increase the reliability of the grid – ensuring adequate electricity supply and avoiding blackouts and brownouts. Businesses are able to address their sustainability goals while reducing usage, cutting costs, and generating new revenue that can be reinvested back into their business.
Take energy efficiency to the next level. Learn how Demand Response can help your business grow.
