Demand Response – An Effective Program To Reduce Costs And Help The Environment

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Katia Lundy. Plymouth Rock Energy

Katia Lundy. Plymouth Rock Energy

Imagine getting paid, or otherwise compensated, for not using energy!

It’s a reality these days, and it’s known as demand response. The Federal Energy Regulatory Commission defines demand response as “actions voluntarily taken by a consumer to adjust the amount or timing of his energy consumption.” More utility companies offer demand response programs to reward businesses that lower energy use during times when demand is high. The programs reduce the amount of power that utilities have to purchase, and in turn, they pay back consumers with cash or other perks.

Basically, demand response works this way: a utility pays, or offers credits, to a consumer to install a radio-controlled device on, say, an outside air conditioning unit. The utility company is able to turn the unit off at intervals of peak demand. The demand response systems detect when energy is at a high usage point, and then reduces voltage without cutting power altogether.

Not all demand response programs require an automated system—some businesses enrolled in these programs lower their usage and receive kickbacks from the utility company based on kilowatts reduced. Most companies base enrollment on existing usage and have different programs to meet the individual business’ usage capacities. As a result of lowering voltage during peak usage, lights go dimmer for a while, motors may run slower or hot water heaters take longer to reach intended temperatures.

These demand response programs are ways utility providers can actively engage consumers in modifying consumption, while reducing peak demand and avoiding system emergencies, such as blackouts.

Utilities are finding that residential customers are a huge untapped demand response resource. Get this free white paper from the Energy Efficiency Markets White Paper Library.

There are many different ways of going about demand reduction. One such way is through the use of smart grids. Smart grids are an emerging technology expected to be in broader use across the United States in years to come. Smart grids are able to ‘talk’ with one another and make decisions about how and when to produce and consume power.  These grids allow consumers to shift from times when the utility requests power reductions to a more round-the-clock basis, where consumers see the incentives of controlling energy all of the time.

In New York, buildings with large energy loads can join programs via a variety of organizations. The New York Independent Services Operator (NYISO), which heads up the state’s electricity grid and the dispatches electric power generators, offers four demand response programs—the Emergency Demand Response Program (EDRP), Installed Capacity (ICAP) Special Case Resources (SCR) program, Day Ahead Demand Response Program (DADRP), and the Demand-Side Ancillary Services Program (DSASP).

The New York State Energy Research and Development Authority (NYSERDA) administers a performance-based initiative that provides incentives on equipment needed to participate in demand response programs. Con Edison offers several programs such as the Distribution Load Relief Program, Commercial System Relief Program, Critical Peak Rebate Program, and Steam Air-Conditioning Summer Discount Program, among others.

There are some startling statistics to show demand response is the way to go in the future. Estimates are that a five percent decrease in demand would have resulted in a 50 percent price reduction during the peak hours of electricity crises in California more than a decade ago. The U.S. government believes demand response programs could reduce peak demand by up to 15 percent across the country. This would have the benefit of cutting greenhouse gas emissions and reducing costs associated with system upgrades.

There may be some short-term inconveniences for consumers, such as losing the productive or convenience value of electricity not used. But overall, demand response is a way to keep prices down for users, preserve utilities and benefit the environment.

Katia Lundy is the Sr. Director of Marketing & Communications at Plymouth Rock Energy.

Check out the latest Demand Response White Papers in the Energy Efficiency Markets White Paper Library.

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Comments

  1. I enjoyed reading this. I had no idea that demand response programs could have such a good response and influence. Thank you for sharing your information. It’s helpful to know for business owners!

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