Practically speaking, electricity cannot be easily stored on a large scale. As a result, supply and demand must remain in balance in real time. Traditionally utilities have leveraged peaking power plants to increase power generation to meet demand. Demand response works from the other side of the equation – instead of adding more generation to the system, it pays energy users to reduce consumption. Utilities pay for demand response capacity because it is typically cheaper and easier to procure than traditional generation.
Demand response allows energy users of all kinds to act as “virtual power plants,” adding stability to the grid by voluntarily lowering their demand for electricity. Participants in demand response programs get paid for providing demand response capacity. Demand response providers, called “curtailment service providers” or CSP’s, work with commercial, institutional, and industrial businesses to identify ways for facilities to participate in demand response programs without affecting business operations, comfort, or product quality. Demand response energy reduction measures are customized for each facility and can include turning off lighting, air conditioning, pumps, and other non-essential equipment. In some regions, facilities may participate in demand response by switching to backup generation, thereby reducing demand on the grid. Depending on the type of program, participants may be dispatched just once or twice a year for a few hours, or up to 100 hours per year. The more frequently dispatched programs typically offer higher payouts.
You can learn more about demand response programs and if they are right for your company by contacting Sustainable Energy Services. We’d love to discuss your situation.