What You Need to Know About Demand Response

demand-response-smWhen was the last time you flipped a light switch and took a moment to think about the impact of your action on the electric grid?  It wouldn’t be farfetched to say that it’s a notion that never crossed your mind—and you wouldn’t be alone.  While we rely upon consistent service from the electric grid on a daily basis, most individuals don’t concern themselves with how the grid functions until a blackout or brownout occurs.

Believe it or not, businesses and consumers can have a much more engaged relationship with their energy providers, helping to ensure that energy demand is always met, keeping supply flowing where it is needed most and protecting the security of the electric grid at the same time.  How?  Through a process called demand response.  If you haven’t heard of demand response before, here are some of the basics to help you understand the process, appreciate why it’s important and see how you can benefit.

What is demand response? 

When demand for electricity peaks, utility companies must find a way to ensure that the need is met efficiently, matching supply with demand on a constant, instantaneous basis.  In addition to purchasing costly electricity from other regions (if available) or building and operating facilities just to meet those infrequent times when demand peaks (think hot, humid summer afternoons), some electric systems and utility providers offer demand response programs.  These programs enable businesses or homeowners to be compensated for their willingness to scale back their electricity consumption to relieve usage on the grid during periods of peak demand for electricity.

Both implementation and incentives can vary by program, so be sure to get the details from utilities and companies that offer demand response services in your area.

Why is demand response so important?

Unfortunately, a failure to meet electricity demand in one isolated area can have widespread implications.  Blackouts can leave entire populations without electricity.  Wild fluctuations in voltage seen in brownouts can lead to structural damage to the grid or to equipment that uses electricity.  Demand response programs help mitigate the conditions that cause these costly and hazardous outages.

Who can benefit from participating in demand response? 

Demand response programs vary from state to state.  In addition, energy suppliers can offer differing demand response programs.  You should consult with your utility to see if you are eligible for, and would benefit from, participation in demand response programs.  Typically, organizations with large facilities—hospitals, schools and industrial facilities, for instance—have the most to gain.  But in some regions, even homeowners can reap the benefits.  Check out the business and consumer programs offered by utilities in your area to see if demand response is available.

How do demand response participants get compensated?

There are a number of ways that demand response program participants can be compensated.  Some utilities will offer flat rates for participation, while some will vary their prices per kilowatt (kW) of demand reduction achieved based on other market indicators.  Still others may offer rebates that can be applied to customers’ utility bills.  Click here to learn more about the types of compensation available for demand response programs.

How are companies notified to reduce electricity?

Depending on the demand response program in which you or your business is enrolled, your points of contact and specific protocols can vary.  But typically, you will be notified in advance that you need to reduce consumption.

While there is incentive to participate in a demand response program, not all programs are suited for all businesses and consumers.  You may need additional software or hardware to participate, or you may not be able to scale back your consumption enough to benefit.  If you’re a business owner in New York curious about demand response, reach out to ConEdison Solutions to quickly learn more about whether participation is right for you.

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