Top 10 Demand Response Questions You Need Answered

Posted on March 11, 2013
Posted By: Sarah Battaglia
Whether you are looking to track your facility's energy consumption, or seeking a new form of revenue, chances are you have questions about participating in a demand response program. You've heard that your business could get paid to temporarily reduce its electric usage, but how exactly does that work? How does your company begin the process? And are the benefits truly worth it? Below you will find the top 10 questions customers have regarding demand response programs. They will teach you how your company can get involved and answer the most common questions that are probably going through your head right now.

10. Why is demand response an effective option for grid stability?

When the electric grid is experiencing high demand, utilities have a couple of options to stabilize it. They can purchase electricity from outside the region, but transmission can be costly; they can start up old "stand-by" power plants, but these are inefficient and harmful to the environment; or they can rely on demand response, where participants are called upon to temporarily reduce their electric consumption to safely and effectively stabilize the grid.

9. What will happen if the utility does not produce enough electricity?

The most obvious result is a blackout, which will leave everyone in the region in complete darkness. To prevent a full blackout, utilities will sometimes reduce voltage until a stockpile of electricity builds up again. This is commonly referred to as a brownout.

8. Why is it so important to avoid blackouts and brownouts?

Blackouts leave everyone without electricity, but brownouts can lead to more serious repercussions. Fluctuations in voltage can be hazardous to businesses, causing serious damage to a facility's equipment, which can cost thousands of dollars to replace.

7. Who qualifies for a demand response program?

Any business or organization that consumes a considerable amount of energy could participate. In general, the most successful participants include manufacturing facilities, hospitals and healthcare facilities, commercial properties, schools and universities, data centers, large hotels, and shopping centers.

6. When and how often are events called?

Demand response events are generally held in the summer months when everyone is blasting their air conditioning units in an attempt to stay cool. Each year is different and the number of events may vary, but most events will only last a few hours.

5. What are some methods of reduction?

Each facility will have a different reduction plan but some successful methods include running on-site generators, reducing air-conditioning usage, and shutting off lights and large pieces of equipment.

4. How will we be notified to reduce our electricity?

Designated contacts at your business will be notified via telephone message, email, fax, and a personal phone call from the demand response provider you enrolled with. Depending on your location, notifications are sent out 10 minutes to 4 hours in advance.

3. What if we cannot participate in a certain event because it interferes with our facility's operations?

Different demand response programs will have different requirements during an event. If you enroll in a reputable program, consequences will be minimal. You get paid for what you reduce, so not performing will simply result in no payment.

2. Do we need to install any hardware to participate in demand response?

An interval meter is required to participate, but in most cases, the provider of the program will install it at your facility at no charge.

1. How will my facility benefit from a demand response program

Participation does require some effort, but financial compensation is certainly worth it. For example, if a plastics manufacturer successfully reduces 1,500 KW when called, that company will receive a payment of roughly $65,000.

Participating in a demand response program can be profitable for your facility. Please visit Energy Curtailment Specialists for further information on how you can participate.

Sarah Battaglia
Energy Curtailment Specialists, Inc.

Authored By:
Sarah Battaglia has been one of the in-house Copywriters and the Social Media Specialist for Energy Curtailment Specialists since 2011. Born and raised in Buffalo, NY, Sarah holds a Bachelors degree in Business Management and Marketing from the State University of New York at Buffalo. Out of the office, she has a passion for baking delectable desserts, cooking for her family, and riding her bike. Sarah can be found on

Other Posts by: Sarah Battaglia

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March, 12 2013

Len Gould says

"For example, if a plastics manufacturer successfully reduces 1,500 KW when called, that company will receive a payment of roughly $65,000." -- ?? Is that for a single 4 hour reduction event or what?

March, 14 2013

Sabe Torque says

can time management resolve the issue of low paying job like having two jobs simultaneously but not at the same time like being a full time in the day job then as part-time job during early evening to late in the evening or early morning? usually, it really affects the production or quality of work.

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March, 15 2013

Sarah Battaglia says

Len- That would be classified as the annual capacity payment for being on stand by. Depending on what zone the customer is in and how many events are called- it could be the payment for one 4 hour event or multiple.

March, 19 2013

Jack Ellis says

First, a note to the publisher. Notwithstanding the fact that I occasionally advise one of Sarah's competitors, this is a blatant advertisement and I don't think advertisements have a place in this particular venue.

Second, the standby payment Sarah refers to amounts to less than $40/kW/year, which is well below the net cost of new entry for gas-fired generation. It's not unreasonable.

Third, It would be interesting to read a discussion of the alternatives to essentially bribing consumers not to consume at certain times. "Demand response" is a unique creation of the power industry, but the problems it attempts to address exists elsewhere in our economy. What methods are used by airlines, producers of seasonal perishable goods, etc. to balance supply with demand?

Jack Ellis Tahoe City, CA

March, 19 2013

bill payne says

Local level interests.

Power inverter considerations.

March, 19 2013

bill payne says

Forgot to mention.

A 2012 comprehensive life-cycle analysis in Journal of Industrial Ecology shows that almost half the lifetime carbon-dioxide emissions from an electric car come from the energy used to produce the car, especially the battery. The mining of lithium, for instance, is a less than green activity. By contrast, the manufacture of a gas-powered car accounts for 17% of its lifetime carbon-dioxide emissions. When an electric car rolls off the production line, it has already been responsible for 30,000 pounds of carbon-dioxide emission. The amount for making a conventional car: 14,000 pounds.

March, 19 2013

bill payne says

Green energy pirates is a good one too

March, 19 2013

Len Gould says

Well, how good a deal $40/kW/year is for the customer doing the demand reduction would heavily depend on how often the calls are made. Once each summer month would be good, once every summer day would not be good. Which clearly points out the limitations of this demand control strategy, e.g it's not viable to get very far into load leveling with it. Most utilities are probably already about as far into this strategy as is possible to get without unreasonable payments.

I would point out again Jack's third point. With absolutely every other item we purchase, when supply gets short the price should go up. It's what is known as market economics (pre-101). No reason, with todays computer, communications and storage technology (ice cooling, etc.), electricity can't work just the same, moving all load down the demand curve until it is completely flat and all power outside of solar and storage hydro is generated by lowest cost lowest pollution baseload units.

March, 23 2013

Jerry Watson says

The article is an oversimplification, sort of a mini commercial. If does not address a fundamental problem with DSM; the more it is used the lower the participation. It is great if never called for, start calling on it and the participation drops proportionally.

Also, the targeted commercial and industrial costumers, particularly process industries, suffer the greatest financial penalties from interruptions. They all want the discount but DSM them and their spokesperson will be on the evening news attaching the supplier for mismanagement and looking for reassurances it will not happen again. I have yet to see one mention that they were on program and had sold this right to their supplier.

Hot water heaters, and comfort cooling are still the practical targets for DSM. It remains my conjecture that Ice Storage Air Conditioners (ISAC) are the best answer for peak shaving. They shift loads from peak to off peak and preserve quality of life, the homes still stay cool on hot afternoons, unfortunately it would just be too easy to incent this behavior and it offers little avenue to create long term revenue streams like most DSM proposals.

March, 27 2013

Malcolm Rawlingson says

I use the OTW system myself on a hot day. It is excellent at peak shaving, costs nothing to operate and is already installed in the house. Open The Windows works superbly well on the five hot days we get in Canada. In hot countries they use much more advanced WP technology which can be bought for pennies at the local hardware store. White Paint is so much more effective than dark roof tiles we use in North America. I think someone taught them Leslies cube in high school. In Cuba and many Caribbean countries they use the even cheaper NW system which are basically rectangular holes in the concrete walls without glass or No Window walls. The gentle Caribbean breezes keep the white painted house lovely and cool without an air conditioner in sight. Excellent quality of life. Malcolm

December, 14 2013

Frank Mozes says

I use the OTW system and it is an awesome system that works without any problems what so ever. I have been using it for over a year now and couldn't be happier.

Oh and thanks for a great article Sarah! Regards Frank

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