Demand Response Overview

America's "Power Grids" are actually made up of various Independent Service Operators (ISO's). Some of the largest of these are PJM, NEISO, CASIO, ERCOT and the NYISO. These ISO's don't actually work directly with the end users but rather through intermediaries such as utility companies and/or Curtailment Service Providers (CSPs) also known as "aggregators". The CSPs in turn have thousands of end users as their clients.

End users contract with the CSP to reduce or curtail their electric usage when demand on the grid becomes excessive (Demand Response or DR) and that commitment is then sold to the ISO under various programs for, in many cases, predetermined prices. This is actually an "insurance policy" for the ISO that they can rely on during the hottest, most humid summer days when the demand for electricity approaches the available supply. This situation, if Demand Response: Good for the grid and your company not dealt with in this manner could result in brown outs, or even worse...black outs.

The CSP, compensates the client based on the amount of electricity they are willing to curtail, and the program(s) selected. The CSP earns a percentage of the revenue received from the ISO, for the services they provide; including engineering, metering and verification, program management and in many cases protecting clients from out of pocket penalties for underperformance or non-performance. The balance of
the funds is paid to you, the client, creating a secondary revenue stream that goes right to your bottom line.

What Happens to Your Facility?

Participants of demand response programs are notified that the need to reduce energy will occur, and they respond accordingly. These times of critical need are called "events", and end users respond by "shedding load" and/or shifting it to other shifts.

During an "event", different end users may choose to reduce their energy consumption in a variety of ways. Manufacturing plants may temporarily switch from running full production to powering down some equipment to perform maintenance and/or they may move their full production to another shift. Often end users turn off a percentage of lights, temporarily switch to fans and utilize fewer air conditioners, and will power off unnecessary loads like pumps and motors. The choices for how and what energy loads are shed is determined by the end user to ensure comfort and successful continued production, while still assisting to stabilize the power demands placed on the grid.

Capacity "events" typically give the end user plenty of notice to perform (2 – 3 hours) whereas several other types of "events" (Synchronous Reserves and Real Time Economic) have such short alert times that only an end user with a computerized system requiring no human intervention can participate. In addition to the monetary incentive for businesses to participate, Demand Response creates many other positive benefits, such as:

• Reduces the number of power plants that must be designed and built.
• Less air and water pollution (Healthier environment).
• Lower utility operating costs which translate into lower electric rates.
• Improvement of economies of businesses and communities alike (More job creation from Smart
  Grid development).
• A more stable and reliable power grid.