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Demand Response: Identifying Change, Enhancing Revenue

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Siemens Smart Grid supplies products and solutions for intelligent and flexible electrical network infrastructures. To meet growing energy needs, the networks of today and tomorrow must integrate all forms of power generation and ensure bi-directional energy and communication flows. Intelligent networks help make it possible to generate and use power efficiently and on demand.

Siemens is the only company that offers a complete spectrum of solutions and services for the protection, automation, planning, monitoring, and diagnosis of the grid infrastructure. This post was written by Sachin Gupta, Senior Sales Executive, North America of OMNETRIC Group, a Siemens and Accenture Company.

Though the debate rages on as to whether global warming and climate change is real, the events over the past several weeks have proven that the weather is becoming more extreme. The perception that summers are getting hotter and winters are getting colder is real. Boston has seen a record snowfall of over 60 inches in a 30 day period, and the Midwest, extending out to the Northeast, is still experiencing extremely frigid temperatures. The real question that exists is how this extreme shift in weather patterns affects the stability and reliability of the electric grid, and more importantly the demand response (DR) and energy efficiency (EE) programs put in place to help alleviate this instability.

The majority of traditional DR programs, which have been around for numerous years, were created to be emergency based programs that deal with summer peaking scenarios. However, as a result of the recent extreme weather, Independent System Operators (ISOs) have been more prudent in utilizing and enacting DR resources. Last year, PJM enacted almost 2,000 megawatts (MW) of DR capacity in January. This is almost 25 percent of the registered DR capacity, even though those resources were not obligated to participate. As part of the 2013-2014 Winter Reliability Program, ISO-NE gained the ability to call upon DR assets up to 10 times during the winter peaking period. Last winter, NY-ISO also dispatched close to 900 MW of capacity through its Emergency Demand Response Program and its Special Case Resources capacity market program; these programs were designed to be dispatched in energy shortage situations. With DR having the potential to become a year-round asset, does it makes sense for commercial and industrial DR participants to reevaluate their participation in the DR marketplace?*

The short answer is "yes." It is important to identify that change is taking place. Where open market programs exist, many of these markets are making needed changes and adjusting to meet localized winter peaking demands. The ultimate benefit is the ability for commercial and industrial DR participants to receive additional compensation or revenue through year-round participation.  

Ultimately, for now, it seems like because these programs are only dispatched in extreme, limited weather scenarios, the cost benefit of participating remains high.  The ability to receive added capacity and event payments for the additional limited participation does make sense, but the benefit doesn't stop there. The commercial and industrial participants also the have the ability to continue to be good stewards to the communities and regions they serve. It is one thing to have supply and demand constraints during the summer, but winter produces real problems specifically when talking about the ability for all people to stay warm. As weather scenarios continue to change and become more extreme, the ability for commercial and industrial participants to understand how they can participate in DR year round not only becomes a benefit for that entity, but ultimately us all. 

Siemens Smart Grid & Direct Energy Business Working Together

As you may have heard, this past August, Siemens Smart Grid and Direct Energy Business signed a contract to install a Demand Response Management System (DRMS). Basically, Direct Energy Business will roll out the Siemens DRMS solution to manage existing load commitments in multiple Independent System Operators (ISOs) regions, including PJM, ISO-NE, ERCOT, and NYISO. The technology allows Direct Energy Business to more efficiently manage power demand requirements for its customers, especially during times of peak usage.

Contact us today at 800.437.7265 or to find out how the Demand Response program could help make your business better. 

*Source: 2014 FERC report on demand response and energy efficiency,

About the author: Sachin Gupta – OMNETRIC Group, a Siemens and Accenture Company, Senior Sales Executive, North America
Sachin Gupta, is the OMNETRIC Group, Senior Sales Executive, North America, and is focused on helping to create market facing grid application software solutions. Gupta’s career has been dedicated to various facets of demand side management. Prior to joining OMNETRIC Group, Gupta worked for Siemens as product manager tasked with the creation of Siemens commercial demand response management software. Previously, Gupta worked at  EnerNOC, Grantek and Johnson Controls.

Posted: February 18, 2015