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How can Demand Response help my business?

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Did you know that the price of electricity changes throughout the day? Following the rules of supply and demand, energy becomes more expensive when everyone is using it. 

As summer approaches, we’ll see increased demand on the grid due to air conditioning. During particularly sweltering summer days, demand from HVACs will cause the power grids to reach their peaks – and that’s when prices soar.

For large energy consumers, a failure to plan for these times of peak demand can mean a significant dent in your bottom line. During peak times, not only are businesses likely to be using more energy themselves to cool facilities, but they’re also paying significantly more for each kilowatt. 

But there are strategies for savvy businesses looking to combat peak costs. Imagine knowing ahead of time when grid peaks are likely to occur, temporarily shifting your energy consumption to less expensive off-peak hours, and getting paid to do it. Programs doing just that, called Demand Response, allow businesses to not only save during grid peaks, but to also earn extra revenue, simply for shifting demand. 

 

How do demand response programs work?

At their core, demand response programs offer a mutual solution to a problem faced by large energy consumers and utility providers alike. 

Business consumers are looking to avoid high energy costs on a handful of peak days, while still enjoying the benefits of low market prices the rest of the year. Utility providers are obligated to serve energy to all customers, even on peak days when demand is at its maximum and regional grids may be at a risk for blackouts and brownouts. 

Demand Response solves both problems.

Business consumers can sign up for a demand response program with their retail energy supplier and start seeing results as soon as the hot days roll in. 

First, you’ll partner with energy experts who will get to know the needs of your business and help you craft a curtailment strategy. The goal of a curtailment strategy is to shift usage away from times when the grid is in high demand, and reschedule it for off-peak, less expensive times. Most importantly, shifting your facility’s consumption doesn’t necessarily mean you use less energy or create any impact at all to your operations. Many suppliers can even offer you real-time tracking software to help you analyze multi-facility consumption patterns, which becomes valuable insight for making curtailment decisions. 

Once summer arrives, you’ll want to be fully prepared to curtail your energy load when your utility provider calls you. By working with a trusted energy retailer, you can receive alerts hours or days before peaks are officially called, giving you and your teams valuable time to prepare facilities. 

Depending on how your region's demand response program works, you may receive payments simply for agreeing to participate (even if you aren’t called on to curtail) in addition to payouts each time you curtail your load. For business leaders looking to inject extra revenue into operations and decrease year-over-year energy spending, demand response can be the perfect solution.

For utility operators, demand response has become a standard way to insulate energy grids from failures caused by high demand. By motivating customers to reduce demand, utilities can avoid blackouts and brownouts, and thus their sometimes catastrophic consequences, as well as avoid making expensive changes to grid equipment. Considerer our aging energy infrastructure, (which we explored in this post) and you’ll see that grid operators are vulnerable for more than one problem during summer heat waves. Market-wide, many regions may also see lower production costs and wholesale prices, as demand response averts the need to produce energy using the most costly power plants.

“Demand response allows grid operators to ensure system reliability and gives businesses an important opportunity to reduce their overall energy spend,” says Direct Energy Business product manager Marina Hod. 

It’s a win-win situation for businesses, utilities, and all energy consumers, avoiding the need, as characterized by the U.S. Department of Energy, to “build power plants to serve heightened demand that occurs in just a few hours per year,” in addition to numerous other long- and short-term benefits.

 

The best time to enroll

Summer is always the biggest concern for power grid operators and customers. (We talked about why on one of the hottest days of 2018.) Because more grid consumers are running air conditioning on max, summer months are the most likely times for grid operators to call upon demand response participants to curtail energy usage.

As a result, the best time to enroll in a demand response program is no later than March. By enrolling before the summer months, you’ll have time to prepare your facility and be ready when the temperature spikes.

If you’re considering demand response strategies for your business, contact us to get enrolled before the most profitable time of the year.

 

Is demand response right for my business?

Large energy consumers that can reschedule operations during off-peak hours can benefit financially from a demand response strategy. For example, manufacturers may be able to schedule processes during off hours, such as during the night, without affecting production.

Furthermore, businesses with personnel who are actively engaged in energy purchasing are ideal candidates for demand response. As programs rely on quick action by participating businesses, an energy or facilities manager who is active and uses an energy management system will likely get the best results.

If you’re not sure if demand response is right for your facility, retail suppliers like Direct Energy Business offer support throughout the process, including a review of your energy requirements and assistance with curtailment planning.

 

How businesses can thrive using demand response

Direct Energy Business customer Zuckerman Gravely Management has participated in a demand response program with much success.

As a commercial real estate business located primarily in Washington, DC, energy is a significant business consideration for Zuckerman Gravely’s management team.

In 2015, Zuckerman Gravely began participating in a demand response program through Direct Energy Business. In addition to the revenue generated for the company, the demand response energy curtailment events helped Zuckerman Gravely reduce their peak load contribution by 11.5 percent, enabling them to secure a lower year-over-year price on electricity.

"We're saving money, but more importantly, so are our tenants," says Zuckerman Gravely's Controller Kelly James. "By identifying areas in the building where we can cut energy use, we pass along fewer costs.”

 
Learn how to generate efficiency and revenue with demand response

Posted: March 18, 2019

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