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It pays to curtail your energy usage with Demand Response
By Andrew Short, Hess Corporation

Across the United States, a growing imbalance between supply and demand for electricity is putting stress on local power grids and leading to unpredictable spikes in electricity prices.

The situation will worsen, according to the North American Electric Reliability Corporation, which predicts U.S. demand for electricity will increase by 18 percent in the next decade while supply will only grow by 12.7 percent. In response, regional power pools, like ISO New England in our area, are offering incentives that reward commercial and industrial customers who agree to temporarily curtail energy consumption during peak periods, when overall energy demand is expected to exceed supply. These are typically referred to as “demand response programs.”

Usually, these curtailment activities involve nonessential uses of electricity, allowing businesses to continue routine operations with reduced lighting, air conditioning or other uses of electricity.

Regional power pools like ISO-NE benefit from such voluntary curtailment activities because they are then able to purchase energy at a lower cost and pass the savings on to their customers. Businesses that participate in demand response programs also benefit through periodic incentive payments that are passed along by the power pools to participants.

Getting Started
Before entering into a demand response program, participating businesses typically receive an in-depth energy audit. This audit helps them to better understand their energy usage needs and identify opportunities to reduce or eliminate their energy usage should an energy curtailment event occur.

Businesses participating in formal demand response programs are given flexibility to determine how much energy reduction is appropriate for their facilities. And many demand response programs also provide customers with advanced metering and monitoring equipment, which records detailed, real-time electricity usage data. This information helps them identify additional opportunities to save on day-to-day energy costs.

In addition to the audit, most formal demand response programs provide a team of professionals to work with customers to develop a comprehensive energy-curtailment plan. This plan is put into place in the event a utility company requests a short-term reduction in energy. The plan outlines specific activities—such as temporarily shutting off nonessential equipment—that allow a participant to curtail their energy consumption for a short period if the power grid is under significant stress.

Benefits to Participants
In most demand response programs, participants benefit in several ways. By voluntarily committing to participate in a curtailment event, they become eligible to receive a new source of revenue. One participant in the Hess Demand Response program, for example, can expect to receive a monthly payment of $2,870 just for agreeing to conserve 1,000 kW of energy during a curtailment event. If an actual curtailment event occurs, the participant then receives approximately $500 per hour of the event.
The energy audit the participant receives also helps to improve their facility’s emergency preparedness. And the data delivered through advanced monitoring helps to further manage operating costs.

But perhaps the most appealing aspect of demand response programs is that they offer the best of both worlds—an opportunity for participants to help stabilize the regional power grid during critical periods and the ability to earn extra income while doing so.
For more information about Demand Response, contact Andrew Short, Senior Account Manager at Hess Corporation at (413) 596-6054 or ashort@hess.com or visit www.hessenergy.com.


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