Demand Response for Manufacturers – MES #4

February 25, 2021 – Did you know that a demand response program will pay you for curtailing your usage? In this video, Senior Energy Advisor Michael Zaura, CEM explains how this program can serve as an additional revenue stream for your manufacturing facility.

Video Transcript

Hello, and welcome back to Manufacturing Energy Success. Thank you for joining me!

Did you know that there is a program that will pay you for curtailing your energy usage? In this week’s topic, we are going to cover the Demand Response program and the additional revenue it might mean for your facility.

What is Demand Response?

Demand response is a program that was designed to alleviate stress on the grid during critical times.

Think about over the summer. 100 degree weather, lots of humidity, air conditioning and probably your machines working a little harder than normal. Demand response asks you to curtail during these extreme times to help alleviate those stresses on the grid and prevent blackouts.

How do you receive payments?

Now let’s get to the good part: how do you get paid for being part of a demand response program?

There is a one-hour test even that usually takes place toward the end of June to mimic what an emergency event would look like. You’re given three- to four-weeks’ notice in order to prepare for this test event. Most of our manufacturers do a scheduled maintenance day or maybe a lunch so they can curtail as much as possible during that one hour.

After that one-hour test event, a few months are used to evaluate the data of how much you actually curtailed during that one hour. Then, your payments are determined. For one client last week, we estimated that they can earn $50,000 annually by participating in the demand response program.

What’s after the test event?

Now that the test day is complete and you’re enrolled in the program, what’s next?

If a critical day is called, you will be asked to curtail as much energy as possible on that critical day. Critical day sounds a little scary, I know. But there are two positives to keep in mind in regards to a critical day.

  1. If you curtail as much as possible on that critical day, you get extra energy payments for whatever you curtailed that day.
  2. There has not been a critical day or a grid emergency called in over 12 years in our territory otherwise known as PJM. So, your chances are very good that the only curtailing you’ll be asked to do during this program is on that test day.

“There’s no way we can curtail.”

The number one comment I get from manufacturers all the time when it comes to this program is “Mike, there’s no way we can curtail.”

Would $50,000 of new revenue to your facility make an impact? I’m guessing it would.

Now when we say “curtail,” keep in mind that we don’t mean a complete shutdown of your facility. “Curtailing” could be adjusting the thermostat by a few degrees for that one-hour test event. It could be shutting down an air compressor, a chiller, a rooftop unit, maybe a manufacturing line just for that hour.

The point is, you can curtail as much or as little as you want. But keep in mind: your payments will reflect how much you curtailed during that one-hour test event.

The enrollment deadline is coming up soon!

In closing, demand response is an incredible program to generate revenue for your facility. If you’re interested in seeing an estimate of what payments might be for your facility, I’m happy to help! The enrollment period is coming up fast — it usually ends in late spring, but it could be earlier depending on how many megawatts are accounted for. In this program, there are a certain number of megawatt-hours available, and once those are claimed, enrollment is shut down until next year.

Thank you for watching! I hope you found today’s video valuable. Join me next week for our final video in the series on energy efficiency. Have a great evening!

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