Demand Response’s Moment in the (Hot) Sun

In the Northeast and Mid-Atlantic states recently, a withering heat wave — one that sometimes crossed the 100 degree mark — tested not only the limits of the regions’ inhabitants, but that of the local power grids too. Some grids fared better than others, and those that emerged unscathed have demand response companies to thank. Here’s why it’s a good idea to get the demand response word out when the electrical grid starts feeling the strain.

EnerNOC Helps Keep the Lights On

When two power plants failed in ISO’s New England service region in late June, energy prices momentarily spiked to $1,000 per megawatt-hours. EnerNOC’s DemandSMART network sprang into action and ISO was able to meet demand and avoid a hit to its bottom line by reducing demand by 380 megawatts. According to EnerNOC, this was accomplished largely through its network operations center, which remotely enlisted over 1,000 assets during a two and half hour dispatch and managed 500,000 data transactions to handle the situation in real-time.

A similar scene played out at PJM last week. The wholesale electricity market operator has demand-response contracts with EnerNOC, CPower and Comverge. As temperatures soared across its Mid-Atlantic service area, it was able to reduce the load by 2,500 megawatts for three hours by having its demand response partners signal businesses to dim lights or nudge thermostats up a couple of degrees. Individually, the effect to each commercial customer was minor and business went on as usual. In aggregate, that 2,500 megawatts in reclaimed capacity prevented entire neighborhoods and business districts from debilitating power failures.

Lesson: Tout Those Success Stories

I’ll admit I was a little dismissive when EnerNOC’s press release arrived in my inbox. After all, isn’t stabilizing the grid and preventing blackouts a demand response provider’s job? But after mulling it over, these smart grid success stories are exactly the push the industry needs to accelerate their demand response investment.

Between the lines of that press release was an undeniably clear cost-cutting message. Sure, preventing service disruptions is an important goal, but so is maintaining profitability. In addressing ISO’s recent demand response event, EnerNOC’s CEO, Tim Healy, said in a statement, “EnerNOC delivered the equivalent capacity of roughly three peaking power plants.” What utility would turn down the option to not build expensive power plants? Also, while the sheer number of megawatts saved by ISO and PJM is impressive, more so are the savings from avoiding having to fork over top dollar for electricity in the wholesale market when demand explodes.

Now contrast PJM and ISO experiences with the brownouts that afflicted Brooklyn, NY last week. Consolidated Edison (ConEd), New York City’s utility, had to plead with consumers to shut down non-essential electronics in the wake of problems with some of its underground power cables; the load on the grid needed to be reduced by 5 to 8 percent in an effort to prevent catastrophic blackouts. A look inside ConEd’s command center in Manhattan revealed a tense environment where grid operators struggled with dispatching crews that were already spread thin and requesting that businesses and public services cut back on their energy use. It’s not what anyone would categorize as a smooth or inexpensive response (overtime pay and fuel costs, ouch!) to a heat wave.

If demand response firms are to snag more of the $41 billion that will be invested in the smart grid between now and 2015, according to ABI Research, they should be prepared to let no heat wave or power plant outage go to waste. Prod — or more to the point, shame — utilities like ConEd into investing more heavily in demand response by publicizing your brownout or blackout-free track record. A reminder of the lofty costs associated with failure could be just the push they need.

Question of the week

How else can demand response firms increase their visibility?