PJM says demand response payments are skyrocketing

In a quietly issued report last week, the regional grid operator in the Mid-Atlantic, PJM, reported that since last April $8.47 million or revenue had gone out the door for demand response, more than had been generated in the previous 41 months.

What’s driving the new willingness and ability on the side of big energy users to turn down energy consumption during periods of peak demand? Some of it’s the rule change under Order 745 where large energy users get paid wholesale prices for their power reductions.

But the other helpful driver is that automated demand response means that software control tools can communicate with the grid and then automate power reductions. These tools are critical because they open up the playing field for DR to smaller energy users. And they point to the possibility that we might even see automated DR on a residential level with thermostats that are controllable by utilities in air conditioning heavy states like Texas and Arizona.

The net benefit of all of this for utilities is that if they can even shed 2 percent of load through DR programs, that’s a lot fewer peaking power plants they have to build.