Demand Response
What is Demand Response?
ISO New England's Demand Response Programs compensate customers for reducing their electricity consumption at times when the reliability of the electricity grid is at risk and during periods when wholesale electricity prices are very high. The programs are flexible enough to allow any company – large or small, manufacturing or retail – to easily exercise control of their electricity use and take advantage of the cost savings these programs have to offer.
ISO New England’s demand response efforts are designed to increase the electricity grid’s reliability, mitigate extreme price volatility and increase the market’s response to price signals.
ISO New England offers customers a choice of economic and reliability-based programs, including:
- Real-Time Demand-Response Program, which compensates participating customers for reducing electricity use during system emergencies within either 30-minutes or two hours of the ISO’s request.
- Real-Time Price Response Program, which compensates participating customers for voluntarily reducing their electricity use when wholesale prices are forecast to exceed 10 cents per kilowatt/hour.
- Day-Ahead Option, which was launched on June 1, 2005 and supplements the Real-Time Demand Response and Real-Time Price Response programs. Participants from either of these programs have the option of offering electricity reduction “bids” that are cleared based on the day-ahead wholesale energy market (a day in advance of the actual operating day). Such a program allows customers to establish their own price point for curtailing electricity usage.
How does Demand Response work?
At a time of high peak demand the customer is notified by ISO-NE’s control room that there is a regional reliability issue. Most often this information comes through an Internet Based Communication System (IBCS). Within a short time of the request to reduce usage the customer takes the pre-planned actions to reduce their electricity load. For example, a warehouse may have the ability to shut off every other light in their facility; supermarkets or large refrigeration users can allow their units to creep up 3 or 4 degrees for a short period; and manufacturers may be able to shut down nonessential motors during a designated period. A pre-determined rate per kWh is paid to the customer for the power they have reduced. In addition, for partaking in the program and being on “stand-by” for such events, the customer will receive a Monthly Capacity Payment based on ICAP or Market Price.
This is a win/win for the power region and its partners. By tapping into private businesses and industries at peak energy usage times, Demand Response enables the lights to stay on region-wide and keep the cost of electricity in check.
How can my company become involved in the Demand Response Program?
Customers must enroll through an Enrolling Participant. Enrolling Participants include local utilities, most competitive electricity suppliers, demand response providers and consultants as well as other companies that are members of the New England Power Pool (NEPOOL). Your local utility company is a great place to start.
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