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Though the terms are often used interchangeably, voluntary load-curtailment and demand-side management are not the same as demand response. Demand response is binary. When demand surges too high, utilities request a "response" from large users, and they — the utilities — are willing to pay for that reaction. And steamy summer weather is a good time for facility managers to learn how they can best benefit from an energy grid at its limits.
Typically, demand response happens when a utility customer either curtails load or increases on-site generation to supplement utility power consumption. Demand response is really just a new and improved version of interruptible contracts, which were pretty rigid, says Richard Lubinski, president of Think Energy Management. "It means there are special contracts with lower rates in summer for AC loads, and in winter for natural gas loads, assuming that clients can curtail demand upon notice from the utility." When they do curtail demand upon request, utilities will pay for the capacity that is freed up by the reduction in demand.
Essentially, he says, there are two kinds of demand response; one is at the capacity or generation level, the other at the distribution level. For most facility managers, their concern will be the former.
Genuine demand response is a relatively rare event — most organizations only face genuine demand response events for 10 to 20 hours annually, says Lindsay Audin, president of Energywiz, Inc. Nevertheless, demand response is now expanding beyond power generation; natural gas and some water utilities, particularly in the desert Southwest, are also experimenting with demand-response programs.
Organizations are not just looking at demand response as a way to contain costs, but also as a part of their larger sustainability plans.
"If you don't have a generator to bring on line during a demand response call from the utility, then you can ask yourself, 'What can people do to use less energy?'" says Audin.
Typically, that requires an organization to understand its load profiles. "Loads occurring at peak times can be shifted, and soon facility managers can do this without considering demand-response calls," he says.
When that happens, load shifting — prompted by demand response — becomes a behavior pattern and can be counted as part of a larger sustainability plan. Audin gives an example of a company that uses electric forklifts.
When the first shift ended, about 3 p.m., the forklifts would be plugged in. As a result of a demand response call from the utility, they started looking for power use to cut.
"By using a timer and relay on the forklift charging circuit, the client shifted 50 to 80 kilowatts off peak," says Audin. "Now it's just part of their culture."
Demand response also fits neatly in emergency planning. For owners who already own on-site generating capacity, planning for demand response can be part of a sufficiency plan, mostly because a contract with the utility helps ensure the maintenance and regular use of generation capacity — helping ensure generation potential will be available in the case of emergency or extended outage.
The What, When and How of Demand Response
Most Demand Response Programs are Low- or No-Cost
Demand Response Programs Include Emergency, Voluntary Options