Manufacturers Best Practice Guide
Demand Response: General Guidelines
Demand response programs are an easy way for businesses to ensure reliable and affordable electricity. Administered by local utilities or third-parties, these conservation programs notify participating businesses when to use less electricity in order to prevent electricity shortages or high spot market prices. Some demand response programs provide financial incentives or other benefits to customers who agree to reduce peak consumption or shift electricity use to off-peak hours. Peak hours are those times when electricity use is at its highest, typically between noon and 7 p.m.
The California Independent System Operator (CAISO) triggers demand response programs when operating reserves are expected to drop below 7%, meaning that blackouts are more likely to occur. Low operating reserves occur because of high peak demand, unplanned generation outages, transmission problems, or adverse weather. If reserves drop, CAISO will notify program administrators, who then alert program participants.
Flex Your Power has established a Flex Alert Network for California end-users. A Flex Alert notifies California businesses, governments and residents when they should follow specific conservation and load-shifting measures to immediately reduce their electricity use. The alert is used to prevent Stage 1 and Stage 2 electrical emergencies - times when electricity reserves are low. You can be ahead of the demand response curve by subscribing to the Flex Alert system.
Two Types of Demand Response Programs
Reliability programs are triggered the day of an electrical event to prevent or offset an impending emergency. Some are voluntary programs, meaning that there is no penalty should a business be unable to reduce its load. Other reliability programs are binding and invoke penalties for non-action. However, these programs are designed so that penalties are wholly or partially offset by financial incentives, such as lower overall rates.
Pricing programs, on the other hand, are tied to the spot market price of electricity. On critical days, pricing programs invoke higher rates for electricity used during peak hours. These higher rates are only put into effect for a maximum of 12 days a year.
Participants in either program type (reliability or pricing) receive advance notification when electricity conservation is needed or new rates are put into effect. This extra response time allows businesses to prepare building occupants and work processes, greatly reducing the cost and inconvenience of power interruptions. Participation in demand response programs also helps avoid costly involuntary interruptions.
Businesses interested in demand response programs should contact their local utilities to ask for a no-obligation demand response audit. Similar to an energy audit, a demand response audit examines building equipment systems and operations to determine what opportunities exist for load curtailment. Your utility representative can then help you choose among the many programs available, matching your building's profile to the best-suited incentive packages.
Actions to improve demand response
- Utilize an energy management system in your facility. Invest in enabling technology, e.g., enhanced automation, interval meters and demand lighting controls
- Take advantage of existing programs by signing up for utility or third party demand response programs
- Review building operations to develop demand response strategies and processes ahead of time
- Set thermostats to 78 degrees
- Shut off unnecessary lights and appliances
- Unplug unused equipment in stand-by mode and chargers
- Postpone services like cleaning and maintenance until after 7 p.m.
- Optimize use of onsite generation (renewable, combined heat and power), and fuel assets
- Obtain buy-in from employees who might be impacted and provide conservation education to increase awareness
Leading by Example: Northrop Grumman Marine Systems Sunnyvale, California
Northrop Grumman's Marine Systems Division in Sunnyvale has made demand response a top priority in its energy action plan. They have identified opportunities for peak demand shedding and educated employees on the issue. During the summer of 2006, Northrop Grumman cut demand by an average of 28,900 KW, or 21%, during demand response events; and during two major heat storms they cut demand by 33%. These impressive results were achieved by shifting production to shut down machinery, initiating employee awareness e-mails and turning off unnecessary equipment, lighting and HVAC. Additionally, efficiency programs reduced overall consumption in 2006 by 1,200,000 kWh and cut CO2 emissions by almost 1 million pounds.