Demand Response Markets Explained
The Energy Markets create a lucrative opportunity for large energy users with variable load to “trade” negawatts or reductions of energy for energy payments in the wholesale electricity Demand Response markets. There are three basic categories of markets that create these opportunities:
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Reliability Markets (often categorized under Capacity, Emergency or Peak-shaving programs) compensate consumers for committing to avoid using a specified amount of electricity during times electric capacity may not meet regional reliability requirements.
|Successful Customer Type||Those able to reduce or eliminate electricity load for a number of consecutive hours a few times per year|
|Program Trigger||Reliability: When the grid is experiencing instability or supply shortage|
|Program Frequency||Historically activated only a few times per year but can be called at higher frequencies|
|Payment Structure||Monthly availability payments + energy payments for energy used if program is activated (*varies slightly by region)|
|Typical Benefits||Additional Revenue stream, awareness of grid instability ahead of any power reduction measures are taken|
Economic Markets (sometimes called Energy or Pricing markets) are run to coordinate the commitment and dispatch of generation and demand resources and facilitate electric energy trading. Consumers earn revenue by reducing energy when wholesale energy prices are high.
|Successful Customer Type||Those able to reduce or shift electricity load frequently for short or long periods of time at any point during the year|
|Program Trigger||When wholesale electricity prices are high, customer load can act as a reliable, less expensive and sustainable alternative to generation|
|Program Frequency||Participation frequency is based on voluntary bids. Multiple opportunities exist daily.|
|Payment Structure||Energy payment for energy used if bid is accepted (*varies slightly by program and region)|
Additional revenue stream, energy savings from lowering energy usage during high priced hours, potential retail rate savings
Ancillary Markets act as an insurance policy against the unforeseen loss of a major power plant or transmission line. In addition, they help balance the flow of electricity minute-to-minute.
|Successful Customer Type||Those with Qualifying energy load or equipment that are able to reduce energy with little notification time|
|Program Trigger||Grid balance and reliability|
|Program Frequency||Participation frequency is based on voluntary bid. Multiple opportunities exist daily.|
|Payment Structure||Payments based on voluntary bid acceptance|
|Typical Benefits||Additional revenue stream, energy savings from avoiding high energy usage during high priced hours|
Through our VPower™ optimization engine, we enable our customers to non-intrusively gain benefits from continually shifting and managing your energy load to take advantage of energy market opportunities without affecting your core operations. Since our software is smart enough to co-optimizing across multiple markets, we can identify the most profitable and appropriate market for that time, thereby maximizing your revenue and savings.
Regional Contacts for More Information
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