July 2021 - Quarterly Market Letter
On behalf of the team at 5, I am pleased to forward our market letter for the second quarter of...
Demand Response (DR) programs enable clients to help maintain the stability of the electricity grid during periods of peak demand while also being compensated if they can either run on-site generation or take steps to reduce their electrical load when called upon. While enrollment in various programs is voluntary, some require firm load-shed commitments when an event is called, and penalties may be assessed for failure to perform. DR events are typically called during the hottest days in summer and the coldest days in winter, depending on the regional grid infrastructure and weather patterns.
5 helps clients by working with their facilities and operations teams to evaluate the best DR programs to maximize financial benefits while accounting for operational constraints and company goals. This comprehensive approach includes an examination of any behind-the-meter assets, such as backup generation and building management systems. Additionally, 5 works with the client's current electricity supplier to confirm that the product structure of their supply agreement is designed to maximize these curtailment strategies.
Once a strategy is established, 5 helps clients evaluate potential Curtailment Service Providers (CSPs). There are many CSPs in the market with varying capabilities and market experience. CSPs are responsible for executing the dispatch of DR events and initiating periodic tests to ensure program participants can respond when called. Upon successful participation in a DR program, revenues are paid to the CSP who then pays the client a pre-negotiated share of the overall revenue.
Distributed generation assets that participate in DR programs also reduce the need for peaking service generation facilities, which in turn improves overall grid resiliency. A well-executed DR plan truly benefits all stakeholders involved. 5 is proud to advise DR participation for clients in every program available throughout the US.
Contact Us to learn how 5 can review demand response options for your business.