FERC just issued Order 745 modifications affecting demand response programs nationwide. The big change is DR resources now get paid full locational marginal price instead of the previous net benefits test. This is huge for industrial customers participating in PJM and other ISO markets. Anyone have clients already enrolled in DR programs who might benefit from this?
FERC Order 745 - Demand Response Compensation Changes
Sylvia, this is great timing. I've got three manufacturing clients in the PJM footprint who were hesitant to join DR programs because the compensation was too low. With full LMP payments, they could potentially earn $150-200 per MW-day during peak events. That's enough to justify the control system investments they've been putting off.
Here in Cincinnati, Duke Energy is already reaching out to large customers about expanded DR participation. They're projecting summer 2017 peak events could pay out at $300-400 per MWh. For customers who can shed 5+ MW during peak periods, we're talking serious money. One automotive plant I audit could potentially earn $80,000+ during a single emergency event.
Down in MISO territory, Entergy is restructuring their interruptible rate schedules to comply with the new FERC requirements. The old Schedule LGS-TOU is being replaced with a market-based DR program. Customers who were getting $5 per kW-month interruption credits could now see $15-20 per kW-month during peak summer periods. The economics just completely changed.
Juan raises a good point about the MISO changes. But customers need to be careful - the new programs have much stricter performance requirements. Missing a DR event call now results in penalties equal to 150% of the expected compensation. For a 10 MW customer, that could mean $45,000 in penalties for a single missed event. Risk/reward calculation is definitely different now.
Georgia Power just announced their new DR programs in response to the FERC order. They're offering up to $200 per kW-year for firm curtailment commitments, plus event payments up to $500 per MWh. The catch is they require 4-hour minimum curtailments and only give 30 minutes notice. Most industrial processes can't respond that quickly without significant operational disruption.