Several of my Charleston SC clients have been approached by demand response aggregators offering payments for load curtailment during grid emergencies. The payments sound attractive ? $50-80 per kW per year for committed curtailable load. But Im concerned about the operational disruption and whether these programs actually reduce demand charges on the bill. Anyone have experience with DR programs from the auditing side?
Demand response programs ? worth it for auditing clients?
Ralph ? demand response payments and demand charge savings are two different revenue streams. The DR payment is for committing to curtail during called events. The demand charge savings only happen if the curtailment actually reduces your billing demand peak ? which only works if the utility calls a DR event during your peak billing period. In Minneapolis, Xcel calls maybe 4-6 events per summer. Odds of one aligning with a clients peak interval are maybe 30%.
Steven is right that the alignment is unreliable. But the DR payments themselves can be substantial. I have a warehouse client in KC enrolled in Evergy DR program getting $38,000 per year just for agreeing to shed 450 kW during events. Thats found money on top of any audit savings. The operational impact is minimal ? they just shut down non-essential lighting and reduce HVAC setpoints for 2-4 hours a few times per summer.
Thomas ? $38,000 per year just for agreeing to curtail? Thats significant. Is there a performance penalty if the client fails to curtail during a called event?
Clifford raises a valid concern I should have mentioned. The penalties are real. My KC client has a building automation system that can reliably shed the committed load automatically when notified. Clients without automated load shedding capability should be cautious about DR commitments. Manual curtailment is unreliable.
Bottom line from my perspective: DR programs are a legitimate additional revenue recommendation for clients who have the infrastructure to reliably curtail. But dont confuse DR payments with demand charge reduction ? theyre separate benefits. And always disclose the non-performance penalties. I position it as supplemental income, not a core audit finding.
I was on the utility side for 22 years in Duluth. Demand response penalties for non-performance can be severe ? typically 2-3x the annual payment for the committed load you fail to curtail. If a client commits 500 kW and only sheds 300 kW during an event, theyre penalized on the 200 kW shortfall. Make sure clients understand the commitment is binding and non-performance is expensive.