What is Demand Response?

To help you understand demand response and demand response programs let’s first look at how the electricity grid works and

To help you understand demand response and demand response programs let’s first look at how the electricity grid works and how you and other residential and commercial clients within your same utility zone receive and use electricity.

Naturally, the amount of electricity you use varies throughout the day, with periods of lower usage and periods of higher usage. The most obvious example of this would be when your business is open versus when it’s closed. However, even when your business is open there are periods where you use more electricity.

For example, a bakery uses a lot of electricity early in the morning when it bakes all its bread, pastries, cakes, and so on. Manufacturers use a lot of energy when it turns on all its machines. A restaurant would use a lot of electricity during busy periods such as lunchtime when more clients come in and the kitchen needs to cook more food.

When you use electricity, we view that as “demand”. Your business is pulling electricity through the grid from the supply.

Just like your business has periods of higher demand, so do other businesses. And at some points during the day, there are much higher demands on the grid than others. Periods of the day when you and other residential and commercial energy users combined use the most amount of electricity are called peak periods.

Peak periods put a strain on the electric grid. To balance that and to ensure electricity is available to you and to all other homes and businesses during peak periods, your utility stores energy to ensure you’ll always have it when you need it. However, they also charge you additional fees for those periods that you use the most amount of energy.

“Demand charges” or sometimes also called “peak demand charges” are the second largest part of your monthly electric bill; the first biggest part of your bill being the actual amount of energy you use.

Demand response solutions are one of the most effective ways of reducing your electric bill. Not only do you save money by reducing your energy use during peak hours, affecting both the energy supply and the demand charges on your bill, but you could qualify for rewards and incentives where your utility gives you money back for the electricity you didn’t use during peak demand periods.

Demand response programs can have a significant impact on your businesses bottom line, helping you see energy savings of between 10 – 30%, in addition to earning money from your utility with the average utility payment being between $40 – $125 for residential clients, and between $600 and up to $9,000 for commercial energy clients.

So, now that we’ve given you an overview of demand response let’s get back to our original question:

What is demand response? Demand response programs are voluntary programs that allow you, the electricity user, to reduce your electricity usage during high or peak demand periods. In many cases, in exchange, you will be compensated through your utility for decreasing your energy use when requested.

Demand responses include the adoption or implementation of energy-efficient equipment at the residential and commercial level as well as the industrial level as a way to reduce overall energy consumption. Some programs allow your electric supplier or system operator to directly reduce your usage by temporarily turning off your equipment during peak periods. Other programs offer you insights and information as well as alerts, giving you the opportunity to turn off equipment or reduce usage during predicted peak hours.

So, what are the benefits of demand response?

While the immediate and most obvious benefit of demand response is a major reduction in your electric bills, demand response is also a perfect way to reduce your overall energy usage and thereby your carbon footprint, helping you be more sustainable.

And while many utilities will offer your credits, rewards, and even direct payments for reducing your energy use during peak periods, many states also offer significant cash incentives and rebates for commercial and industrial energy users who implement energy-efficient equipment to reduce overall energy usage.

According to the Energy Information Administration, while 93% of demand response program enrollments come from residential clients, however commercial and industrial clients who participate make up a larger share of energy-saving and qualify to receive much bigger incentives.

Onsite generation and batteries

The three main ways to reduce power usage during peak demands are:

  1. Turn off colling and heavy usage equipment
  2. Adopting and implementing energy-efficient equipment
  3. Onsite generation and batteries

Onsite generation and batteries provide Asset-Backed Demand Response.

Asset-Backed Demand Response is a gateway to increased reliability and cutting peak-time electricity costs allowing you to benefit from the rewards of demand response participation without interrupting your operations in any way.

Configured to meet your unique power needs, onsite generation and batteries provide reliability with rewards. Operated, maintained, and monitored by a dedicated team of experts, if you use a lot of electricity you could qualify to have asset-backed demand response at no cost to you.

To find out more about demand response programs, and to see if you qualify for incentives in rewards in your area please contact us at (844) 674-5465 or e-mail us at info@energyprofessionals.com

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