Understanding Energy Demand-Response Programs

Increasingly, electric utilities are offering demand-response programs to their customers (see how Supervalu is making the most of energy saving opportunities, http://www.automationworld.com/feature-9089).

With demand-response, utilities essentially pay businesses for reducing their energy consumption during specified times of peak demand. In some cases, the customer receives additional payments just for being part of the program. And there are other benefits, according to Efficiency and Innovation in U.S. Manufacturing Energy Use, a document prepared by The National Association of Manufacturers and the Alliance to Save Energy, 2005. They are:

• Customer benefits. Large businesses are learning that the revenue they can generate through demand-response is too great not to be pursued. The study noted that many manufacturing plants can easily reduce their energy consumption by 10 to 20 percent. According to the report, a large portion of this reduction can be obtained without significant capital expense.

• Utility benefits. Power plants are costly to build and operate. New ones take years to build. Demand-response can be implemented quickly and can reduce or altogether eliminate the need to build new peaking power plants and the associated transmission and distribution lines and equipment. Additionally, with adequate demand-response participation, utilities can keep prices low and customer satisfaction high.

• Environmental benefits. Demand-response smoothes out the energy demand curve, reducing the need to generate additional peak power. The resulting environmental benefit is substantial, because less fuel is burned and fewer greenhouse gases are generated.

Source: Opto 22 (www.opto22.com), an automation supplier in Temecula, Calif., contributed information to this article.

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