Demand Response

Demand Response programs help the Energy Regulatory Commission of Texas (ERCOT) and the Transmission and Distribution Service Providers (TDSPs) such as CenterPoint minimize the risk of blackouts when the electricity grid is near peak capacity. Participating companies agree to curtail the amount of electricity they draw from the grid when ERCOT or the TDSP notifies them of an emergency. In return, companies are paid to participate whether an emergency occurs or. In 2012, there were no declared emergencies but enrollees received significant payments; a user that committed 1 MW received approximately $62,600 if it was in the ERCOT and CenterPoint programs.

 

Companies can curtail usage in two ways:

  1. Reducing electricity consumption by raising thermostats or slowing or stopping interruptible processes, or 
  2. Activating emergency generators and reducing the power they draw from the grid. If a 1 MW generator backs up 750 KW of load, a company can offer the amount of load the generator takes off the grid.

Companies can combine these two methods to determine potential curtailment.

There are two types of Emergency Interruptible Load Service (EILS) programs offered by ERCOT, one with a 10 minute response time where generators are switched on or usage reduced from a central control station; the operator installs equipment to do this and the cost is deducted from payments to participants. The second program has a 30 minute response time but the US Environmental Protection Agency has ruled that emergency generators cannot be used in the 30 minute program.  Some telemetry equipment is required but the cost is modest.

ERCOT programs run in 4 month segments, June-September, October-January, and February-May and are divided into 4 daily time blocks, Business Hours 1 (BH-1) 8 AM-1 PM, BH-2 1 PM-4 PM, BH-3 4 PM-7 PM, and Non-Business Hours. A company can choose to participate in some or all segments and periods or only selected times and will maximize revenues from ERCOT by full participation. ERCOT will call one annual test of 30-45 minutes and companies must respond within the 30 minute response time and curtail the agreed amount as verified by telemetry and Interval Data Recorder (IDR) or smart meter.

CenterPoint’s Load Management Standard Offer Program operates only during the summer trimester, June-September, from 1-7 PM on weekdays excluding federal holidays, the most likely times for the grid to approach peak usage. Companies can participate as long as they can curtail 100 KW or more and will earn $35,000 per MW. The Scheduled Curtailment (Test) will not exceed 3 hours and unscheduled curtailments will not exceed 4 hours.

Electricity users can maximize revenues by selecting the CenterPoint program during the hours it operates and ERCOT the rest of the year. ERCOT pays for many more hours but at a much lower rate than CenterPoint.

GeoVend International works with Constellation Energy, an Exelon company, to enroll clients and manage Demand Response. Constellation has been managing Demand Response programs in Texas and other states for more than 10 years. It has the staff and equipment need to do so cost effectively and at minimal expense to its customer. Equipment and telemetry expenses are deducted from payments to customers so there are no direct charges to participating companies.

The table below shows annual revenues if a company participates in both ERCOT and CenterPoint programs. Contracts are for 3-5 years and companies must confirm their enrollment for each four month period. If a user curtail less than 1 MW, their revenues will decline proportionately.

 

5 Year Demand Response Revenues
ERCOT 6/1/13 - 5/30/18 Total Hours Current EILS Price Load Reduction MW Gross Revenue Generated Customer % of Revenue Customer Net Revenue
Business Hours 1 6319 $7.50 1.00 $47,392.50 65% $30,805.13
Business Hours 2 2513 $7.50 1.00 $18,847.50 65% $12,250.88
Business Hours 3 3351 $7.50 1.00 $25,132.50 65% $16,336.13
Non Business Hours 28664 $7.50 1.00 $214,980.00 65% $139,737.00
ERCOT Hours 40847   Total Revenue $306,352.50   $199,129.13
             
CenterPoint
6/1 - 9/30 2013

BH 2-3 1-7 PM
           
Mon- Fri 516 $35.00 1.00 $35,000.00 65% $22,750.00
             
CenterPoint
6/1/13 - 9/30/18
2580 $35.00 1.00 $175,000.00 65% $113,750.00
             
ERCOT + Centerpoint 43427     $341,352.50   $312,879.13