Demand Response

Demand Response (DR) is an end user’s ability to curtail usage when the PJM Interconnection is in need of excess capacity. There are multiple DR programs that your business can participate in depending on the way your company consumes electricity. The value for each event (or year) is determined by PJM and not by the individual DR provider. URA will help you determine the best DR program(s) for your business to participate in, as well as acquire multiple competitive quotes from DR provides.

There are three major types of Demand Response:

Emergency Demand Response

Emergency DR is the most common and well known type of Demand Response. This is a mandatory commitment to reduce load to a certain baseline, called the Firm Service Level (FSL), when the PJM Interconnection is in need of capacity. The general rules and regulations for this program are as follows:

  • Program runs from June 1st to May 31st of the following year, but calls only occur between June 1st and September 31st (payments are year round)
  • Curtailment calls can occur up to 10 times with a maximum duration of 6 hours for each event
  • If no events are called, the PJM mandates that the supplier must perform a 1 hour test to be sure your facility can perform

Estimated payment per MW (1,000 kW):

  • 2014/2015 – $37,000
  • 2015/2016 – $45,300
  • 2016/2017 – $32,500

Synchronized Reserve

Synchronized Reserve is a commitment to reduce usage within 10 minutes of an event. These can occur year round, but last a maximum of 30 minutes. Events occur when the PJM Interconnection is in immediate need for extra capacity (example:  generator is temporarily disabled). The value of the curtailment is based on the market at the time of the call, but can be very profitable. This program is great for high-draw equipment that can be shut off for short periods of time (at any point during the day) without sacrificing product quality, such as freezers.

Economic Demand Response

Economic DR is a voluntary commitment to reduce usage when prices on the PJM grid are higher than a pre-determined price. Prices are generally based on the day-ahead market, and payments are based on the kW reduced and the value of the market at that time. Economic DR is great for companies that have refrigeration, freezers, or the ability to shift their production schedule.