With the continuous demands on electricity and capacity-strained power grids, States and Independent System Operators throughout North America are looking for new technologies and concepts to curtail the strains placed on the grids during peak demand. Until recently, the only choice for grid supply optimization during peak periods was to bring costly backup plants online. Commercial, industrial and institutional energy users can now utilize “Demand Response” programs to shed a discretionary amount of electricity, which in turn enables the ISO to re-route the unused electricity to critical areas of their systems.
Most demand response programs are originated by Independent Systems Operators (ISOs), and are usually sponsored by Local Distribution Companies/Utilities (LDCs). Almost all programs offer revenue-based incentives (capacity payments) to businesses to be on standby for occasional short-term curtailment events throughout the year, regardless of how few events may be required. Most Capacity-based demand response programs also offer an incremental performance payment for the curtailed load during an actual event.