Tricks Of The Trade: Demand Response

By B. Kevin Folsom, CEP
Published in the October 2012 issue of Today’s Facility Manager

Q I am interested in participating in the demand response program with my local utility. I have done a lot of research and see the benefits but would like your input. Or, if you know of anyone who already is participating what are their challenges, and is it working for them or not?

Ray Andrews
Facility Manager

Sitel Teleservices
St. Catharines, Ontario, Canada

A I have been part of the Texas ERCOT EILS (Now called ERS) demand response program since 2008. We literally have our campus electricity cut off within 10 minutes of being notified of a statewide emergency. Typically, the program seeks customers who have a minimum average 1,000 kilowatt demand, but there are ways they work with smaller customers through aggregation, which is what we do.

Participants are required to test their systems once per year. If we are called to curtail energy use, that serves as the test for the year. We have found three major benefits:

  1. You can test all your power outage systems once per year (e.g., emergency lighting, battery backups, communication protocols, procedures, etc.)
  2. If rolling blackouts are imminent, you’ll receive advance notice before anyone else so you can protect your systems by turning them off until all is cleared. Rolling blackouts can destroy costly systems.
  3. Financial rewards. You get paid for your power outage when others don’t during a rolling blackout.

Do not engage a system like this without having your leadership on board first! This is a very disruptive commitment at least once per year (while you probably already encounter power outages, this is looked at very differently).

I would advise finding an energy procurement consultant to help you competitively bid your campus out to participate. There should be several companies that want your campus on board.


  1. Kevin did a great job explaining many of the reasons for demand response. There is one other reason and it’s called “price response”, which incentivizes end users (load resources) to reduce their load in response to ultra-high price signals during times of low reserve margins on the electric grid (e.g. not enough generation to meet demand), and/or in those instances in which there are transmission congestion constraints on the electric grid. Price response programs are typically voluntary and enable participation at various price point levels depending upon end-user value thresold.

  2. After seeing my response above, I thought I could have done better by including the reasons why we need a demand response program:

    There are times when everyone on the transmission grid is demanding more electricity than what is available. So they are looking for customers that are willing to turn off their electricity to free up more for others. Why does this happen? Following is a list of a few examples:

    1. The economy won’t support building more generators.
    2. During mild weather some generators are down for schedule maintenance. If there is an unexpected extreme weather occurrence the demand for electricity can spike up too quickly to respond.
    3. EPA no longer allowing some fuels for generators to be used. (e.g., Texas is being required to curtail its Clean Coal generators before new generators can be built) thus reducing the capacity to meet demand.
    4. No new combustion type (coal, gas, nuclear/steam, etc.) technologies that are considered acceptable.
    5. Wind has not been reliable during extreme hot weather at the time it is needed, thus wind driven generation drops off when it’s needed most.
    6. An unexpected failure of a major generator.

    I would love to see others share more reasons why (or share solutions to this problem)!

  3. Kevin:

    Great article! You definitely were one of the first campuses in TX to embrace participation in demand response!

    As you are probably aware, demand response has come a long way over the last 4 years here in ERCOT. When you first entered into the program, we were in what’s known as the “Demand Response 1.0 World.” With the advent of automation and smart grid technology, we are now playing in the “Demand Response 2.0 World.” More and more universities, school districts, and commercial properties are wanting to reap the rewards of demand response participation but cannot just turn things off (or they don’t have generation).

    Nice job for setting the standard for other campuses out there!

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