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Saving Energy through Demand Response Programs

October 16, 2012 | 1 comment

By temporarily reducing your building’s electricity use through a demand response program (also known as load response), you can help keep infrastructure systems reliable, reduce emissions, and control costly energy infrastructure investments.

Demand response programs offered by utilities encourage facilities professionals to lower facility energy use during tight power supply, when wholesale power supply rates are high, or when local distribution equipment approaches capacity limits. These events may occur during times of extreme heat or storms, or during power plant repairs and maintenance. If electricity demand doesn’t decline during these situations, unavoidable power interruptions can occur.

If you volunteer to be part of a demand response program, make sure to set realistic energy-reduction goals. It’s not always necessary to turn off all the lights or completely shut down the air-conditioning; check with your utility on what they recommend. It’s also important to let tenants/occupants know about the reduction as soon as possible so they can plan accordingly.

Based your location and your utility’s offerings, there are different ways you can participate in a demand response program:

Price-Based Programs

  • Time-of-use (TOU): a rate with different unit prices for usage during different time periods
  • Real-time pricing (RTP): a rate in which electricity prices change hourly, based on changes in the wholesale price of electricity
  • Critical peak pricing (CPP): the basic rate structure is TOU, but certain conditions cause the normal peak price to be replaced with a higher event price when reliability is an issue, or when supply prices are extremely high

Incentive-Based Programs

  • Direct load control: program operator shuts down or cycles your air-conditioner, water heaters, etc. on short notice
  • Interruptible/curtailable (I/C): curtailment options are integrated into retail tariffs that provide a rate discount or bill credit for agreeing to reduce load during system contingencies, and penalties may be issued by not participating
  • Demand bidding/buyback: bids are offered by customers to curtail based on wholesale electricity market prices
  • Emergency demand response: incentive payments are given to customers for load reduction during periods when reserve shortfalls occur
  • Capacity market: customers offer load curtailments as system capacity to replace conventional generation or delivery resources

To see demand response programs available in your area, check out this map from the U. S. Department of Energy.

Have you ever participated in a demand response program? What was your experience like?


1 Comment


  1. Chris Aycock
    October 17, 2012

    Great article


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