Utilities can expand participation in demand response (DR) programs among large commercial and industrial electricity users through greater compensation and flexibility, according to a recent report issued by the San Francisco-based Lawrence Berkeley National Laboratory (LBNL).
The report presents the results of market research conducted by Houston-based Nextant and San Francisco-based Freeman Sullivan Co. in which six focus groups of commercial and industrial electricity users from Arizona, Delaware, New Jersey, and Illinois discussed the important factors affecting their willingness to participate in a DR program.
The incentive structure of a DR program ranked the highest in importance with these customers. Many participants also indicated the desire to be able to tailor their participation in DR programs in ways that better reflect the technical and operational needs of their businesses.
These focus groups came up with several user-friendly DR program ideas facilities managers, energy managers, and plant engineers may be able to take advantage of in the future, including:
Opt-out and opt-in windows. This plan allows customers to designate a specific block of time during the peak demand season in which they will not be called to shed load (opt-out), as well as designated blocks of time in which they would be willing to shed load (opt-in).
Tiered incentives tied to flexibility. This plan provides customers with the flexibility to scale-up or scale-down their level of load reduction. The program would have an incentive structure with tiers of payment for different levels of load reduction.
Defining minimum and maximum levels of load reduction. This plan has customers committing to a designated level of load reduction that ranges between a minimum and a maximum level. The customer is paid on a $/avoided kW basis.
A menu of payment options and incentives. These payment options and incentives include technical assistance, rebate programs/discounts on equipment purchases, revolving fund to offset the capital cost of DR-enabling technologies, and on-bill financing.