Saturday, April 20, 2024
HomeEnergy NewsHow Your Business Can Get Paid to Reduce Energy?

How Your Business Can Get Paid to Reduce Energy?

Introduction

With electricity prices rising, Australian businesses are looking for innovative ways to reduce their energy bills. One potential solution lies in demand response programs, which reward organisations for decreasing energy use during periods of peak demand on the grid. Read on to understand what business demand response entails and how your company can benefit from enrolling.

Key Takeaways

  • Demand response pays businesses incentives to shift or curtail energy consumption during peak hours
  • By reducing demand when the grid is stressed, businesses help avoid blackouts and costlier peak power
  • Typical demand response actions include adjusting HVAC, lighting, production schedules and using onsite generation
  • Energy retailers and aggregators now offer tailored demand response programs for commercial clients
  • Participating businesses earn cash payments and/or energy bill credits as incentives
  • The incentive revenue and cost savings achieved make demand response programs profitable

What is Demand Response?

Demand response involves businesses voluntarily adjusting their power consumption in response to requests from their energy provider, typically during hours when electricity demand and prices are highest.

By reducing their energy use at critical times, businesses help ease stress on the grid and avoid the need to bring more expensive peak power plants online. In exchange, demand response program participants earn financial incentives. The Australian Energy Market Operator provides more details on how demand response supports grid reliability here.

Why Do Energy Providers Offer Demand Response?

For utility companies, paying businesses incentives to temper peak demand is often cheaper than building extra infrastructure to meet demand spikes. Having commercial customers respond to their requests also helps energy retailers:

  • Avoid expensive wholesale spot price spikes during periods of high energy demand
  • Manage congestion on the transmission and distribution grid
  • Reduce the risk of blackouts by curbing demand before reserves are depleted
  • Integrate more renewable energy through better demand modulation
  • Meet government peak demand management and reliability mandates

By tapping building assets business-wide, energy providers can strike the optimal demand-supply balance.

How Can Businesses Participate in Demand Response?

To begin participating, a business first enrolls in a commercial demand response program offered by their electricity retailer or a third-party aggregator.

When peak events are called, the business then implements their authorised demand response measures – typically using building management systems for larger firms. Strategies include:

HVAC Optimisation – Temporarily raising cooling setpoints or limiting heating/cooling in unused zones. Pre-cooling spaces also helps shave peaks. The US Department of Energy has guidance on HVAC optimization strategies here.

Lighting Dimming – Reducing non-essential lighting loads by 20-50% lowers electricity draw.

Production Shifting – Adjusting production schedules and batch loads to avoid peak hours.

Onsite Generation – Leveraging onsite solar, batteries, gensets, or combined heat and power systems to reduce grid reliance.

Equipment Shutdowns – Powering down certain discretionary equipment or processes temporarily.

Incentives and Savings

The incentives earned make implementing demand response worthwhile:

  • Direct Cash Payments – Businesses receive monthly checks based on their load reduction performance.
  • Bill Credits – Some programs issue credits on the company’s utility bill instead of direct payouts.
  • Reduced Energy Costs – By curbing usage at peak pricing periods, businesses pay less for the energy consumed.
  • Infrastructure Avoided – Shaving peak load lowers infrastructure costs to meet demand spikes.
  • Improved Competitiveness – Taking advantage of revenue potential from flexible consumption.

Programs are often highly profitable – participants can earn up to $100 per kW reduced annually.

Maximizing the Value of Demand Response

Follow these tips to capture the full value from business demand response participation:

  • Enrol in both retailer and third-party aggregator programs concurrently to access more events and incentives.
  • Implement automation using building energy management systems to easily activate complex demand response measures.
  • Bundle demand response with onsite generation and storage solutions to increase load reduction capacities.
  • Consider changes to production planning and staff schedules to optimise shifting daily energy usage patterns.
  • Keep accurately quantifying demand reductions during events to maximise incentive payments.
  • Promote participation internally as a sustainability initiative to gain staff engagement.

Conclusion

With the right strategies, demand response programs enable Australian businesses to earn income while supporting grid stability and reducing energy expenditures. Consider enrolling your organisation if faced with rising power bills. Demand response represents an innovative opportunity to turn energy costs into profit. The Australian Alliance for Energy Productivity has resources on the business case for demand response here.

FAQs

How much can a business reasonably expect to earn from demand response?

Earnings vary based on program types, facility capabilities and load sizes. But $50-100/kW reduced annually is common. A 500 kW shed earns $25,000-$50,000/year.

Do I need smart metering and building automation to participate?

Interval metering is required to quantify load shedding. Automated BMS and EMS systems allow seamless load control versus manual efforts.

What are the risks or downsides to demand response for my business?

With proper planning, there is minimal risk. But improperly managed DR could disrupt operations or antagonise building occupants.

What duration are demand response events?

Events typically last 2-6 hours for larger commercial/industrial programs. Residential programs are shorter in the 15-60 minute range per event.

Who are the major demand response providers I can work with?

Leading companies include EnerNOC, Greensync, Redback Technologies, Zen Ecosystems, and aggregators like Bidgely. Retailers like AGL also have programs.

RELATED ARTICLES
- Advertisement -

Most Popular

Recent Comments