ERCOT Demand Response Programs (Texas)

The Electric Reliability Council of Texas (ERCOT) manages the grid for most of Texas. Unlike other ISOs/RTOs, ERCOT operates an "energy-only" market, meaning it does not have a formal capacity market like PJM or ISO-NE. Consequently, Demand Response (DR) programs in ERCOT primarily focus on providing ancillary services (grid stability) or emergency load reduction.

C&I customers typically participate through a Qualified Scheduling Entity (QSE), often an aggregator specializing in DR.

Key ERCOT DR Programs for C&I

Emergency Response Service (ERS)

• Administered By: ERCOT
• Type: Emergency standby capacity
• Goal: Prevent involuntary load shedding during grid emergencies.
• Products: ERS-10 (10-minute response) and ERS-30 (30-minute response).
• Participation: C&I customers commit a firm load drop amount (typically ≥100 kW) via a QSE for specific time blocks. Contracts procured seasonally.
• Response: Must curtail within 10 or 30 minutes of ERCOT dispatch.
• Baseline: Firm Service Level (FSL) method - based on committed reduction level.
• Stackability: Cannot be combined with other ERCOT ancillary services for the same load at the same time.
• Incentives: Primarily capacity payments (~$60-70k/MW-year average historically, varies by bid/season/product). Potential energy payment if deployed (rare).
• Penalties: Strict penalties for non-performance during tests or events (payment clawbacks, potential suspension).

Responsive Reserve Service (RRS)

• Administered By: ERCOT
• Type: Ancillary Service (fast contingency reserve)
• Goal: Provide instantaneous response to grid frequency drops.
• Participation: Large industrial loads (typically ≥1 MW) capable of very fast, automated response. Requires installing Under-Frequency Relays (UFRs) that automatically trip load below a frequency threshold (e.g., 59.7 Hz).
• Response: Instantaneous (automatic via UFR).
• Baseline: Measured against load just prior to the frequency event.
• Stackability: Generally cannot be enrolled in ERS concurrently for the same MW.
• Requirements: Mandatory UFR, 2-second telemetry to ERCOT.
• Incentives: Capacity payments based on daily RRS market clearing prices. Can be very lucrative (historically averaging $85k-$100k+/MW-year), but requires specialized equipment and acceptance of automatic tripping.
• Penalties: Non-performance (failure to trip) can lead to disqualification.

Non-Spinning Reserve (Non-Spin)

• Administered By: ERCOT
• Type: Ancillary Service (30-minute reserve)
• Goal: Provide reserves that can be brought online within 30 minutes during shortages.
• Participation: C&I loads (often via QSEs) that can curtail reliably within 30 minutes. Load participation enabled more recently.
• Response: Within 30 minutes of ERCOT dispatch. Manual or automated curtailment acceptable.
• Baseline: Requires telemetry and verifiable baseline calculation.
• Stackability: Cannot participate in ERS at the same time for the same MW (can split capacity).
• Incentives: Payments based on Non-Spin market clearing prices.

ERCOT Contingency Reserve Service (ECRS)

• Administered By: ERCOT
• Type: Ancillary Service (10-minute, longer duration reserve - Launched June 2023)
• Goal: Provide faster reserve than Non-Spin, designed to support grid during renewable energy fluctuations (ramping).
• Participation: C&I loads (typically ≥1 MW via QSEs) that can curtail within 10 minutes and sustain the reduction for up to ~3 hours. Does *not* require UFRs like RRS.
• Response: Within 10 minutes of ERCOT dispatch. Often requires automated controls due to potential frequency and duration of events.
• Baseline: Requires telemetry and verifiable baseline.
• Stackability: Mutually exclusive with providing other reserves (RRS, Non-Spin, ERS) at the same time.
• Requirements: 2-second telemetry, automated curtailment capabilities preferred. Participants must be prepared for potentially frequent dispatch (daily balancing needs).
• Incentives: Capacity payments based on ECRS market clearing prices. Potential range estimated at $85k-$185k/MW-year, reflecting high value for fast, flexible resources.
• Penalties: Market-based; non-performance can lead to penalties or disqualification.

Other Considerations in ERCOT

• 4CP Management: While not a formal DR program, many large C&I customers actively manage their load during the single highest 15-minute peak demand intervals in June, July, August, and September. Reducing load during these four Coincident Peaks (4CP) significantly lowers transmission charges on future bills (potential savings of ~$40-60/kW-year). This is a common DSM strategy in Texas.
• Real-Time Price Response: Businesses can voluntarily curtail load when real-time energy prices spike (capped at $5,000/MWh). This is often done for bill savings rather than through a specific program payment.

ERCOT Program Comparison Summary

Disclaimer: Incentive values are estimates based on historical data and market reports (as of ~2023-2024) and can vary significantly. Always consult official ERCOT documentation and your QSE for current program rules and potential earnings.