How C&I Businesses Participate in Demand Response

Participating in Demand Response (DR) programs allows Commercial & Industrial (C&I) businesses to earn revenue by leveraging their operational flexibility. While specific rules vary by market and program, the general process often involves working with a specialized third party.

The Role of Aggregators (CSPs)

Most C&I customers participate in wholesale DR programs through Demand Response Aggregators, also known as Curtailment Service Providers (CSPs) or DR Providers (e.g., CPower, Enel X, Voltus).

Why work with an aggregator?

  • Market Access: Aggregators are registered market participants with the ISO/RTO and understand the complex bidding, scheduling, and settlement processes.
  • Expertise: They know the specific rules, requirements, and revenue potential of various DR programs in different markets.
  • Aggregation: They can combine load reductions from multiple smaller C&I customers to meet the minimum participation size required by many wholesale programs (often 100 kW or more).
  • Technology & Support: Many provide metering, communication systems for receiving dispatch signals, control automation options, and support during DR events.
  • Risk Management: They often manage performance risks and penalties associated with wholesale market participation on behalf of their customers.

The aggregator acts as the interface between the C&I customer and the ISO/RTO or utility running the DR program.

Direct Participation (Less Common for DR)

In some cases, very large industrial customers with sophisticated energy management capabilities and sufficient curtailable load might register directly with the ISO/RTO as a market participant. This requires significant internal resources and technical expertise to manage market interactions, bidding, telemetry, and compliance.

For most utility-run DR programs, participation is typically direct enrollment with the utility, although aggregators may also facilitate enrollment in these programs.

Typical Steps to Enroll (Often via Aggregator)

  1. Assessment: An aggregator (or the utility) works with the C&I facility to identify flexible loads (e.g., HVAC, lighting, pumps, industrial processes) and quantify the potential load reduction (kW).
  2. Program Selection: Based on the facility's capabilities (how much load, how quickly, how long) and risk tolerance, the aggregator recommends suitable DR programs.
  3. Enrollment: The aggregator handles the necessary registration paperwork with the ISO/RTO or utility. This usually involves providing facility details and metering information.
  4. Metering/Technology: Ensure appropriate interval metering is in place. The aggregator might install communication equipment to receive dispatch signals or enable automated controls if desired.
  5. Baseline Establishment: A baseline energy usage profile is determined based on the program rules (see Baselines Explained). This is used to measure performance during events.
  6. Participation: When a DR event is called, the facility receives a notification (via the aggregator or utility) and curtails its load according to the program requirements (response time, duration).
  7. Measurement & Verification (M&V): After the event, the actual load reduction is calculated by comparing metered usage to the established baseline.
  8. Payment: The aggregator receives payment from the ISO/RTO or utility based on performance and shares a portion with the C&I customer according to their contract.

Key Requirement: Load Flexibility

The fundamental requirement for DR participation is having some operational flexibility – the ability to temporarily reduce electricity consumption without significantly impacting core business functions. Identifying and quantifying this flexibility is the first step towards unlocking DR revenue.