Energy and Smart Building Industry Blog

Maximizing Demand Response Programs in 2023 - How Retailers Can Plan Now

Maximizing DR in 2023

Energy use is a major operational expense, and the management of it is one of retail’s biggest focus areas for sustainability. With the industry consuming billions of dollars of energy per year, the opportunity for savings is immense – along with the important environmental benefit of dramatically reducing greenhouse gas emissions.

While the focus of the holiday season is on sales and profitability, the season is also the perfect time to plan so that you can personally impact your organization’s bottom line through earning financial incentives on energy savings with Demand Response (DR).

Demand response refers to the practice of reducing or shifting electricity consumption during periods of high electricity demand in order to avoid overloading the electric grid and prevent blackouts. Demand response is important because it helps balance supply and demand of electricity on the grid, and can prevent blackouts, the need to “fire up” gas-peaking power plants, and avoid costly upgrades to the grid which are usually passed onto rate-payers. By reducing or shifting electricity use during periods of high demand, demand response can help prevent overloading the grid and ensure that there is enough electricity to meet the needs of all customers.

In addition to improving the reliability of the electricity grid, demand response can also help reduce greenhouse gas emissions by promoting the use of cleaner, more efficient forms of electricity generation (avoiding those gas-peakers). By reducing the need for utilities to rely on fossil fuels to meet peak demand, demand response can help to reduce the overall carbon footprint of the electricity system.

Demand management (or what we call “persistent demand management”) is a strategy that goes hand-in-hand with demand response as it aims to balance the supply and demand of electricity on the grid. Unlike demand response, which requires buildings to curtail their consumption when a utility sends a signal, persistent demand management requires a building to continuously balance its energy demand to avoid large demand spikes – it’s an application that runs 24 x 7 and in parallel with demand response programs. The importance of demand response and demand management lies in their ability to help maintain a stable and reliable electricity grid. By managing demand, these strategies can help prevent blackouts and other disruptions, and can also help utilities avoid the need to build expensive new power plants or transmission lines to meet peak demand. In addition, demand response and demand management can help reduce greenhouse gas emissions by promoting the use of cleaner, more efficient forms of electricity generation. Finally, both techniques can significantly reduce retailers’ energy expense with little investment and opportunity cost.

There are a few key factors to consider when deciding which demand response programs will provide the maximum financial benefit. Some of the key factors to consider include:

  1. The specific needs of the grid operator and the local electricity market: Different regions and electricity markets have different needs and challenges, so the type of demand response program that works best in one area may not be the most effective in another. Program requirements like notification window and curtailment duration can vary significantly.
  2. Building types can have differing ability to participate in demand response: Different types of buildings have different levels of flexibility and ability to participate in demand response programs. For example, large industrial customers may have more flexibility to shift their electricity use than residential customers and retail is often in between these extremes.
  3. The type of technologies and resources available: The availability of different technologies and resources can affect the feasibility and cost-effectiveness of different demand response programs. For example, some programs may require customers to have access to advanced metering infrastructure, while others may be more suitable for customers with on-site generation or storage.
  4. The potential for financial incentives: Different demand response programs may offer different levels of financial incentives including rebates that can apply demand response modernization investments.

A recent, informal poll of our customers indicates that multi-site businesses like retailers and grocery chains, on average, only participate in about 20% of the demand response programs available.  That's A LOT of money left on the table, but why? Here are the four most common challenges we hear:

  • It requires too much time to quantify and evaluate multiple demand response programs.
  • They don’t have the staff to deal with the complexity of managing hundreds or thousands of sites with multiple different building automation systems across a portfolio.
  • It’s unclear what demand response aggregators (or curtailment service providers) offer the best pricing and market access based on their broad geographic footprint.
  • They are unsure if the effort or potential risk to occupant comfort is worth the financial gain.

Phoenix Energy Technologies developed Demand Manager™ to solve all of these technical roadblocks and our team can help you easily identify, quantify, and qualify the value of all DR programs across your portfolio.

And with more than a decade of experience, Phoenix Energy leverages partnerships with leading DR aggregators to significantly streamline and simplify the contracting process and bring energy-reducing activities to customers’ store nationwide. Join us for our live webinars coming up in January, February, and March 2023 where you can hear directly from our Demand Response partners.

Demand Response program contracting begins February 1, so timing is perfect to get your planning and process started now.

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