What is Demand Response? Green for Cash or Environment?

In a nutshell, Demand Response (DR) is getting paid for using less electricity when others are pigging out.  When everyone wants electricity at the same time, it’s called peak demand.  Here is a definition from energy.gov.  DR programs rewards those who respond during peak demand.  That’s why it’s called “demand response.”

Here are four ways how it’s about the cash:

Not Paying for Peak Cost.  Pretty much, like a traffic jam or any marketplace, when everyone wants something at the same time, the price reaches its highest.  Utility companies charge the most during “peak hours.”  You can probably see electricity costs broken down into tiers or time of use on your electric bill.  These savings can be substantial for some people.

Getting Credits.  Some demand response programs give you credits.  So, maybe if you use 10 kwH less during peak hours, you get 10 or 20 kwH credit later.  Credit meaning you save money twice!  First, you don’t pay for the peak cost during peak hours.  Second, you get to apply the credit to further lower your electricity bill!  Doubly paid.

Getting Cash.  Some demand response programs may even give you hard cold cash back.  It’s that simple.  So, you reduce your bill when things are the most expensive, and then you get paid cash again for all the electricity you didn’t use.  Doubly paid.

Prices Lower for All.  This is indirect.  Some utility companies may not actually lower their prices, but some will.  It’s really tough to squeeze more out of an electric grid.  I’m talking about hundreds of millions of dollars to keep an electric grid ready to handle peak demand.  If this enormous cost is gone, some utilities will lower prices.  Now, you are triply paid.

What Do You Have to Do?

Sign Up.  Check if there are demand response programs in your area.  You can do this googling or checking on your utility company’s website.  For example, here’s a list of demand response programs if you are a PG&E customer.  Alternatively, go try an app on your phone.  Here’s an app directly from the utility company SCE.  Apps and services are also available from OhmConnect, Chai Energy, and Bidgely.  Also, if you have a smart thermostat, you can sign up for a demand response program through them.  For example, if you have a Nest, they call it Rush Hour Rewards.  Honeywell offers demand response through their Savings Program.

Make Small Adjustments.  The brass tacks is that you do have to make some small adjustments.  The easiest one to make is to adjust the thermostat half or one degree.  This is one of the easiest things to do and requires very little of your attention.  People are often surprised how they don’t even notice the difference anymore after a few days.

Other small adjustments could be just delaying certain activities until peak demand is over.  Maybe you don’t have to run your electric dryer exactly after dinner?  Another small adjustment is just turning off stuff you don’t really need during peak times, e.g. lighting in a room no one is in.

Green for Cash or Environment?

We’ve established that demand response dishes out cash, but it’s often talked about as green for the environment as well.  It actually helps your environment in two ways.

Prevent Brownouts in Local Region.  Let’s go back to the traffic jam.  A jam happens when everyone is on the same part of the road.  Any tiny unexpected thing will cause a traffic jam that spreads and spreads.  The more cars, the worse.  The electricity grid is similar.  This is why utility companies or private organizations are willing to pay big bucks for people willing to make small adjustments during peak demand.  It all adds up.  Money aside, it really helps your local electricity grid.

Earth.  Making more electricity during peak demand is so difficult that utility companies must resort to any way possible.  Their main job is to make sure electricity never stops.  So, oftentimes, they must use the “dirtiest” means there is, whether it’s coal or something a town just doesn’t like, e.g. nuclear power plant.  Worst yet, these “extra” plants must be kept going all time even when there is no peak demand because power plants take a long time to fire up.  If we go back to the traffic jam example, it is like building a 20-lane highway just to make sure there is no traffic jam during rush hour.  What a waste.

So, demand response is about getting extra savings (and money) if you’re willing to make small adjustments during peak demand.  If you have something like a smart thermostat, it can be done automatically.  If not, you can use an app that tells you when peak demand happens.  Check with your utility company.

Demand response is green in both cash and the environment.