Demand response: What customers need to know.

For many organizations, participating in a demand response (DR) program is integral to their energy strategy. To learn why — and how — DR takes hold, we asked four NRG team members, who talk with customers every day, about common DR questions and how DR delivers real value to businesses.

To use less energy, and get paid to do so, seems too good to be true. How does it work?

“That’s one of the first things customers ask, either directly or indirectly,” says Colleen O’Neil, strategic accounts manager.

DR’s value proposition is that when businesses commit to using less energy during a defined period or “event,” they’ll receive a check related to their reduction. In this way, DR takes the standard idea of using less and paying less one step further, letting customers earn revenue, too.

“In many cases, the concept doesn’t hit home until they receive that first tangible check,” says O’Neil.

So why are customers paid when they don’t use electricity? When grid operators have confidence that customers will use less electricity in times of stress and high demand, they can help protect against unplanned outages. With a more resilient grid, there’s less need for new generation facilities and older, inefficient ones can remain offline. Then, the expensive energy these outdated facilities produce won’t be put into the market. The resulting reduced demand, greater efficiency, and grid stability contribute to savings for customers. 

I want to know if my company is a good candidate for demand response, but don’t know where to start.

“Even if customers understand the premise of DR, they wonder if it’s a fit for their company,” says Kelly Brand, strategic accounts manager.

At a high level, DR is effective for any business with high electricity consumption. NRG works with all types of customers to implement DR programs, the common denominator being a significant electricity load and the capacity the curtail some of it when required.

It’s important for the organization to have an inherent understanding of its energy footprint. This is also part of the expertise NRG provides. Knowing where energy is sourced, how it’s used, and its impact on day-to-day operations forms a good starting point for reducing when called upon.

 How can my company reduce energy use without disrupting our business?

“The biggest hesitation I see from customers relates to the impact of energy reduction on their daily operations,” says David Hecht, strategic accounts manager.

This is where a good energy management strategy comes into play. NRG’s team works to tailor reduction to the individual business, with little or no impact on critical operations. This ranges from shutting off certain lighting fixtures, to an approach called “pre-cooling”   an example is a company reducing its thermostat setting to 66-degrees two hours before the actual event or reduction starts and when the event is called, raises it to 82-degrees. With the facility pre-cooled, temperatures remain comfortable inside during the event. On-site generators are another optionthey can keep a company fully operational when called upon without pulling as much power from the grid.

If my company decides to participate, how does the actual reduction event process unfold?

“Logistics are a common question,” says Jonathan Anderson, strategic accounts manager. “Often, just knowing what steps will occur brings clarity and reassurance to someone who’s never been involved in DR before.”

NRG eliminates uncertainty with a formal, well-communicated plan. Although an event may only last a few hours, or occur once in an entire year, advance planning, communication and rehearsals are critical for a seamless, low-impact DR program. Event notification to designated contacts occurs via email, phone call and/or text message, anywhere from 10 minutes to four hours prior, depending on the specific DR program and region.

Still, for almost every customer, one final question often lingers: 

What happens if we can’t participate when the day arrives for some unforeseen reason?

“That’s the one thing that holds many new customers back,” says Anderson. “If they don’t ask me that directly, I know they’re thinking it.”

The answer, though, is reassuring. While each DR program differs in scope and requirements, typically the direct consequences to the customer if they’re not able to perform are minimal. Because NRG manages a diverse portfolio aggregating thousands of customers, it is able to manage and protect customers from risk while minimizing (or avoiding) harm to the market. At NRG, customers get paid for what they reduce, so not performing will simply result in no payment, not in a penalty.

Overall, a successful DR program is like any other effective business process integrating knowledge, planning, communication, and execution. And getting paid to use less energy is the best motivation of all.

Start a conversation with NRG about Demand Response for your company.