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The most advantageous demand response programs in California for your business

James McPhail's picture
Chief Executive Officer Zen Ecosystems

James is a strategic and visionary Executive and Sales Leader with significant experience in strategy and management within the energy industry. James is focused on building the business and...

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  • Sep 20, 2018 5:05 pm GMT

Energy deregulation in California has been making waves since the 1990s. Competition has spurred California’s investor-owned utilities to offer new services that are attractive to existing customers as well as potential ones. A wide range of services is now available to help achieve energy efficiency in commercial buildings, including demand response programs, real-time pricing, and renewable energy credits.

Demand response (DR) — the ability to shift energy load to take advantage of lower rates — is a great way for businesses to spend less on electricity and natural gas. If your company is located in California, you have an amazing array of DR programs to choose from, each offering distinct advantages that can help your company lower its utility spend.

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Automated Demand Response with Pacific Gas and Electric (PG&E)

PG&E’s DR programs offer energy incentives to customers when they adopt energy management controls with DR capability. In addition to technical assistance, PG&E will cover up to 75% of a building controls project cost.

This financial support is a great way to offset installation and equipment programming costs, which can be a major barrier to participation in DR. The offer is available to customers updating their energy management system or adopting one for the first time.

Customers must have 12 months of billing and usage history before enrolling. They can then choose from several eligible DR programs.  A few programs are provided below:

  • Peak Day Pricing – Participants receive a discount on regular summer rates, but a higher price up to 15 Peak Pricing Event Days per year. You can try the program risk-free for 12 months: if your total bill ends up being higher than usual, PG&E will pay back the difference.
  • Capacity Bidding Program (CBP) – Participants commit to this aggregator-managed program on a month-by-month basis. On months they opt in, they will receive either day-ahead or day-of notifications for load reduction events, which should not exceed a total of 30 hours per month. You must enroll with a third-party aggregator to participate; a full list is available on the PG&E website.
  • Base Interruptible Program (BIP) – During a maximum of 10 events per month, participants lower their energy consumption to below its Firm Service Level (FSL). The FSL must be no more than 85% of the customer’s highest monthly maximum demand and may be adjusted annually. Customers receive at least 30 minutes notice of events, which last a maximum of 4 hours. Once enrolled, customers won’t have the opportunity to discontinue until the following November.
  • Scheduled Load Reduction Program (SLRP) – Open to customers that have an average minimum monthly demand of 100 kW or higher, this program lets participants select the times they’ll reduce their energy consumption. Specifically, participants select one to three four-hour periods on specific weekdays during which they’ll decrease their load to below a certain baseline. Just as with BIP, participants have the opportunity to discontinue only once each year in November.

Once enrolled in a program, they’re expected to participate in DR events for three years.

Alleviate Grid Stress Through Southern California Edison (SCE)

SCE helps companies lower their utility bills through a combination of reduced rates, bill credits, and avoided energy consumption. It offers four SCE DR programs and 20 partner programs, all of which provide incentives to curtail energy use.

  • Air Conditioners (SCE program) – Participants in the Business Summer Discount Program give SCE permission to turn off or cycle their air conditioner compressors. The fan will still run during the event to keep building occupants cool. Customers receive bill credits per unit based on a 100%, 50%, or 30% cycling plan.
  • Microgrids (partner program) – Commercial and industrial customers that are already on a microgrid can take advantage of behind-the-meter battery storage for renewable energy and automated load control through the third-party provider Advanced Microgrid Solutions.
  • Demand-Side Energy Management (partner program) – CPower offers programs such as a demand response auction mechanism, a capacity bidding program, and energy storage.
  • Energy Storage (partner program) – Participants can leverage the power of Athena, an energy storage solution that doesn’t create operational disruptions. The system is networked with other units to create a virtual power plant, which is a cloud-based aggregator of distributed energy resources.

Earn Energy Incentives With San Diego Gas & Electric Company (SDG&E)

SDG&E has six DR programs as well as offerings through third-party providers that may be an option to empower businesses to choose when and how they shed energy.

  • Critical Peak Pricing (CPP-D) – Participants in this program are charged higher prices for energy use during CPP-D events, which take place on up to 18 high-demand days per year. Each event lasts from 2-6 pm, and customers receive notification a day prior. They can respond by reducing their energy use during the event, by accepting the higher charges, or by using energy reserved ahead of time via SDG&E’s “capacity reservation” program.
  • Summer Saver AC Cycling Program – From April to October, participants agree to cycle their HVAC unit on select days. The free AC Saver device will reduce air conditioner run-time with the option of 50% or 30% cycling. Customers can save anywhere from $4.50 to $7.50 per ton for each unit.
  • Base Interruptible Program (BIP) – This initiative rewards users with bill credits if they reduce power levels during an event. Notification is only 20 minutes before an event but it will last no longer than four hours. Participants have extra motivation to reduce demand because there are penalties for excess energy use.
  • Day-Of and Day-Ahead Capacity Bidding Programs (CBP) – Similar to PG&E’s CBP, these programs managed by third-party aggregators pay out incentives to participants who reduce their energy consumption upon request. Participants can opt to receive notification of each event at 3 pm the day before or on the day of, just two hours prior; the day-of program offers bigger incentives. Events run from May to October and are limited to one event per day and 24 total hours per month, though there are no annual or weekly limits.

The most attractive demand response programs in California offer choice and flexibility to commercial building owners. Energy incentives can offset installation costs of energy management systems and decrease your utility expenses all without sacrificing your facility’s performance. An energy management system can simplify your ability to participate in demand response by centralizing HVAC and lighting controls, among other benefits.

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Bob Meinetz's picture
Bob Meinetz on Sep 20, 2018

James, California electricity prices are up 30% in the last decade and are now among the highest in the continental U.S.

Now, ratepayers are being asked to trade some of these higher prices for a cost in convenience - having to lose their electricity (and for businesses, close their doors) with only 30 minutes notice, for example.

What exactly is more "flexible" about re-organizing my schedule around what's most convenient (or least expensive) for my utility?

Phillip Kopp's picture
Phillip Kopp on Sep 24, 2018

Bob, some of our customers (hotels) have actually had a 20% increase YoY... the problem is actually much WORSE than what you have just highlighted.

This issue is not about what is convenient for your utility. This issue is directly related to intermittent supply and demand (load) caused by distributed solar PV and behind the meter battery storage systems that the Utilities have no control of whatsover.

The power system is a closed loop, actually it is not very flexible at all. You and your businesses ability to adapt may be the only thing that keeps it all together. Creative businesses and regulators are trying to find financial incentives to "ease the blow," becuase the alternative is actually no power at all. 

And this problem is not limited to CA. Just a few weeks ago the North East set a new record of $2,500/MWh wholesale spot price for energy (or $2.50/kWh in terms of your power unit cost). This really isn't about convenience, it is about sheer survival.

At some point you may be making more money by adding grid flexibility than you will by just running your normal business. Sometimes we joke that in the future, people will build buildings, just to turn them on and off. Reality is not so funny sometimes.

You can watch a short and fun (well not quite as fun as I wanted it to be...) presentation I gave on this topic a year ago at UCSD:

This is an URGENT problem. And your bandaid flexibility does keep the lights on for everyone, at least for now... 

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