For the next two capacity periods (2018-19 and 2019-20), customers will be able to participate in a program known as Base Demand Response, which requires the Demand Response resource to be available from June 1-Sept 30 for up to 10 hours in duration per event. From 2020-21 forward, resources will have to be available at all times. From a practical viewpoint, it must be highlighted that PJM/ComEd has had only two events (January 2014) in the last ten years, which does not mean that an event will not occur. The Demand Response customer needs to have a mechanism in place to reduce their load. It is just to make clear that events are usually due to an outlier event/circumstance.
The PJM market structure allows for a group of participants called Curtailment Service Providers (CSPs) to aggregate Demand Response customers to provide PJM with larger units of response capability. Customers generally need a capacity demand component of 100 KW to participate, but accounts belonging to the same owner can be aggregated. The CSPs provide the operational infrastructure to facilitate Demand Response, and they are generally compensated by taking a percentage of the customers’ capacity payment.
For suitable candidates, Alfa Energy will represent our customers and solicit bids from different CSPs to compete for your business. Parameters that Alfa Energy will help our clients negotiate include, but are not limited to: the percentage capacity payment that the customer will receive, the event notification period, the amount of capacity to be pledged and reduced, contract length, and
payment terms from the CSP to the customer. After being enrolled in a Demand Response program, Alfa Energy will keep the customer informed regarding possible curtailment notifications and tests ensuring that the appropriate personnel in your business are notified in a timely fashion. Additionally, Alfa Energy will facilitate the prompt and correct payment to the customer from the Curtailment Service Provider. For additional information on the PJM Demand Response Program please feel free to contact us.
Analyst – David Mousseau
Source – PJM, Federal Energy Regulatory Commission (FERC), and Utility Dive