With a growing population, increasing power demands, and limited power grid capacities, the threat of utility power outages is increasing for many areas of the U.S.
In February of 2021, historically frigid temperatures throughout Texas caused a 48.6% loss of utility grid power generation, according to ERCOT, the local independent system operator. With just over 50% of their expected power generation capacity in operation, they could not keep up with the power demand and were forced to implement rolling blackouts, shedding power to millions of customers. Additionally, SPP, which operates the utility grid for portions of fourteen states (including states within our service area: Oklahoma, Kansas, Arkansas, Missouri, and Texas), implemented load shedding for the first time in its 80-year history.
So, how do commercial and industrial power customers avoid being left without power? Demand Response programs combined with natural gas standby generators might be the solution.
What is Demand Response?
Generac Industrial Power says: Demand Response (DR) or Demand Side Response (DSR) programs reduce demand on the utility supply in the event of a utility grid emergency. They do this by allowing the local electric utility — typically an Independent System Operator (ISO) or regional electric utility company — to automatically and remotely use an organization’s on-site generators, transferring some or all of a facility’s load from the grid to the generator. They also trigger load reduction through commercial and industrial building automation systems that act on lighting, HVAC and other mechanical loads.
While DR participants are only called upon to use their gen-sets up to four times per summer for about four hours per event, DR programs provide a no-risk, no-cost opportunity for organizations to help offset the capital and operational cost of a stationary generator set. Participants can earn money, save on energy costs and help maintain reliable electricity throughout their city, thereby avoiding blackouts or brownouts.
DR program participants receive recurring capacity payments for agreeing to allow their local utility to curtail their utility power consumption in response to abnormally high electricity demand. They also receive additional energy payments based on their performance during dispatches.
Financial incentives vary, but DR can significantly offset the capex and opex of a generator system that would otherwise be viewed as just an insurance policy. For example, a 300 kW natural gas generator with approximately 200 kW of “enrolled load” would earn the customer $4000 at enrollment and up to $3000 per year for the peak energy generated.
Additionally, program participants usually pay less for electricity, whether they sign up for mandatory, voluntary or price-responsive programs. Rates may include a combination of credits, penalties or time-of-use charges, but they are generally lower overall for program participants.
How do Natural Gas Generators fit with Demand Response Programs?
DR is most viable for natural gas generators rather than diesel generators, as the costs for achieving diesel emissions compliance in a non-emergency application often exceed the potential benefits of participating in a DR program. For example, in 2013 the U.S. Environmental Protection Agency (EPA) put forth rules to allow diesel generators to operate for 100 hours per year for DR purposes. A group of environmental regulators and advocates along with centralized generation interests appealed the rule to the U.S. Court of Appeals, which overturned the 100-hour limit in 2015. As a result, diesel generators must undergo costly upgrades to meet the emissions standards to run in DR applications.
Generac Industrial Power’s natural gas generators are factory EPA certified to be used in a non-emergency application (demand response), meaning the end user does not have to apply for a generator emissions certification and they do not need any type of site testing to obtain an emissions certification.
For additional information about generators for Demand Response, contact your local Clifford Power Equipment Representative.
Clifford Power Systems, Inc. provides dependable generator equipment, service, and rental. We are solely focused on power generation and offer professional consultation to meet all your project needs. For additional information, contact us at any of our locations in Oklahoma, Texas, Missouri, Kansas, or Arkansas.