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A New Type of Demand Response Program for Your Commercial Customers

Imagine if simple programming changes to your commercial and industrial (C&I) customers’ HVAC systems could reduce their summertime on-peak energy demand by an average of 21 percent.

That’s the reality for a small sample set of C&I energy users who participated in the 18-month On Demand Savings (ODS) pilot program. The program emphasizes the importance of education and behavioral changes to help C&I customers control their on-peak energy demands and lower their energy bills.

Why do your C&I customers need the ODS program?

Like most utility customers, many C&I users are familiar with ways to manage their energy usage (kilowatt hours). But they’re less familiar with managing their power usage (kilowatts).

And yet, according to the report On Demand Savings: Introducing Demand Management in an Efficiency World, kilowatt usage typically accounts for 30 to 70 percent of commercial customers’ electric bills.

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Energy efficiency programs that target kilowatt hours are part of the reason energy sales have been relatively steady over the past seven to 10 years, according to data cited in the On Demand Savings report. However, HVAC use in the summer has risen, which is an indicator of growing peak demand.

And that’s where C&I customers will likely be hit in the pocketbook in the future.

“Demand charges have the potential to increase,” the report notes. “In the past two years, three rate cases increased demand charges by an average of 9 percent.”

In response to these rate cases, the ODS program was formed to provide C&I customers with education, tools and financial incentives to reduce their summertime on-peak demand use.   

“The intent of the ODS program is to determine if customers will place greater emphasis on managing their electrical load profile during critical on-peak periods through operational and behavioral modifications,” the report states.  

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How ODS differs from traditional demand response programs

In a typical demand response (DR) program, a utility alerts its customers to shed loads when the electric grid is overtaxed. While customers usually receive a financial incentive to participate in the program, the main beneficiary is the utility.

But the ODS program focuses specifically on a customer’s unique electricity needs and building demands, educating the customer as to when it’s most beneficial for them to shed load to maximize cost savings on their electric utility bills. In other words, the main beneficiary is the customer.

The three key components of an ODS program

ODS programs are designed to educate C&I customers by highlighting hours in which power is more expensive and comparing that to high-demand times for the facility. The program accomplishes these objectives in three main ways:

Financial incentives. Each C&I customer is eligible to receive a monthly incentive of $10 for every 1 kilowatt reduction during each month from June to September. There are also incentives for customers that work with energy management system (EMS) trade allies.

Demand-limiting strategies. The C&I customer works with an ODS program representative and, potentially, an EMS trade ally to identify load-shedding strategies that can be implemented by building operators. Many of these strategies can be done for no cost.

Customer Energy Dashboard. This computerized system helps C&I customers track their energy usage in real time or historically, in a variety of formats.

Given the recent utility regulatory trends that devalue the energy charges on utility bills and place greater emphasis on customer demand charges, it makes sense to introduce programs centered around on-peak demand management through customer education and performance-based financial incentives.

Download The Whitepaper

Fred Dreher
Written by Fred Dreher

Vice President of Small and Mid-Sized Business Strategy
Fred Dreher knows how to make a big impact in small businesses. He draws upon his vast industry experience to identify ways to improve Franklin Energy’s approach to the small and mid-sized business sector. This includes developing new products that achieve more effective approaches to program implementation. In addition to his role at Franklin Energy, Fred is a former chair and a founding member of the advisory board for the development of UW-Platteville’s Sustainability and Renewable Energy Systems (SRES) degree, a founder of Wisconsin’s SE2 Award (now USGBC Wisconsin’s Building Performance Award), and a former chair of the Association of Energy Services Professionals’ (AESP) Innovations in Tools and Technology Topic Committee. He holds a bachelor's degree in mechanical engineering from UW-Platteville.

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