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6 Questions & Answers Regarding Demand Response in Texas

Summer is gone, however, not without underling the necessity of Demand Response (DR) programs, as the energy demand puts a tremendous strain on the grid and can contribute to blackouts. That is the main reason why Electric Reliability Council of Texas (ERCOT), the company responsible for controlling Texas’s energy grid, initiated programs such as DR to minimize energy usage when demand is high. 

If you are thinking about enrolling within a DR program, but you are not sure, we have come up with a list of a few common questions to make it clearer for you.

If by now DR is still an enigma for you, let us shed some light on the importance of this strategy. In order to enhance grid reliability and avoid blackouts, demand response is an incentive for energy users to reduce or move their energy consumption from peak times to peak periods. Financial incentives for customer engagement are provided by grid operators.

Demand Response systems allows you to save money during times of high demand that could have a negative effect on grid stability by paying you for load curtailment.

What does ERCOT’s Emergency Response Service (ERS) program represent?

ERS is a wholesale demand response grid reliability network that assists the avoidance of power outages in ERCOT services areas at periods of peak use or emergencies. Participants in particular load zones are supposed to reduce their energy usage by a promised amount to lower total grid demand.

As an illustration of how helpful a program such as ERS can be to ERCOT, during the second month of 2011, an ice storm generated the loss of 7,000 MW (megawatt) of power. In response, the ERS DR system helped decreasing demand by more than 400 MW, preventing the emergency from aggravating. 

How much can you save by participating in a DR program?

The amount you can save due to DR, rests on the number of hours you are registered to participate in; Also, on the clearing price for the amount bid into the market. For instance, for 1 MW of load curtailment, a business can earn up to $70,000.

If you are participating in a DR scheme, once an event is called, you will receive monetary gratification for the amount curtailed. Nonetheless, if no event is called, a pre-determined remuneration will still be received. Within 75 to 90 days after the end of the participation into the market period, ERCOT provides monetary compensation to Qualified Scheduling Entities (QSEs).

What are the advantages of participating in Demand Response?

By taking part in a DR program, once again, you gain compensation, furthermore you lower your carbon footprint, boost energy efficiency and most importantly, protect the environment by ensuring grid reliability.

Eager to learn how do you become eligible for participation into an ERCOT ERS Demand Response scheme? You simply must meet the below preconditions:

  • Your business must have over 100 kW (kilowatt) usage.
  • You should be able to decrease energy consumption within a window of 10 to 30 minutes.
  • Lastly, get a smart meter mounted.

What DR services am I allowed to participate in?

There are two ERS program options that you can aim for participation. The first one, ERS-1O provides you with a 10 minutes notification prior to the event, during which you must reduce your load by the amount promised. The second one, ERS-30 provides you with a 30 minutes notification.

As soon as the notification is sent by ERCOT to the QSE you are registered to, a warning will be forwarded to you along with your specifications for load resource reduction. Furthermore, the ERCOT ERS demand response program is open year-round. There are 4 periods, each one for 4 months when you can bid your curtailable load. The program periods are between February and May, June and September and October to January.

When is ERCOT calling events?

ERCOT is testing every participant of a demand response scheme with real load reduction yearly, excluding any actual event within that time frame. 

There have only been 3 incidents since the introduction of demand response: the ice storm in February 2011, the heat wave in August 2011 and the polar vortex in January 2014.

Who is Lone Star Demand Response?

Lone Star Demand Response is a Commercial Service Provider, who works with ERCOT to provide Demand Response services for commercial and industrial energy end-users that pay the company to be “on call” when there is a request to minimize the electricity usage when the ERCOT grid is strained with high demand or extreme weather impacts (or both).

QSEs sell and operate two key ERCOT electricity curtailment programs, which are known as “ERCOT Demand Response” for commercial and industrial electricity consumers, who pay substantial financial benefits to each participant in a program, such as an insurance policy, for being available to minimize their electricity load during the time of an extreme ERCOT electricity grid emergency.

There are two wholesale Demand Response systems that have been developed by ERCOT. Each client will be evaluated based on their load and aptitudes and will participate in one or the other program.

One of the programs, which we previously explained is ERS, while the second one is ERCOT Load Resource (LR). LR pays participants a high hourly revenue, however it has broader technical conditions for participation.

Still questioning whether you should enroll or not into a Demand Response Program? 

Feel free to contact us at any time and we will share all the details needed for you to find the best fit for your business.


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