Post: Demand response in Illinois

Demand response in Illinois

In 2021, with Governor Pritzker’s signature, Illinois became the first state in the Midwest to set an aggressive timetable for reaching 100% renewable energy by 2050. The legislation propels Illinois’ effort to decarbonize the electricity sector by setting timelines to close fossil fuel power plants and achieve 100% renewable energy by 2050 while also preserving the voluntary renewable energy buyers’ market.

It also sets an ambitious goal of 1M electric vehicles by 2030 and extends cost-saving electric energy efficiency programs beyond 2030, while allowing large energy consumers to participate in programs. But alongside the need to reach these ambitious targets, electricity grid is facing challenges from increasing demand and the impact of volatile generation.

As large energy users, C&I are positioned to play a crucial role in helping the state reach this goal. In a recent report, TNC found that businesses have been rising to the challenge. They are setting ambitious greenhouse gas reduction targets and working to attain those goals. But how can businesses in Illinois reach their targets in the most cost-effective way, without impacting operations?

By participating in demand response programs your business could receive substantial financial payments for agreeing to reduce energy in response to grid signals. In addition to supporting the grid to integrate more generals generation into the energy mix, the payments earned from these programs can then be reinvested into energy efficiency measures, renewables or battery storage technologies that provide further flexibility to your site, reduce your operating costs and support the transition to a greener future.

A C&I facility in Illinois could be part of either the PJM interconnection or the Midcontinent Independent System Operator (MISO) area. As the programs available for demand response differ by grid operator it is important to check which your facility is in.

PJM

The PJM Interconnection (PJM) offers two key demand response programs. Ultimately, the ability to be flexible about when you use energy represents both a value and a cost and utility and grid demand response programs allow you to monetize that flexibility.

PJM’s Capacity Performance program allows demand resources to participate in PJM’s Reliability Pricing Model (RPM) forward capacity market. Participants pledge to either reduce load by a specified amount or to a specific kW level, within one or two hours of an event notification. Payment is based on the results of the annual RPM capacity auctions in various PJM regions. Remuneration levels for the 2023–24 PJM year (which runs from June 1, 2023, to May 31, 2024) are in the $12,000/MW range for most Illinois customers. Participants are also eligible to receive energy payments for actual reductions, if and when the program is called but load reductions are mandatory.

PJM also allows energy efficiency projects to participate in its forward capacity markets, based on the RPM. To be eligible, energy efficiency projects must reduce load continuously by at least 100kW during peak summer hours. This load reduction can be bid into PJM’s annual (for three years in advance) and “residual” (nearer-term) capacity auctions, and if selected will receive the auction clearing price.

The Economic Load Response program allows C&I customers to provide load reductions in exchange for a payment based on wholesale electricity prices. Participation is fully voluntary. Customers start by submitting load reduction bids of at least 100 kW into the day-ahead energy market. Participants whose bids are accepted are paid for their load reductions based upon the day-ahead, hourly electricity market prices. Reductions are figured based on a baseline of the average loads for the same hours in four of the facility’s previous non-responding days.

MISO

Customers in the footprint of MISO (the Midcontinent Independent System Operator) may enroll in MISO’s demand response offerings, from which they can receive payments for reducing load.

MISO’s Capacity Performance program requires participants to reduce their load by a specified amount or to a certain kW level within a short period of time. Participants are paid for their load reductions based on the results of annual auctions but the price paid could be in the $86,000/MW range for Illinois customers.

MISO also offers real-time market programs available through utility providers:

• ComEd’s Voluntary Load Reduction program pays customers for responding to individual load reduction requests of generally 2–8 hours with at least one-hour notice. Participants are notified of the payment level in advance of each event and are guaranteed at least $0.25/kWh for their reduced usage. To participate, a customer must be able to curtail at least 10kW of peak load.
• MidAmerican Energy offers its Curtailment program to customers that can reduce load by a minimum of 250kW during peak demand periods. Curtailment calls occur 2–6 hours in advance. Incentives are based on the contracted kW to be reduced during peak periods and are payable as rebates at the end of the peak energy season.
• MidAmerican Energy offers time-of-use rate options to customers who shift their energy usage away from peak hours (1pm–6 pm, weekdays) from June through September, to off-peak hours (10pm–8am).
• Ameren offers the Hourly Supply Service (Rider HSS), an hourly priced option based on the relevant MISO delivery point.
• Ameren also offers the optional EV Rate Program for certain non-residential facilities (particularly, customers on rate schedules DS-2, DS-3, and DS-4). These rates offer steep discounts for charging fleets during Preferred Charging Periods (11pm – 7am) and substantial discounts for charging fleets during Standard Charging Periods (7– 11am and 7pm– 11pm). 

At GridBeyond we have significant experience in aggregating behind the meter energy assets and successfully entering them into market either working as an aggregator or through a partnership with a utility.

By working with C&I businesses in successfully implementing demand response our technology not only helps meet the grid needs for peak-period flexibility without building power plants that sit idle most of the year, but also reduces overall emissions by providing the flexibility needed to maintain the grid when renewables output falls, supporting the state’s goal of reaching 100% renewable energy by 2050.

Call us to discuss how best to optimize your energy strategy for revenue and savings in Illinois.