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Demand Response turns Hotel into an Income Generator


A 400-room Hotel in the PJM territory has a central Building Management System (BMS); tied into guest room controls and the central HVAC for the common areas (meeting and convention rooms).

Concerned about guest satisfaction, the Hotel approaches Alternative Utility Services looking for guidance on how to utilize this system in order to participate in their utility’s demand response program, while minimizing the impact on their guests.


Alternative Utility Services identifies an opportunity for possible participation in a demand response program and follows-up with questions about the facility, equipment and operations.

Contrary to popular belief, hotels can be ideal candidates for demand response; they aren’t always at full occupancy and a newer BMS will allow central management of each individual room’s occupancy status and control over their HVAC. 

Given that, Alternative Utility Services completes a simple site assessment which includes gathering information about equipment, variable frequency drives (VFD), and back-up generation.

Findings conclude that the hotel is capable of achieving a load curtailment or demand reduction of 400kW.  Alternative Utility Services then works with the client to put together a load reduction strategy, should an event be called. 

This strategy includes precooling and changing set-point temperatures on their chiller, reducing the number of elevators running for up to 3 hours, and reducing the speed of their VFDs in the fans and pumps. VFDs provide great savings opportunities since a 10% reduction in speed saves 27% in energy.

Based on the plan year capacity payment value for their utility ($45.80/kW for 2014 and $54.75/kW for 2015), the hotel earns an additional income of $14,654.90 and $17,520.00 respectively (capacity value X 400 kW X 80%). 

Demand response participation payment rates vary by curtailment service provider (CSP), opportunity size and utility, and range between 50 and 80 percent.

Added Benefit

Utilities view demand response (which is only needed for several hours each year) as a cost effective, environmentally friendly alternative to adding additional generation (which is very expensive and unnecessary).  They view the 400 kW load reduction from the hotel as being the same as turning on 400 kW of new generation.

Demand response programs pay buildings to reduce their energy consumption or demand if the electric grid is under duress. By agreeing to curtail load if called upon, a building is paid a fee whether or not they actually do.  If no event is called, the building is paid based on the load they can curtail during a 1 hour ‘performance’ test.

If an event is called and the building performs, they earn an additional payment based on actual performance during the event.  Assuming six hours of actual events, this hotel could earn as much as $1,920.00 in additional yearly income.

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