Top 5 things to consider when choosing a Demand Response Provider
Not all demand response providers are the same
There are a variety of terms and conditions which can easily affect how beneficial a Demand Response program really is for your facility.
Here are 5 things to look for when choosing a provider:
COMPONENT #1
Payment Rate
Demand Response providers coordinate and manage your load enrollment with the RTO, (which requires membership & bonding) and take part of your payment as a fee for this service.
Fees vary by provider and will affect your take-home revenue.
There may also be penalties for non-performance, and differences in how payments are made if no events are called.
COMPONENT #2
Contract Term
Typical DR contract terms are for 5 years, with automatic renewals. Because payments for event performance are calculated using a baseline (your peak load contribution figure from the previous year) compared to your load during the actual event, your future plans for changing operations, equipment or the physical building will definitely impact your payments.
Make sure your demand response provider is able to accommodate your future plans and doesn’t squeeze you into something that is not flexible to your situation.
COMPONENT #3
Up-Front Costs
‘Ennoblement costs’, ‘installation costs’ and ‘software solution fees’ are among the confusing types of costs that can be charged up-front, or taken out of DR payments, depending on the provider and program.
If a provider does charge you for the installation of a meter, check to see how much, and how you will be paying for it.
These costs can be substantial and may affect the profitability of the program.
COMPONENT #4
Meter Installation Fees
Special meter installation may be required by the provider in order for them to get the interval data needed from your account. And even if you already have an interval meter, some providers will install a gateway device that communicates with your building automation system, and charge you for it.
Determining what is necessary and what is not for your facility and participation in the program is vital. There are even some providers that will assume the cost of any meter installation they consider as necessary.
COMPONENT #5
System Integration
Do you want your participation in demand response to be hands-on?
Do you want to control what gets shut off and when, or do you feel more comfortable having a load reduction plan in place and letting the provider manage this for you during an event?
Most providers have software that set-up automatic controls with dashboards that will allow you to view real-time data on your performance.
These are typically an extra cost and may require an ‘opt-out’. Without knowing, you may end up paying for a system that you don’t want or need.
Knowing how you want to manage an event, BEFORE you sign a contract with a DR provider, will help you make sure you get a clear view of your own energy data.
Energy can be confusing.
We make it simple.
Provider contracts can be complicated and confusing. Knowing what and where to look for these items can feel like an impossible task.
An experienced consultant like Alternative Utility Services, who works with multiple providers, can manage and negotiate payment rates, contract terms, meter installation costs and software requirements, and work to get you the most benefits for your Demand Response program participation.
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