You’ve cut your energy use, now, can you make money from it?
The greentech beat is full of jaw-dropping statistics, but here’s another one for you to chew on. According to demand response upstart World Energy, Barclay’s Capital estimates the market for demand response could reach $20 billion by 2020.
I’ve written about demand response technology here several times, but here’s the nutshell description again. Demand response systems are designed to sense periods of peak demand. When a situation occurs, businesses or households that have agreed to participate are altered, and they ratchet back their electricity usage. In exchange, they usually collect some sort of fee for their curtailment activities. Demand response service providers sit in-between utilities and their consumers, orchestrating this exchange and receiving a cut for their trouble.
As one might expect with oodles of money sitting out there, demand response activity has considerably increased over the last year and the reason for this blog entry is to mention the entry of a player who is bringing a whole new twist to the market – an auction-based exchange for demand response.
The World DR Exchange is, as its sounds, an online platform for conducting demand response auction activities. It was developed by World Energy Solutions, which already operates other auctions for energy procurement and green commodities.
World Energy\'s president explains the company\'s exchange concept
The simple idea behind demand response auctions is that the business that is willing to curtail electricity usage will get the best possible price for those actions. One example is Gerber’s Poultry, which used the exchange to choose its demand response plan. Here’s some perspective from Gerber’s CFO John Metzger, which was included as a statement in World Energy’s press release:
“A month or so we didn’t know much about demand response, but today, thanks to a prior investment we made in back-up generation, a recent seminar on the topic and our work with World Energy, we have over $100,000 in new DR revenue coming back to our facility. …. We found watching the auction unfold very exciting: there wasn’t much bidding activity at first, but as the end point of the auction drew near, the bids were flying, driving up our overall share of revenue.” Of course, there are certain caveats to becoming involved in demand response. First and foremost, you’ll need some other form of generation capability to get you through a curtailment exercise. But it may be time for your company to look beyond simply cutting energy consumption to cutting it even more at times when it could help generate some excess revenue.
Hey, greentech that doesn’t just save money, it earns you money. Who could argue with that?