Industrial demand response payments to reach $4.3 billion by 2019

Since the inception of demand response in the mid-1970s, electricity customers in the industrial sector have represented an important target market in the U.S.

As demand response is increasingly adopted in other parts of the world, industrial facilities will also become a critical customer segment in other countries. According to a recent report from Navigant Research, annual revenues, in the form of curtailment payments for load reductions for industrial customers participating in demand response programs, will reach $4.3 billion by 2019.

“Because industrial power users can contribute unusually large amounts of load reduction — even from just one plant — the industrial sector offers unique opportunities for demand response,” says Marianne Hedin, senior research analyst with Navigant Research. “The financial incentives paid by utilities, grid operators, and curtailment service providers often represent a substantial annual revenue stream to industrial customers, especially those who are able to curtail a large amount of load.”

Demand response participation by industrial energy users largely depends on the flexibility of their production process, according to the report. In some instances, process manufacturers, such as food and beverage companies, can potentially go without power for many hours, since they usually run a cold storage operation with buried refrigerators that only begin to thaw after many hours without electricity. Discrete manufacturers, on the other hand, tend to have greater difficulty participating in load curtailment because they usually have less flexibility to modify their processes.

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