Businesses paid not to use power

I forget, now, where first I saw this story.

When temperatures soared across Ontario this week, businesses like Magna, Royal Group, Canada’s Wonderland and Lear Corp. in southern Ontario responded by cutting back on their power use.

It was a responsible thing to do and helped the York Region’s hydro service deal with the exceptional demands of near-record temperatures.

I remember seeing this first, followed by the punchline – clearly I cannot resist doing the same.

But the companies, along with others in a pool managed by Rodan Energy, got more than the satisfaction of doing their part for the community good. They got paid for not using electricity.

The York Region program was one of two pilots for a provincewide “demand response” program that the Ontario Power Authority hopes to introduce by the end of this month.

On first blush this seems like a doomed stop-gap approach to a systemic under-capacity problem. The programme is taking a longer (better) view, though.

Under terms of the Ontario Power Authority’s (OPA) Demand Response program, participating companies will be paid two ways. First, they’ll get a payment for standby capacity – or the promise to deliver power when asked to do so. Then they’ll get paid for the megawatts they don’t use, when called upon to conserve.

The goal by 2010 is to sign up 500 megawatts of power that can be shifted from users in the program to meet other demand and keep supply and demand in balance. That roughly amounts to the output of a small nuclear power plant, which wouldn’t have to be built if conservation can generate the same amount.

Whoever wrote this, though, needs to learn that you introduce acronyms on the first use of a title (the OPA thing).

This looks like a pretty well-considered approach to demand-management, given the constraints of irrational human behaviour. In Tokyo, for example (and Adelaide still, for all I know) there are times when an individual apartment can run, say, the refrigerator and lights, but turn on the microwave and your fuse goes. Here in New York, the lights will sometimes indicate that the building’s electricity is right on the edge. Why not apply the same distribution of power in a full city?

Obviously (or not, but I would hope so) demand managment means households, too, but in a heat wave that simply won’t hold. We’ll burn air conditioners (or, in the case of Bloomingdales downtown, several millions BTUs-worth of them). A system that prompts non-essential parts of a grid to return power to it is pretty good thinking. The incentives seem to be structured well and if conservation keeps new supply infrastructure from being built, so much the better.

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