The use of behind-the-meter generation for demand response programs is declining as a result of recent regulation favoring greener emergency demand response resources, according to GTM Research’s third-quarter edition of the U.S. Wholesale DER Aggregation report.

In May 2016, the Environmental Protection Agency (EPA) cracked down on the use of stationary reciprocating internal combustion engines (RICE) that are unable to meet new emissions standards.The provision went into effect as PJM and MISO entered their 2016/2017 delivery year.

GTM Research found this led to a 1.7-gigawatt drop in behind-the-meter participation in PJM and MISO. "Past participation of non-complying RICE generators is not clear; however, the declining numbers show a clear shift in resource mix,” said Elta Kolo, a GTM Research grid edge analyst and author of the report. 

As delivery year 2016/2017 commenced, MISO cleared 500 fewer megawatts of behind-the-meter resources -- a decline attributed to the EPA ruling. In PJM, the percentage of behind-the-meter resources providing load management demand response has contracted by 50 percent.

The fuel mix has traditionally been dominated by diesel generators; however, in delivery year 2016/2017, diesel's dominance shrunk while the provision from natural gas remained stable.

EPA regulations are impacting the provision of emergency demand response across the country. On the West Coast, declining participation in demand response programs is an effect of broader decarbonization goals. The California Public Utilities Commission has adopted a ban on backup generators that use diesel, natural gas, gasoline, propane, or liquefied petroleum gas acting as demand response resources in CAISO that will go into effect in January 2018.

"For more than a decade, California has demonstrated a vigorous push for a carbon-free energy system. Over the years, the California Public Utilities Commission has asserted that using fossil-fueled backup generators as a demand response resource goes against the greater purpose of DR: offsetting carbon-intensive peaking generation," said Kolo.

While territories differ in their development of demand response or distributed energy resource programs, there is a clear signal that EPA regulations are impacting electricity markets across the country.


Demand response resources are continuously changing as policy and regulation make headway into greener pastures. To dive deeper into the evolving electricity market landscape for distributed energy resources, please download the report brochure, or contact