by Jeff St. John
April 24, 2020

New York City’s struggles to contain the country’s worst outbreak of COVID-19 are wreaking havoc on the demand response providers that help customers shed electricity consumption to keep the city’s power grid from overloading during summer heatwaves. 

And while the shuttering of all nonessential businesses and resulting massive drops in electricity demand might reduce the need for those services this year, it’s also possible that failing to bring enough customers on board could leave the city under-prepared for managing the grid under heightened residential loads, or when it’s able to open businesses again in the months ahead. 

Earlier this month, a group of the state’s biggest demand response providers and trade group Advanced Energy Management Alliance (AEMA) sent a letter (PDF) to the New York Public Service Commission (PSC), laying out the problems they’re facing amid the coronavirus pandemic and suggesting temporary changes to utility Con Edison’s demand response program rules to help mitigate them. 

Many customers have closed their buildings under Gov. Andrew Cuomo’s March 22 lockdown order, leaving them with little load to reduce. Those essential businesses that haven’t closed are too busy with “more pressing issues” to do the preparatory work to meet Con Edison’s already-passed April 1 enrollment deadline and its fast-approaching May 1 deadline, the letter noted. 

These problems have led customers to postpone or cancel plans for participating in demand response this summer, David Klatt, VP of operations for Logical Buildings, said in an interview this week. “A lot of these businesses and companies are in operation and making huge decisions. We have some clients that just don’t have the mental bandwidth to focus on this.” 

What’s more, Con Edison has stopped all nonessential work of its own during the pandemic, including installing the smart meters needed to participate in demand response, which has led to some applications being delayed or rejected, AEMA wrote. 

“Getting metering set up is a huge issue,” Klatt said. “It’s a very seasonal sales process and signup: Everyone rushes at the last minute to get all the utility-grade revenue metering set up in time.”

Not only has Con Edison been forced to stop entering buildings to install meters, but it’s also hard-pressed to solve integration or communications problems with those that have already been installed.  

Con Edison requires customers to determine in advance how much load they’ll be able to shed during every summer month. That’s a big problem since most businesses don’t know when they’ll be able to reopen, Peter Dotson-Westphalen, senior director of market development for CPower, said in an interview.

“Right now, you can only enroll for a May 1 or June 1 start date for a summer season that runs from May to September,” Dotson-Westphalen said. “There are some customers that we didn’t enroll for May because we knew they were going to be closed, or their operations were changed to a point where they weren’t sure their load would be relied upon.” 

Those customers might be able to reopen in June, July or August and start providing Con Edison the load drop it needs for what are typically the hottest and most grid-constrained times of the year, he said. But “there’s really no mechanism to get enrolled” in later months and still “be able to provide service through the remainder of the season.” 

AEMA is asking for rule changes to extend program signup deadlines throughout the summer and to allow customers to offer different load reductions on a month-to-month basis to account for the uncertainty of when they’ll be able to start business again. “Allowing those changes will help provide more accurate views of what load actually is available to be interrupted” in the summer months when Con Edison needs it the most, Dotson-Westphalen said.

Why falling loads in spring could undermine peaking loads in summer

AEMA’s recommendations are in response to ongoing discussions with the New York PSC, state grid operator NYISO and the state’s utilities on how to manage demand response programs amid the coronavirus pandemic. They're also an effort to preserve the tens of millions of dollars that demand response participants earn on an annual basis from participating. 

At the same time, demand response providers are aware that these pleas for rule changes might be seen as asking for special treatment, Gregg Dixon, CEO of demand response provider Voltus, said in an interview. “We shouldn’t expect to be immune from the effects of the pandemic. We’re not asking to be made whole by any stretch of the imagination.” 

Given the massive drops in commercial energy demand in the New York metropolitan region, it’s likely that demand response providers are going to see a significant drop in revenue for themselves and their customers, he added.

New York City has recorded the country’s biggest declines in electricity demand due to coronavirus-related business shutdowns, according to data from NYISO. Demand in New York City, or “Zone J” in NYISO parlance, has fallen from about 8 percent below typical daytime load in the first weeks of the crisis to as much as 20 percent below typical levels in the past week, as this graph shows. 

At the same time, the purpose of demand response isn’t to funnel money to participating customers, but to help utilities and grid operators prevent peak loads from causing grid disruptions, equipment failures or blackouts, Dixon said. “It’s our job to support the grid, not the other way around.” 

And rules that prevent or discourage customers from enrolling in the spring so that they’ll be available in the summer months could leave the grid bereft of support when businesses are able to reopen later this summer. “It’s possible that if the powers that be get the economy back to work, you have a snap-back effect,” he said. 

That term describes how buildings that have air conditioning curtailed during hot afternoons tend to turn back on at even higher levels of energy consumption once that curtailment is lifted. But “the same effect could be seen at a grid level when the economy comes back. We hit the emergency brake — and when it comes back, it’s likely to be like red-lining the engine.” 

At the same time, many of the businesses coming back online may not be ready or able to participate in demand response at the same levels they have in the past, Dixon noted. “We have two manufacturers that have significant demand response capability that are now making essential medical equipment, and there’s no intention to do curtailment,” since their work in supporting public health supersedes the value of their load reduction. 

Even if many businesses remain closed into the summer and keep overall New York grid loads below normal levels, Con Edison could still need to manage increases in residential demand due to stay-at-home orders, Dotson-Westphalen said. “Lower [commercial and industrial] load on its own doesn’t eliminate the risk those triggers being reached, or having transmission or local congestion issues arise that require [demand response] to be called to help maintain grid reliability.” 

As an example, he pointed to the July 2019 heat wave that caused power outages in New York and across the eastern U.S. and Con Edison’s extensive use of demand response to limit the scope of its outages. Over the weekend of July 20-21, the utility dispatched its Distribution Load Relief Program, designed to limit local grid constraints, across every part of its system. It also called for voluntary reductions from customers in its Commercial System Relief Program, which is aimed at reducing systemwide peaks, on both days as well. 

Residential air conditioning loads drove much of the peak load over that weekend, reducing the impact of its commercial and industrial demand response capabilities. At the same time, Con Edison’s residential and small business customer demand response programs are much smaller and less effective for managing emergency events. 

Last year, Con Edison paid out just under $49 million in commercial demand response customer incentives for just over 700 megawatts of enrolled load-reduction capacity and just over 600 megawatts of “operationally available” load reduction, according to a Nov. 2019 report filed with the PSC. During the July 20-21 heat wave, it called 10 Distribution Load Relief Program events asking for up to 65 megawatts of load reduction at a time and achieved reductions ranging from 53 percent to 10 percent of what it asked for — differences that were "heavily swayed by the particular subset of participants and their relative [megawatts] pledged in the event,” it wrote. 

But the same report noted that the utility was able to get no more than 18 megawatts of load reduction from its smart thermostat programs and less than 1 megawatt of load reduction from its direct air conditioner load control program, all of which is spread across its service territory and unable to be dispatched to manage local constraints. These differences indicate that Con Edison will continue to rely on the same commercial programs that are facing challenges in getting enrolled for this summer’s demand response season.