During my decades-long career in the energy industry, and as the former Chairman of the Federal Energy Regulatory Commission (FERC), I’ve witnessed innumerable regulatory, policy, and market changes that have advanced our progress toward a cleaner and more reliable energy future. I had the privilege of spearheading one of these changes myself, FERC Order 745, which established that saving energy is as valuable as producing it. This led to the creation of demand response programs, where businesses get paid to reduce their energy use in response to grid imbalances or high energy prices.

For consumers, utilities, and grid operators in the Midwest, demand response has become a key strategy for managing energy costs and maintaining grid reliability. With rising energy demand, the retirement of fossil fuel power plants, the increasing penetration of renewable energy, and more frequent extreme weather events, demand response is an essential resource to reliably support our energy needs and prevent blackouts like those experienced by 4.5M households during Winter Storm Uri in 2021.

How consumers benefit from demand response participation

Consumers can generate cash from demand response participation in two ways: 1) get paid to be on standby in case there’s a grid emergency, and/or 2) when the power grid needs additional resources to help balance supply and demand, businesses are paid to reduce or shift their energy use in exchange for payments. 

Demand response provides benefits to both participants and their communities:

• New revenue and savings: Businesses generate net new cash by participating in these programs. These new revenue streams can offset energy bills, fund projects and upgrades, fund staff bonuses, etc. Businesses generate additional savings from not using energy when it’s most expensive. 
• Business continuity: Companies get advance notice of potential power outages, allowing them to prepare, pre-cool, or avoid damage to product or equipment. 
• Community support: By reducing energy use, businesses help prevent power outages in their local communities which, at worst, can be deadly.
• Sustainability: Participating in demand response helps companies reduce their carbon emissions to meet sustainability goals.

Why demand response is critical in the Midwest

The Southwest Power Pool (SPP) and Midcontinent Independent System Operator (MISO) face unique energy challenges while ensuring grid reliability. 

Here’s why demand response is critical for the SPP and MISO regions:

• Growing electricity demand: The SPP region is experiencing a 12% growth in electricity demand due to population increases and economic expansion. Meanwhile, the MISO region is experiencing increasing demand driven by significant economic development activities, new large load additions such as data centers, and increased electrification; Despite adding a net of 11 GW of capacity in 2024, MISO expects to face tight reserve margins. Demand response helps manage this demand without the need for expensive new infrastructure.
• Renewable energy integration: Both MISO and SPP are incorporating more renewable energy resources like wind and solar. In MISO, several fossil-fuel units will retire in 2024 despite supply-chain issues impacting renewable projects. Meanwhile, in SPP, the use of coal in the energy mix decreased from 29% in winter 2023 to 25% in winter 2024, while wind generation was the primary fuel type, accounting for just under 40% of total generation in winter 2024. This resource shift adds complexity for grid operators because of the unpredictable, variable nature of renewable energy generation. Demand response helps balance the grid by reducing demand when there are dips in renewable energy generation.
• Extreme weather: Both the MISO and SPP regions are characterized by repeat severe weather events like derechos and droughts, respectively; high reliance on variable energy resources (e.g. wind); and emergency forced outages that can spike electricity demand or damage power infrastructure. Demand response helps prevent blackouts during these events.
• Democratizing access to energy revenue: Demand response allows consumers to earn energy revenue just like traditional generators. This puts power back into consumers hands while bringing down their energy costs.

Steps to get started with demand response

For businesses in the SPP and MISO regions looking to participate in demand response, the first step is to partner with an experienced demand response provider, like Voltus, who will make it easy to start generating value from these programs. Voltus will:

1. Evaluate energy use: Assess your current energy consumption patterns and identify the best demand response opportunities for your business.
2. Engage stakeholders: Help communicate the financial, operational, and environmental benefits of demand response to your team to ensure buy in.
3. Leverage technology: Use technology to monitor and control your energy use, ensuring you can respond quickly to grid signals and maximize the value of demand response!

By embracing demand response, businesses in the midwest play a key role in ensuring grid reliability, supporting their communities, and achieving their profitability goals. The future of energy isn’t just about producing more energy; it’s about using energy more intelligently. Demand response is a critical part of this process, offering a path to a more stable, cost-effective, and sustainable energy future.

Hundreds of companies are already generating value by participating in demand response programs with Voltus and more. Click here or email info@voltus.co to get started.