Curtailment Programs: Commercial Green Building Money Maker?

Question:

Should we look into a curtailment program for our office building in New Jersey?

Answer:

The answer depends on your building's energy load requirements and the programs available in your state. Curtailment programs can be smart for many commercial real estate owners and because they help reduce energy consumption overall, they reduce the building of additional coal fired or other greenhouse gas emitting power generation sources.

Curtailment programs not only save energy but can be a source of revenue for a commercial real estate owner. Curtailment programs and "interruptible load response programs" fall under a category known as "demand response" in energy markets. Curtailment programs are considered a type of load response program and are offered by power companies nationwide subject to regulatory standards set in place by independent systems operators (ISOs) and the Federal Electricity Regulatory Commission.

They are not well known, but there are significant benefits to demand response programs in general. Over the course of a day/week/year, etc... the costs of power production may vary significantly. Demand response programs allow power generation systems to operate, transmit and distribute energy more efficiently.

Curtailment program benefits vary from state to state, but in some states, including New Jersey, there can be significant payments to commercial and industrial operators who participate in a voluntary curtailment program during peak demand periods. During summer months, for instance, some power companies may be required to maintain a buffer of additional contingency power (say 5%) for emergencies at all times. As such, curtailment programs that are interfaced with energy management systems may be called on, often with ample notice to the real estate owner, to reduce power by between 100-1000 kwh for short periods of time. Depending on the deal with the ISO or the power company, a real estate owner may be paid significant sums of money on a monthly, quarterly or yearly basis in return for curtailment.

In some cases, real estate owners and companies may also be able to have energy companies bid for their curtailment through demand buyback programs (aka pay for performance). A real estate owner may be notified that demand must be curtailed and the owner may choose to participate, followed by a bidding process whereby the owner may "name his price" in exchange for a curtailment. Get on the phone with your local energy company and ask about these commercial programs... depending on your business you may have significant excess capacity that you can turn into cash.