Ontario Power signs demand-curbing deal

The Globe and Mail
April 2, 2008
Shawn McCarthy

Ontario Power signs demand-curbing deal

Boston-based EnerNOC Inc. is going to be paying some Ontario power users to dim the lights and turn down the air conditioners when the province faces short-term peaks in electricity demand.

EnerNOC, a leader in the booming field of “demand response,” announced Wednesday that it has signed a five-year contract with Ontario Power Authority to provide 25-megawatts of load reduction when the province faces major spikes in usage.

Under the deal – the value of which was not disclosed – EnerNOC has lined up a roster of business and institutional power users that will be paid to reduce their electricity consumption at those peak times. EnerNoc will install automated system controls that largely manage the response from a centralized location.

Company chief executive officer Tim Healy said that he is excited about Ontario's potential for demand response, which is part of the province's effort to secure clean electricity and reduce the need for new power plants.

“We're pretty excited about the Ontario market,” he said in a telephone interview. “Our investments [in the province] are paying off.”

North American utilities are increasingly turning to demand response – as well as other conservation and efficiency strategies – in order to rein in power usage and avoid the need for expensive and dirty new plants.

In the United States, EnerNOC manages some 1,100 megawatts of peak-time demand response – equivalent to the output of a large nuclear reactor – in some 2,200 locations.

Mr. Healy said the company signed its first contract in New England for 30-megawatts four years ago, and now has 750-megawatts under management in the region, which has peak demand of 27,000 megawatts, roughly the same as Ontario.

“It is our hope the Ontario market can be that for EnerNOC,” he said. “But more importantly, we hope demand response can be that successful for Ontario.”

The OPA's Sean Brady said in a release that demand response is an important tool that allows the authority to manage the province's electricity system more efficiently.

“Demand response is a valuable resource that enables a wide range of benefits for integrated power systems, provides financial incentives for participants and reduces the need for building additional capacity, which has a positive environmental impact,” Mr. Brady said in a release issued Wednesday morning.

EnerNOC estimates that the typical utility uses the last 10 per cent of its capacity only 1 per cent of the time. In the U.S., it says, the demand-response approach could eliminate the need for 760 100-megawatt peaking plants, which cost an average of $100-million each to build.