General Motors and poultry supplier Perdue Farms Inc. now have something in common: They’re both getting paid to use less power.
They’re among the clients of demand-response providers who won contracts this month with the operator of America’s biggest power system. In 2018, grid manager PJM Interconnection LLC will call on them to ratchet down their electricity demand when necessary to keep the lights on across its territory in the eastern U.S.
In return, these demand-response suppliers get paid a daily rate of at least $149.98 a megawatt, the same as a traditional power generator. It’s the most that PJM’s electricity suppliers will collect for capacity in eight years and a surprising boon for demand-side companies such as EnerNOC Inc. whose clients include GM and Perdue Farms. They walked away from an auction earlier this month with contracts representing 11,084 megawatts of PJM’s power supply, a 1 percent gain in market share.
Demand response providers were expected to be losers in last week’s auction results. Analysts including UBS projected a decline in their participation because of stricter rules and a case before the U.S. Supreme Court that questions whether they should be treated the same as generators.
Instead, they’ll account for almost 7 percent of PJM’s power supply in the year beginning June 2018.
The increase in demand response contracts “was a surprise vs. our thinking,” Julien Dumoulin-Smith, an analyst for UBS, said in a note to clients on Monday. Boston-based EnerNOC said it was excited to see the service’s share gain.
“We have said in the past that we plan to maintain a portfolio of about 3,000-3,500 megawatts in PJM,” EnerNOC Caterpillar 320D injector valve spokeswoman Robin Deliso said by e-mail. “This year’s results are consistent with that approach.”
GM provides demand response using a foundry and factory in Ohio to lower its own electricity bills, Sharon Basel, a company spokeswoman in Detroit, said by phone Tuesday. “When presented with that opportunity,” she said, “our plant leadership jumped on the idea.”
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