Industrial Demand Response Payments Will Reach $4.3 Billion Annually by 2019

June 13, 2013

Since the inception of demand response (DR) in the mid-1970s, electricity customers in the industrial sector have represented an important target market in the United States. As DR is increasingly adopted in other parts of the world, industrial facilities will also become a critical customer segment in other countries.  According to a recent report from Navigant Research, annual revenues, in the form of curtailment payments for load reductions for industrial customers participating in DR programs, will reach $4.3 billion by 2019.

“Because industrial power users can contribute unusually large amounts of load reduction – even from just one plant – the industrial sector offers unique opportunities for demand response,” says Marianne Hedin, senior research analyst with Navigant Research.  “The financial incentives paid by utilities, grid operators, and curtailment service providers often represent a substantial annual revenue stream to industrial customers, especially those who are able to curtail a large amount of load.”

DR participation by industrial energy users largely depends on the flexibility of their production process, according to the report.  In some instances, process manufacturers, such as food and beverage companies, can potentially go without power for many hours, since they usually run a cold storage operation with buried refrigerators that only begin to thaw after many hours without electricity.  Discrete manufacturers, on the other hand, tend to have greater difficulty participating in load curtailment because they usually have less flexibility to modify their processes.

The report, “Demand Response for Industrial Markets”, examines the global market for industrial demand response, detailing the breakdown of peak load curtailment into two major customer segments: small/medium and large/very large industrial customers.  The report provides data on how much these different industrial DR participants receive in payments from utilities, grid operators, or aggregators when they reduce their load at peak times.  The market forces and competitive landscape are explored in depth, and 21 industrial DR vendors are profiled.  The report also provides forecasts for industrial peak load curtailment, in terms of capacity, and reduction payments, broken down by region and by market segment.  An Executive Summary of the report is available for free download on the Navigant Research website.

Contact: Richard Martin

+1.303.493.5483

richard.martin@navigant.com

* The information contained in this press release concerning the report, “Demand Response for Industrial Markets,” is a summary and reflects Navigant Research’s current expectations based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Navigant Research nor Navigant undertakes any obligation to update any of the information contained in this press release or the report.

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