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| An
employee works on the
floor of the Metal
Technologies plant in
Ravenna, Mich. The
company participates
in a demand response
program in which its
industrial facilities
agree to power down at
times of high demand
on the grid. Credit:
Metal Technologies
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When
electricity supplies
are tight, being able
to flip a few switches
and save 38
gigawatt-hours is a
pretty cool trick.
CPower Energy said this week that its customers reduced
their grid electricity
usage by that amount
from January to
September, which is
enough to power about
8 million houses
during a grid
emergency.
The energy savings
were more than double
what the company’s
customers recorded in
all of 2024.
CPower is a leading
vendor of demand
response services,
which means that it
organizes large groups
of clients who agree
to reduce their energy
use during periods of
high demand. This is a
resource whose value
is increasing as
utilities struggle to
build power plants
fast enough to keep up
with the rising need
for electricity for
data centers and other
large users.
I spoke with Mike
Smith, CPower’s CEO,
this week to
understand how demand
response works. His
Baltimore-based
company has about 200
employees.
“We’re a shock
absorber,” he said.
“We are there to turn
down our collective
usage, and that is the
usage of our customers
in response to the
grid’s need.”
CPower’s clients
operate businesses in
23,000 locations
across the country,
and they have the
potential to reduce
their electricity use
by up to 6.7
gigawatts. The bulk of
that capacity comes
from large
manufacturers that are
flexible in how much
power they need from
the grid.
In exchange for
cutting their energy
use, the customers
receive compensation
from the grid
operator, with $1.2
billion paid since
2015.
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| Metal
Technologies is an
energy intensive
business. It works
with CPower of
Maryland to reduce its
power use at times of
high demand. Credit:
Metal Technologies
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While 38 gigawatt-hours
is a large number, most
of that energy savings
happened during a few
hours on a few days.
About half of the total
happened during brief
periods of the June
heat wave, which
led to tight electricity
supplies in the PJM
Interconnection and ISO
New England grid
regions, Smith said.
I asked Smith how his
customers get the
message to turn down
their power, imagining
that he has a central
controller and pushes a
few buttons. He
explained that the
process varies depending
on the client, with some
agreeing to have their
power demand reduced
remotely by CPower, and
others wanting to
receive a phone call,
text message or email so
they can make the
adjustment themselves.
Turning down the power
may conjure images of
dimming lights and idled
assembly lines, but it
often doesn’t work that
way. Instead, many
customers switch from
grid power to local
backup sources, such as
batteries.
Nick Heiny, vice
president and general
counsel for Metal
Technologies of Indiana,
is a CPower customer. I
asked him how he would
explain demand response
to somebody unfamiliar
with it.
Demand response “is
similar to deciding to
wait a few hours to
leave for a road trip
the day before
Thanksgiving after a
foot of fresh snow has
fallen and all highways
are jammed,” he said in
an email.
It’s also a way to be a
good neighbor, he said.
His plants are large
power users, so when
they reduce their use,
it frees up capacity for
others on the grid and
helps to reduce the
risks of brownouts. His
company operates metal
casting plants in
Indiana, Michigan and
Mexico.
Industry analysts often
categorize demand
response as a form of a
virtual power plant, a
term that describes when
many customer-owned
power sources work
together to mimic the
effect of large power
plants.
The U.S. market for
virtual power plants,
including demand
response, is 37.5
gigawatts, an increase
of 14 percent from
last year,
according to the
research firm Wood
Mackenzie.
Demand response “is
receiving unprecedented
attention” because of
the urgency that
utilities and grid
operators are feeling to
have enough power to
serve data centers, said
Ben Hertz-Shargel,
global head of grid edge
for Wood Mackenzie.
He said the challenges
to growth in demand
response are almost all
regulatory, including
utilities that have caps
on participation and
grid operators that have
not yet found ways to
fully integrate these
systems. The Federal
Energy Regulatory
Commission sought to
accelerate the use of
demand response and
other customer-owned
resources with a
2020 order, but
implementation has been
slow.
CPower was founded in
2014 under the ownership
of H.I.G. Capital, a
private equity firm. |
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| Workers
at Metal Technologies
wear protective gear
around the high heat
of the production
process. Credit: Metal
Technologies |
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In 2018, H.I.G. sold
CPower to LS Power of
New York, an independent
power company. Then, in
May, NRG Energy said it
had reached an agreement
to buy assets from LS
Power, including 18
power plants and CPower.
The deal is contingent
on regulatory approval,
which is still pending.
CPower’s competitors
include companies that
either specialize in
demand response or offer
it as part of a larger
selection of goods and
services. This includes
Enel X and Siemens,
among others.
One upshot of the NRG
acquisition is that
CPower may now have
greater access to sell
its services to
companies that already
buy power from NRG, said
Hertz-Shargel.
But CPower’s market is
poised for growth
regardless of who owns
it, thanks to the need
to accommodate the
substantial power needs
of data centers.
Smith, the company’s
CEO, said data centers
have become a larger
share of his customer
base. This ties into a recurring
theme
this year as researchers
and grid operators
recognize that data
centers need to be
adaptable in their power
use, or else there won’t
be enough electricity to
go around.
“Everybody in the data
center space, no matter
what the use case, is
looking at becoming more
and more flexible, and
we’re running right
along beside them,”
Smith said. |
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Other
stories about the
energy transition to
take note of this
week:
Democrats
Sweep Election Day:
Voters chose
Democrats in all major
contested races on
Tuesday, a result that
the party is
interpreting as a
rebuke of the Trump
administration and an
encouraging sign for
next year’s midterm
elections. A key issue
was energy prices and
utility bills, as Marianne Lavelle reports for ICN. Democrats
did especially well in
Virginia, winning the
governor’s race and
gaining seats in the
House of Delegates, as
Charles Paullin reports for ICN.
Democrats Take
Two Seats on Georgia
Utility Regulatory
Board: On
a good night for
Democrats nationwide,
the party gained two
seats on the Georgia
Public Service
Commission, ousting
Republican incumbents
amid public
dissatisfaction with
high utility rates, as
David W. Chen reports for The New York Times.
Republicans will still
hold a 3-2 majority on
the panel, but the
results indicate the
public was receptive
to Democrats’ campaign
messages about
reducing utility rates
and a willingness to
invest more in
renewable energy.
Illinois
Passes a Major
Energy Bill:
Illinois legislators
passed a bill that
increases incentives
for battery energy
storage, geothermal
power and virtual
power plants, as Kari Lydersen reports for Canary Media. Gov.
JB Pritzker has said
he will sign the
measure, which is one
of the most
significant
state-level clean
energy bills to pass
this year. The Clean
and Reliable Grid
Affordability Act says
the state will procure
3 gigawatts of energy
storage by 2030, among
other provisions.
Can Cows and
Solar Coexist?
I went to Kentucky to
visit a farm where
sheep graze alongside
a utility-scale solar
array, and I found
that the future of
this so-called solar
grazing is in cattle.
My story for ICN provides a first look at
CattleTracker, a
system from the solar
developer Silicon
Ranch that is
customized to operate
in environments with
large, often clumsy
animals in the
vicinity. If solar
developers can
convince cattle
ranchers to install
solar, there is an
opportunity to deploy
this energy hardware
on some of the vast
amounts of land used
for cattle grazing.
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