Arizona Public Service’s (APS) Peak Solutions Demand Response Program Incentivizes Commercial and Industrial Customers to Earn Revenue for Reducing their Usage
by Erin Christensen on May 09, 2022
energy storage systems
Arizona Public Service (APS) is the largest electric distributing utility in Arizona, serving over 1.3 million homes and businesses in 11 of the state’s 15 counties. In January 2020, APS set an aggressive goal of providing 100% carbon-free electricity by 2050, which also included a nearer-term target of achieving an energy resource mix that is 65% clean energy, with 45% of generation coming from renewable energy sources by 2030. One of the ways APS plans to make strides towards its bold goals is by reducing grid pressure during times of increased demand.
Launched in 2010, APS’s Peak Solutions program incentivizes commercial and industrial (C&I) customers to curtail electricity needs during the grid’s most stressed days and hours. The program is offered through CPower, a leading demand-side energy management solutions provider, that manages more than 4 gigawatts of electrical load across North America’s energy markets and utilities.
The APS Peak Solutions program is comprised of two demand response types, ‘Day Of’ and ‘Day Ahead’. We summarize the specifics of each program below:
Those enrolled in the APS Peak Solutions program must meet their contractual nominations during events and test events that take place between 4 pm – 9 pm, participation outside that window is voluntary. Customers are automatically opted-in for all event hours, but those partaking in the ‘Day Ahead’ program do have the ability to opt-out for 2 hours of an event. In 2021, the ‘Day Of’ program had 6 events totaling 28 hours and the Day Ahead program had 4 events totaling 20 hours. Participants receive payment for their total contribution within 60 days of the end of each season. CPower assists APS customers by evaluating the involved facilities and designing a personalized conservation plan to maximize earnings. Capacity payments will vary based on performance. For example, a performance value of 60-85% will result in a capacity payment that is based on 50% of the curtailment value. Performance that is lower than 60% will yield a capacity payment that is calculated by taking the curtailment value less 60% of the enrolled value multiplied by the capacity rate. The performance percentage is a result of dividing the delivered capacity by the enrollment value.
What's the Bottom Line?
The state of Arizona does not offer net metering (NEM) for solar C&I customers; in 2016 the Arizona Corporation Commission (ACC) voted to replace net metering with net billing. This means that unless a solar customer is grandfathered under a legacy NEM tariff, exported generation is not valued at the full retail rate. For some APS customers, export rates run as low as 3¢/kWh.
APS’s Peak Solutions Program is especially well suited for C&I customers with behind-the-meter solar + storage, who can earn additional revenue by utilizing their battery to participate. Whereas many commercial customers without onsite solar or storage, limiting energy use during the hours of 4 pm – 9 pm may be difficult or impractical, depending on their flexibility of loads. Customers with storage can draw from a battery, and not need to shift their load patterns or day-to-day business operations. Additionally, adding an energy storage system can enable C&I customers to minimize the impact of high-priced peak energy and demand charges, both of which are common components of the rate tariffs utilities require solar customers to take service under.
How can I participate in this program?
Energy Toolbase is working with CPower to enable customers to participate in the APS Peak Solutions Program with an energy storage system controlled by our Acumen EMS controls software. Additionally, customers can view DR-specific dispatch events and manually schedule overrides through our ETB Monitor platform. Given that the program starts on June 1 of each year, ESS projects that are not already interconnected can consider participating in the program in 2023. Energy Toolbase is intending to make wider-scale announcements around our DR modeling and monitoring capabilities later in 2022. For C&I developers interested in evaluating the economics of participating in this program on a specific project, contact your assigned Account Manager for more details.