World Energy Unveils “Demand Response” Auctions, Disrupting a Market Dominated by Boston’s EnerNOC

2/24/10Follow @wroush

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taking our technology and migrating it across similar commodity markets,” says Adams. “With the rise of demand response, we felt like we needed an option, because our customers were looking for one-stop shopping” in energy management services.

The company briefly considered acquiring a curtailment service provider—there are 50 to 70 such providers in the PJM market alone, according to Adams. But sometime in 2009, he says, “the light bulb went off, and we said, ‘Wait, aren’t there enough CSPs out there that we could actually build a market and do the same thing as we do with our retail energy providers?’ We explored it, and we have tested the concept, and now we’re moving into full launch mode.”

World Energy tried its demand response auctions first in the PJM market, where it has many existing customers. (The name comes from Pennsylvania-New Jersey-Maryland, but the interconnected grid region actually covers all or parts of Delaware, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, Virginia, West Virginia, and the District of Columbia as well.) One World Energy customer, Gerber’s Poultry of Kidron, OH, says that it will earn over $100,000 in demand response payments as a result of the agreement it reached through a reverse auction. “We found watching the auction unfold very exciting,” Gerber’s chief financial officer John Metger said in a press statement prepared by World Energy. “There wasn’t much bidding activity at first, but as the end point of the auction drew near, the bids were flying, driving up our overall share of revenue.”

Adams emphasizes that World Energy brings value to the demand response market by handling a lot of the spade work that curtailment service providers might otherwise have to do themselves. “It is very expensive to acquire customers in the demand response space,” he says. “There’s a lot of market education and preparing customers and helping them figure out how much they can curtail. Oftentimes that makes the transaction more cost-effective on both sides. We’re not trying to pit one side against the other—we’re here in the middle trying to make the process easy for the buyer and the seller.”

Back at EnerNOC, however, Gregg Dixon argues an auction provider like World Energy isn’t really qualified to help customers increase the return on their participation in a demand response program. “Demand response is a very nuanced service in terms of how you maximize the dollars you get,” he says. In fact, EnerNOC lists 19 “points of value” that it delivers to its customers, including … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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