This month, the US Environmental Protection Agency (EPA) began enforcing revised regulations that prohibit the use of certain backup generators during emergency demand response (DR) dispatches.
The rule is applicable to emergency DR in several major markets across the country—including PJM (Mid-Atlantic), New York, and ERCOT (Texas)—and could have a significant impact on how enterprises in these areas participate in DR.
Here’s a brief rundown of the history of the ruling, how it could affect your organization, and what you can do to help offset the impact on your bottom line.
What Are the New Requirements, and Where Did They Come From?
Since 2013, the EPA’s National Emission Standards for Hazardous Air Pollutants (NESHAP) and New Source Performance Standards (NSPS) for reciprocal internal combustion engines (RICE) allowed facilities to use emergency backup generators to temporarily offload their facilities’ energy usage from the grid during emergency DR events for up to 100 hours per year. The availability of backup generators enables large organizations to participate in emergency DR without disrupting normal operations, while also taking pressure off the grid and acting as a general “last line of defense” to prevent regional blackouts.
A year ago, a federal appeals court ruled in favor of various groups that sought to eliminate the 100-hour DR allowance for certain backup generators. At the time, the court granted the EPA a Stay until May 1, 2016. Now that the Stay has expired, only backup generators that meet the stricter, non-emergency requirements of EPA’s RICE NESHAP or NSPS are permitted to be used during emergency DR dispatches.
To learn more about the specific circumstances in which the EPA plans to restrict the use of noncompliant generators for emergency DR, read the agency’s memorandum here (PDF).
How Do I Know If My Backup Generators Qualify?
The requirements vary based on the engine manufacture date, fuel type, and size, so it may be difficult to determine which fall under the non-emergency category. Contact Enel X for an assessment of your backup generators and help sorting out which can participate.
What Happens If I Don’t Comply?
The RICE NESHAP regulations are part of the Clean Air Act, violations of which are subject to potentially large fines, shut downs, and/or criminal enforcement actions. That’s why it’s so important to ensure any generators you plan to use during DR dispatches comply with the new regulations.
The simple fact is the new requirements could have an impact on your bottom line if your backup generators aren’t in compliance. So, what are some alternative actions you can take to prepare?
One step many are likely to consider is upgrading generators so they align with the EPA’s updated requirements and can continue to be used in DR events. For older engines, this requires the addition of a diesel oxidation catalyst (DOC), stack testing, continuous monitoring, semi-annual reporting, and more. It can be quite a lengthy and expensive undertaking, but the costs and effort could pay off in less than a year, so it could be valuable to consult with an expert before you get started.
And for those in deregulated energy markets, competitive procurement can reduce your electricity and natural gas costs substantially. Energy prices are at record lows right now, and locking in a contract that meets your organization’s risk profile can reap serious long-term advantages. Procurement advisors can help identify a pricing and risk strategy that best fits your organization, while the reverse auction drives suppliers to bid for your business by undercutting each other’s prices.
It’s important to stay on top of these kinds of developments to ensure you’re able to fully capitalize on the opportunities available through DR. The DR world is impacted by a lot of outside factors and can change frequently, but fortunately you have plenty of resources, tools, and expertise to keep you up-to-date and ready to navigate any changes to this or other important developments.
Want to learn more? Contact an expert to develop a demand response strategy today.