• Nicole Stika

Can Your Backup Generator Make you Money?

Demand response provides an opportunity for consumers to play a significant role in the operation of the electric grid by reducing or shifting their electricity usage during peak periods in response to time-based rates or other forms of financial incentives.


If your facility has a natural gas or diesel generator that supports whole building or partial building operations, you may be eligible to participate in demand response.


One of the biggest challenges facing the grid is managing high levels of demand for electricity. When demand threatens to exceed available supply, electric utilities and grid operators need to rely on peaking power generation infrastructure, which can be expensive to operate, to prevent a power outage. Since energy providers need to accommodate any increase in costs to meet peak demand levels, these costs often result in higher electricity charges for their customers.


Demand response (DR) programs help to alleviate these challenges. Through DR programs, utilities and grid operators call on their customers to reduce demand from the grid temporarily when demand levels reach abnormal highs and offer incentive payments in exchange for their participation. At scale, DR programs bring demand levels down at the time when the grid needs it most, reducing the need to build expensive infrastructure that may only operate a few times per year, and ultimately helping to prevent blackouts and other power quality issues.


Customers with backup generators available on-site can often earn higher demand response payments than those that participate solely by shutting down equipment in their facilities. While some participants can find creative ways to shutdown nonessential equipment or schedule their energy-intensive operations to participate in DR, others might not have the kind of flexibility to remove significant capacity from the grid.


Since DR payments are based on the amount of capacity that a customer can remove from the grid on demand, those with backup generators available on-site can often earn higher payments than those that participate solely by shutting down equipment.


Transitioning a facility’s load onto a backup generator accomplishes the same goal for the grid while still providing a source of power for the facility to remain operational during a DR event.

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