About Demand Resources

In ISO New England’s wholesale electricity markets, demand resources, like power plants and other supply resources, are competitive assets that help meet New England’s electricity needs.

How Demand Resources Compete

Instead of generating energy that they can sell, as power plants do, demand resources reduce their consumption of electricity from the regional power system. This reduction is their product—it frees up electricity on the grid that can then be used to serve others. 

Types of Demand Resources

Demand resources can take many forms. They can be a capacity product, type of equipment, system, service, practice, or strategy—almost anything that verifiably reduces end-use demand for electricity from the power system. (Reductions must be verified using an ISO New England-accepted measurement and verification protocol.) These resources fall into two general types:

• Active demand resources (also known as demand-response resources) are activated when dispatched by the ISO. An example of what a customer might do to comply with a dispatch instruction would be the practice of powering down machines or using electricity from an on-site generator or a storage device rather than from the grid.
• Passive demand resources are principally designed to save electricity across many hours, but cannot change the amount saved in response to a dispatch instruction. Examples include energy-efficiency measures, such as the use of energy-efficient appliances and lighting, advanced cooling and heating technologies, and passive behind-the-meter generation, such as solar power.

DR Participation in the Wholesale Electricity Markets

ISO New England has had a long commitment to demand resources. Since the ISO’s first programs in 2001, participation by demand resources has grown from just 63 megawatts (MW) to thousands of megawatts. For more on the history of demand resources in New England, see the Price-Responsive Demand (PRD) Overview (slides and webinar recording).

June 1, 2018, marked the completion of a complex, years-long effort to fully integrate active demand resources into the regional wholesale electricity marketplace. With the new Price-Responsive Demand (PRD) framework now in effect, active demand resources are fully part of the energy market and reserve market systems and are dispatched economically based on their energy market offers, just like power plants and other supply resources. Passive demand resources, which are not dispatchable, are ineligible to participate in the energy markets. Both active and passive demand resources have been fully integrated into the Forward Capacity Market since 2010, though the resource type names have changed (more below).

More specifically, under the current PRD framework, active demand resources:

• Receive wholesale market payments comparable to that of generating resources for providing energy, operating reserves, and capacity to the New England electric system
• Are able to submit offers to both Day-Ahead and Real-Time Energy Markets
• Can be committed by the ISO a day ahead and dispatched in real time
• Are co-optimized to provide energy and/or reserves in the most economically efficient manner
• Are able to set the price for wholesale electricity

In the FCM, all dispatchable resources receive fully comparable obligations and compensation as other power resources do using the pay-for-performance construct (which also went into effect June 1).

The graphic below illustrates the various ways New England electricity customers can now fully participate in New England’s wholesale electricity markets. Note the hierarchical organization.

• The actual customer facilities that physically reduce their consumption of electricity are known as demand-response assets (DRAs).
• One or more DRAs each under 5 MW can be mapped to a demand-response resource (DRR) that participates in the energy and reserve markets. A DRA that is 5 MW or larger must participate individually as its own demand-response resource.
• Demand-response resources can then be mapped to an active-demand capacity resource (ADCR) for participation in the capacity market.
• Non-dispatchable passive demand resources—the on-peak and seasonal-peak resources shown below—may only participate in the capacity market.
  • On-peak resources offer on their reduced electricity consumption during summer peak hours (nonholiday weekdays, 1:00 p.m. to 5:00 p.m., during June, July, and August) and winter peak hours (nonholiday weekdays, 5:00 p.m. to 7:00 p.m., during December and January).
  • Seasonal-peak resources offer on their reduced electricity consumption during the summer months of June, July, and August, and during the winter months of December and January, in hours on nonholiday weekdays when the real-time system hourly load is equal to or greater than 90% of the most recent “50/50” system peak-load forecast for the applicable summer or winter season.

With the implementation of PRD, the former Transitional Price-Responsive Demand program for active demand resources, as well as the capacity resource types called real-time demand-response resources (RTDR) and real-time emergency generation resources (RTEG), were terminated.

Visit the Demand Resources page to access related data, information, rules, and procedures.