Week #7 – Portfolio Aggregation vs. Single Site Nomination
If you are a multi-site demand response customer, you can financially benefit from portfolio aggregation versus single site nomination. Let’s show you how by asking a simple math question.
Take home: If you are a multi-site demand response customer, you can financially benefit from portfolio aggregation versus single site nomination. Let’s show you how by asking a simple math question.
What is the average of 80% and 120%?
If you said 100%, you would be mathematically correct, but you’d be wrong from the standpoint of how most multi-site customers are compensated for demand response curtailment. Rather than paying customers based on their aggregate performance, most demand response providers pay multi-site customers on each site’s performance and keep the value of aggregation for themselves. Let’s take a closer look.
You have two properties: Site A and Site B. Site A performs at 80% and Site B performs at 120% during a dispatch. Your DR provider, through the benefit of aggregation, is able to use the over performance of Site B to make up for the underperformance of Site A. In fact, as an aggregator, they rely on this phenomena.
Sadly, this benefit doesn’t always trickle down to the customer. Aggregators often pay each site up to their given enrolled amount: Site A would be credited 80% and Site B would be credited 100%. This averages out to a 90% payment to the customer.
The difference for the customer can be quite substantial. For a customer in NYC with a 1 MW nomination, performance aggregation can result in an additional $24K, or roughly a 9% increase, in value.
At Voltus, we nominate multi-site customers in aggregate and pay in aggregate. Of course, there may be exceptions if markets don’t allow for aggregation but you’ll know that at the start. This allows our customers to cash in on the benefits of over performance at a given site.
Interested in learning more about how we double demand response dollars for our customers? Email firstname.lastname@example.org or reach out on chat below.