Standby Reserve is a service that is used by the grid operator to maintain a balance of generation and consumption. Extraordinary imbalances occur when a generator unexpectedly shuts down or extreme weather causes unexpected load increases. The grid operator anticipates imbalance needs by purchasing a stand ready contract from generators as well as large energy users that can quickly reduce their electricity demand within ten minutes (either by reducing consumption or by increasing their own output of electricity from on-site generation).
Standby Reserve programs are designed to allow a portfolio of energy market participants to act as a “virtual generator.” By aggregating a number of participant sites that have the ability to quickly shed load, the grid can forego the costs of generation dedicated to this service and instead utilize the virtual generation of participant sites that can rapidly alter operations.
How does it work?
Participants make a firm commitment to reduce load by turning off air conditioning, heating, light or machinery, or to displace load by starting up on-site generation. When called to deliver Standby Reserve service in the PJM control area (each control area has slightly different rules), participants must perform within ten minutes by fully implementing the reduction and maintaining the load reduction for up to 30 minutes.