Demand Response (DR) programs enable commercial and industrial energy consumers to earn revenue by reducing energy demand when the grid is stressed. Enrolling and participating in DR can be complex. Luckily, demand response aggregators provide a service that makes accessing the program easier. However, outsourcing control to an aggregator raises concerns about transparency and fairness. If you’re participating in a demand response program through an aggregator, how can you tell if they’re truly providing value or taking more than their fair share? Let’s explore the key factors determining whether your aggregator works in your best interest.
How Demand Response Aggregators Work
Demand response aggregators help to facilitate a company’s participation in demand response. They act on a company’s behalf with an ISO to handle the hassles of enrolling in the program, ensure regulatory compliance, and bid in capacity auctions on their behalf. The aggregator will also handle payments to your company. They simplify the process, ensuring businesses maximize their DR earnings with minimal operational burden. In return, they typically take a cut of the earnings, either as a fixed fee or a percentage of the revenue generated.
Where Transparency Can Be an Issue
While many aggregators operate fairly, some practices can raise red flags:
- Opaque Revenue Sharing – Does your contract clearly state how much of the DR payment goes to your business and how much the aggregator keeps? Some aggregators take a disproportionate share, leaving companies with less than they should earn.
- Hidden Fees – Some aggregators impose unclear or unexpected fees, such as penalties for opting out of events, administrative fees, or even extra service charges.
- Lack of Performance Data – Are you getting clear, real-time insights into your curtailment performance? If your aggregator isn’t providing detailed reports, you may be missing out on additional savings or payments.
- Long-term contracts – some companies can find themselves locked into long-term contracts that are difficult to cancel and will auto-renew without notifying you. Demand Response programs typically restart every year, so there’s really no reason to lock you in for longer than you are comfortable with.
Questions to Ask Your Demand Response Aggregator
To ensure you’re in a fair partnership, consider asking these questions:
- What percentage of the DR earnings does my company receive?
- Are there any hidden fees or penalties in the contract?
- How will you provide performance data and savings reports?
- Can I choose which demand response events to participate in?
- Do you provide benchmarking data so I can compare my performance to similar facilities?
- Are my payments derated based on my best or worst performance?
How to Protect Your Business
If you’re concerned about the transparency of your demand response aggregator, consider these steps:
- Review Your Contract – Ensure there are no ambiguous terms or hidden costs.
- Compare Offers – Get quotes from multiple aggregators to ensure competitive pricing.
- Demand Data Access – Ask for real-time tracking and clear breakdowns of revenue and payments.
- Consult with an Energy Expert. A third-party energy consultant can help you assess whether you’re getting a fair deal.
The Bottom Line
A demand response aggregator should be a partner that helps your business maximize savings—not an opaque middleman that siphons off more than its fair share. By asking the right questions and demanding transparency, you can ensure that your DR participation is as profitable and fair as possible. If something doesn’t seem right, it might be time to renegotiate your terms or explore other providers.
At Edgecom Energy, we prioritize transparency, clear reporting, and fair revenue sharing to ensure businesses get the full value of their participation in demand response programs. If you’re interested in optimizing your DR strategy with a transparent partner, let’s talk.
