As energy costs rise and grid reliability faces increasing pressure from extreme weather, electrification and aging infrastructure, businesses across the PJM region are seeking smarter ways to manage risk and control costs. PJM Demand Response offers a solution that can help organizations generate potential revenue while supporting a more reliable and resilient power grid.
For many commercial and industrial facilities, Demand Response is no longer just an incentive program, it’s an operational strategy.
What Is PJM Demand Response?
PJM Interconnection operates the largest wholesale electricity market and power grid in North America, serving more than 65 million people across 13 states and the District of Columbia. To maintain grid stability during periods of peak demand or system stress, PJM relies on Demand Response resources, clients who agree to temporarily reduce or shift electricity usage when called upon. When a Demand Response event is triggered, participating facilities may curtail pre‑committed load for a short period. In return, they can receive capacity payments for being available and may qualify for additional energy payments for performance during dispatched events. Demand Response reduces the need for expensive and carbon‑intensive peaking plants, supports grid stability and may help prevent outages during periods of high demand.Why Demand Response Matters Now
As capacity prices in PJM have risen in recent years, many organizations are taking a closer look at how Demand Response can help them manage exposure to these market conditions. Participation in PJM’s Demand Response programs provides an opportunity for businesses to generate a potential revenue stream, depending on program rules, market conditions, and facility performance, while also increasing visibility into their energy use during periods of grid stress. Beyond the financial aspect, Demand Response supports broader business priorities:- Sustainability: Reducing demand during peak periods can lower emissions without major capital investment.
- Resilience: Participation encourages energy awareness and contingency planning.
- Corporate responsibility: Supporting grid reliability reflects well on organizations during periods of system stress.
Planning Around PJM’s February Incremental Auction
Each year, PJM conducts one or more Incremental Auctions (IAs) to adjust capacity commitments for an upcoming Delivery Year. While participation in Demand Response is not dependent on the timing of an IA, many organizations use the February IA period, as a practical planning milestone ahead of the peak summer season. During this time, businesses often reassess their operational readiness by evaluating available curtailable load, reviewing operational flexibility before extreme‑weather months, and considering potential revenue opportunities under current market conditions. Many organizations also take this opportunity to confirm enrollment decisions and participation strategies with their Curtailment Service Provider (CSP). Even though the IA timing can vary by Delivery Year, organizations can modify their Demand Response plans at multiple points throughout the year to reflect changing operational needs and evolving grid conditions. However, planning around the February IA window can help align internal readiness with key market activities, even though enrollment and participation options remain available beyond this period.Many businesses use this period to:
- Reevaluate available curtailable load
- Review operational flexibility ahead of peak weather months
- Assess potential earnings using updated market information
- Confirm enrollment or participation strategies with a Curtailment Service Provider
Earning Potential
Through PJM’s Emergency Load Response Program, businesses may earn between $98,000 and $170,000 per megawatt per year, depending on market outcomes, program rules, location and performance. These payments apply to enrolled loads that are available during emergency conditions. Additional energy payments may apply when curtailments are dispatched. Example: A facility with 2 MW of curtailable load could earn an estimated $200,000 to $340,000 annually, depending on location, market conditions and performance. Actual earnings vary and are not guaranteed.How PJM Demand Response Works
- Program period: June 1 to May 31
- Event notification: Typically, 30 minutes to two hours in advance
- Event duration: Generally, two to four hours
- Participation: Voluntary during events, but commitments are firm once enrolled
- Program management: Many businesses enroll through a Curtailment Service Provider (CSP)
Benefits Beyond Revenue
Demand Response provides operational and strategic advantages that extend beyond financial returns:- Grid reliability: Participants help maintain system stability during periods of high demand.
- Cost control: Participation may reduce exposure to volatility in peak energy prices and capacity costs.
- Sustainability: Reducing peak demand lowers reliance on carbon intensive generation.
- Operational flexibility: Many organizations participate using existing infrastructure or operational adjustments.
Is Your Facility a Good Fit?
Demand Response is well suited for organizations with flexible or controllable loads, such as:- Manufacturing and industrial facilities
- Data centers
- Large commercial buildings
- Operations with onsite generation or storage
Turning Grid Challenges Into Opportunity
PJM Demand Response provides a structured way for organizations to manage rising energy costs, support reliability and enhance resilience. As grid conditions and market dynamics evolve, many businesses are reassessing how Demand Response fits within their broader operational and sustainability strategies. With the right planning and support, participation can help organizations generate potential revenue, strengthen contingency planning and demonstrate leadership in energy management. Interested in understanding what your facility may earn? Rodan Energy can help assess your eligibility and design a Demand Response strategy tailored to your operations. Contact us today for more information. Citations- PJM Demand Response Operations & System Footprint PJM Interconnection. 2025 Demand Response Operations Markets Activity Report. https://www.pjm.com/-/media/DotCom/markets-ops/dsr/2025-demand-response-activity-report.pdf [pjm.com]
- PJM Emergency Operations, Alerts, and DR Dispatch Framework PJM Interconnection. Manual 13: Emergency Operations. https://www.pjm.com/-/media/DotCom/documents/manuals/m13-future-20180101.ashx [pjm.com]
- Performance Assessment Interval (PAI) Triggers & Conditions PJM Interconnection. Performance Assessment Hour (PAI) Triggers – Knowledge Base. https://pjm.my.site.com/publicknowledge/s/article/Performance-Assessment-Hour-PAI-Triggers [pjm.my.site.com]
