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Funding and Financing

PJM: Demand response

Building Sector:

Commercial Office Hospital Hotel Industrial Institutional Multifamily Affordable Housing Multifamily Market Rate Housing Retail School University

Energy Type:


Financial Incentives:




Program name

Demand Response

Program summary

There are multiple curtailment service providers (CSPs) who can implement demand response (DR) programs. CSPs provide payments to large energy users that agree to reduce their energy demand during times of grid stress.

Applicable building size

Large commercial energy users (whose peak demand is >500kW, which is roughly equivalent to spending more than $20,000 per month on energy).


These programs are a no-risk, no-cost opportunity for businesses to earn money and drive energy savings while helping to maintain reliable electricity throughout the region.


  • Incentive/funding details. Customers that agree to reduce their energy usage are eligible to receive payments from the grid operator. Participants earn recurring capacity payments for agreeing to curtail electricity consumption in response to abnormally high demand and additional energy payments based on their performance during dispatches.
  • Amount (max, min, average). Payment rates in PJM fluctuate each year, but for 1 MW of energy reduced during a demand response event, customers can expect to earn $35,000-$40,000 each year.


  • Level of effort required. Provider works with customers to identify energy reduction potential and create a DR strategy that maximizes value with minimum impact on operations and tenants. Provider will install all necessary metering devices to monitor energy consumption in real time and during DR events.
  • Length of time to receive funding. Payments are disbursed annually.

Additional information

  • Advantages. Customers have the ability to manage their electricity use in response to conditions in the wholesale market. They can reduce their electricity consumption when wholesale prices are high or the reliability of the grid is threatened, receiving payments for the reductions they make.
  • Ownership types or organizations are best suited for the program. Large energy consumers.
  • Program fit for customer. Customers with building management systems are especially well-suited to enroll in demand response programs. Providers may offer financing to customers interested in upgrading a BMS system to participate.

Take action

Visit the PJM Learning Center for more information about Demand Response.

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