Toronto-based Enbala Networks has brought demand-response to a new level — just don’t call it demand-response.

In traditional demand-response, companies such as Comverge and EnerNOC sign up dozens, potentially hundreds of clients that agree to reduce their energy demand when asked.  When a heat wave hits and electricity demand spikes, a power system operator will ask a Comverge or EnerNOC to orchestrate a large-scale demand reduction for a specific period of time. These companies (and their clients) get paid to reduce their electricity, with the idea being that the cost of such programs is far less expensive than the cost of building (and paying for) a natural gas peaker plant to do the job — that is, negawatts is cheaper than natural gas megawatts.

EnerNOC, for example, said it was able to reduce power demand across the United States last week by 1,230 megawatts when asked to kick its services into action.

But this is only one form of demand-response. What about the second-by-second fluctuations on the grid that require what the industry calls “regulation”? Regulation is a way to constantly balance supply and demand on the system, and it’s usually accomplished by power generators that get paid a hefty premium to do the job (In Ontario hydroelectric facilities in Niagara Falls play a major role). In early 2010, Enbala Networks decided to participate in an Ontario Independent Electricity System Operator (IESO) program aimed at proving that demand-response could work for regulation services as well.

The company issued a call in June 2010 for municipal and industrial partners that had the flexibility, when asked, to reduce power demand regularly throughout the day and night. Ideal candidates were water and wastewater treatment facilities, wood chipping and rock crushing facilities, companies that had large electric boilers, chillers and battery charging loads, and partners that relied heavily on industrial ventilation. In other words, anyone that used lots of electricity for equipment that could easily be turned on and off without materially affecting the overall operation of the organization. You might call it flexibility harvesting, and Enbala has built a smart grid platform that does it well.

Enbala went ahead with the pilot project and a year later the company and the IESO appear satisfied with the outcome. Now that proof-of-concept is out of the way, it will be interesting to see where it leads. Will Enbala be able to replicate it in other jurisdictions and turn it into a vibrant money-making business? Will the IESO expand the pilot into a full-scale commercial program, giving the Ontario grid a faster and cheaper way to balance supply and demand?

The smart grid demands no less, and this approach will become increasingly important, along with energy storage, as we add more intermittent renewables to the power mix.

I was in Vancouver last week, where the weather was perfect, so I dodged most of the hot, humid heatwave stuff that kept air conditioners blasting in the northeast. But I was watching Ontario’s power demand from afar and was happy to see that the electricity system handled the hot weather quite well. It was, in fact, the first time we got a sense of how well Ontario’s demand-response programs work. Last summer just wasn’t hot enough to give it a proper test run, but we found out last week that demand-response has an important role to play in the province. According to figures from the Independent Electricity System Operator, DR programs were able to reduce electricity use during the four-day heat wave by 3,000 megawatt-hours. Since we’re talking roughly 100 hours, that averages out to about 30 megawatts of capacity spared during the entire period. That’s a misleading figure, however, because the programs would only kick in during peak times. For example, at the height of the heat wave last Tuesday as much as 350 megawatts of load were reduced – the equivalent of a small coal-fired power plant. About 150 megawatts of that came from our Peaksaver program, which allows utilities to slightly reduce air conditioning load from participating customers. Another 200 megawatts came from the DR 3 program, which consists of industrial/commercial electricity users and aggregators that have agreed to reduce load when asked.

The cleanest megawatt is the one not used, and not using it is a hell of a lot cheaper than paying a natural gas peaker plant for peak supply.