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The ongoing battle within the US Environmental Protection Agency (EPA) regarding diesel generators for the purpose of demand response (DR) finally came to a resolution last week.

The regulations will take effect in 2015, with DR customers being able to continue operating diesel-powered generators for up to 100 hours each year. Maintaining up to 100 hours of usage each year is considered a success for demand response providers, who pay customers to take electrical usage off the main grid when stressed, (often through generators) preventing blackouts and brownouts nationwide.

On the other hand, the EPA will require all diesel generators with engines at 100 horsepower or greater that run between 15 and 100 hours a year for DR to file a detailed annual report, providing the location of the generator, dates it was used and all times of operation.

Furthermore, all generators will be required to run on ultra low sulfur diesel, or ULSD, which is a cleaner fuel that releases fewer carcinogens into the atmosphere compared to standard diesel. The EPA sees the switch to ULSD fuel to be a major victory, estimating a reduction of capital costs by $287 million, annual costs by $139 million and savings of over $2.1 billion in health benefits from cleaner future generator use. The agency states, “[O]ur information shows that only a small percentage of emergency engines currently use ULSD fuel. This will result in lower emissions.”

To explain the importance of generators and demand response, one must understand how DR works and the benefits that diesel generation provides. DR is implemented at times of great strain on the electrical grid, most notably in the summertime when air conditioning and other means of energy usage are peaking. Accordingly, the power authority must find optimal means to satisfy consumer demands for electricity. They essentially have two choices; they can either accommodate by creating more power in power plants, or they can implement programs to reduce electrical draw.

Demand response is the most effective use of the latter – and simply put, the demand for demand response has never been stronger. It was reported that 2012 was the hottest year on record, accounting for over 34,000 record daily high temperatures according to the National Oceanic Atmospheric Association. As a result, utilities across the country called upon ECS for emergency events at a record pace last year, resulting in tens of thousands of megawatts being curtailed off the grid.

In fact, the health- and safety-related alternatives of not performing demand response at trying times could be disastrous, too. Entirely eliminating diesel-powered generators would certainly decrease pollutants but would also tremendously increase the risk of blackouts; as we all know, blackouts can cause a plethora of health and safety concerns, big and small, in a very short period of time.

Paul Cicio, president of the Industrial Energy Consumers of America, (IECA) shared this concern on blackouts in a letter to Jeffrey Zients, Acting Director of the Office of Management and Budget. Cicio states,

"Reliability of electricity supply to industrial consumers is very important. If the power goes out in manufacturing facilities without warning, it becomes a safety issue for facility employees because many facilities have high pressure vessels and/or operate furnaces at thousands of degrees Fahrenheit. Also, product that is in the equipment can be damaged or ruined. Equipment can be either partially of permanently damaged resulting in lost production capacity. For large facilities, costs can quickly run into the tens of millions of dollars."

It would be fair to say the ICEA, a nonpartisan association with more than 1.3 million employees representing over 900 industrial facilities in the US, understands the importance of diesel generator use for DR.

In addition, generating more electricity at that time would require a great deal of resources through the utility, easily creating more pollution through the generation and transmission process. Other solutions, such as buying new generators to replace older ones and/or improving the generation and transmission process within a utility would be a great means to address pollution concerns, but they are both very costly.

While there’s no denying how paramount reducing harmful airborne pollutants will always be, it’s also valuable to note a similar obligation to run these generators for DR programs. The EPA recognizes this by not only originally instituting the 100 hour maximum for DR last May, but by reinstituting the same hourly limit upon their extensive review process and accompanying report last week. Mark Crisson, president of the American Public Power Association, also condoned the EPA’s decision, “the EPA is fulfilling its obligation to protect public health while providing the electricity industry the flexibility it needs to prevent unnecessary electrical outages.”

For the time being, the EPA ruling is the right decision when considering all variables. 

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