Demand Response Compensation Methodologies: Case Studies for Mexico

This report examines various compensation methodologies for demand response programs in Mexico. This report presents three case studies, including New England, California, and Hawaii. Demand response (DR) can refer to a variety of approaches to changing the amount and timing of customers' electricity use, allowing the electricity supplier to more easily balance electricity supply and demand. The level of compensation for a DR program will depend greatly upon both the regulatory context of the electricity supplier, as well as the economic circumstances of the DR providers. For a regulated utility, a proposed compensation level may need to pass regulatory approval. To determine the value of DR resources, a regulatory body typically seeks to determine the costs that the utility would avoid if demand-side resources 'produce' energy.