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Manufacturers regularly face market volatility, including supply chain disruptions, material shortages, and geopolitical tensions, all of which can impact operating margins. Recent turmoil in trade policy has only intensified these challenges, raising the cost of importing essential components and increasing overall operating expenses. Additionally, uncertainty surrounding tariffs on electricity imports poses a risk of potential energy cost hikes that could further increase operational expenses.

Even as these new policies are introduced, there may not be certainty about their implementation. Court proceedings may be initiated to evaluate these policies, with different court rulings influencing how and when policies are implemented. Negotiations between and reactions by countries may change the scope of new policies. This potential for whiplash in policy implementation adds to this uncertainty.

To navigate this challenging environment, manufacturers need to be agile and adaptable. While some strategies – such as reassessing procurement strategies, project timelines, and operational processes – can take months (or even years) to implement, a solution is available now that can help manufacturers bolster their bottom line, mitigate cost impacts, and maintain resilience.

That solution is demand response.

Turning uncertainty into opportunity with demand response

Demand response is a proven strategy that rewards large energy users, like manufacturers, for being flexible and agile with how they use energy. How does it work? When the electric grid faces supply constraints, grid operators and utilities call on demand response participants to temporarily reduce or shift their energy usage during what is known as a “demand response event.” Bringing demand levels down to meet available supply helps stabilize the grid and reduces the risk of blackouts and brownouts.

Demand response participants earn revenue for every megawatt they can offer the grid during demand response events. By optimizing existing assets and adjusting energy consumption, manufacturers can generate new revenue streams and lower operational costs. With the right strategies, manufacturers can achieve these goals without sacrificing productivity, making demand response a fast-to-implement and effective solution to counter the effects of a volatile trade landscape on their bottom line.

Beyond financial benefits, demand response programs provide deeper insights into energy usage, enabling manufacturers to identify efficiencies and achieve additional cost savings. Advanced notifications of grid issues protect sensitive equipment from disruptions, preventing damage and downtime. Real-time forecasting tools are also available that allow manufacturers to gain a better understanding of when electricity prices will peak, providing the insight needed to proactively schedule operations during more economical periods and further reduce energy expenses.

These advantages make demand response a strategic tool for enhancing operational resilience and competitiveness.

How manufacturers participate in demand response 

Successful demand response implementation requires careful planning and customization of energy reduction plans to meet facility-specific needs. Manufacturers can select from various methods to meet demand response program requirements while maintaining core operations. They can implement energy reduction plans manually or make participation effortless and seamless by leveraging automation.  

Industries across the manufacturing sector participate in demand response in various ways depending on their operational assets and processes. For example, a metals manufacturing facility might shut down specific equipment and auxiliary systems to reduce load, while a food manufacturer might adjust production schedules or use backup generation. Developing an energy reduction plan that is realistic, achievable, and aligns with the facility’s operational dynamics is essential for success.

Below are just a few of many examples showcasing how manufacturing industries reduce their load during demand response events:

Metals manufacturers are adopting measures such as shutting down HVAC systems or increasing set points by at least 5 degrees to reduce energy consumption – a straightforward yet effective tactic. They also avoid turning on non-essential equipment during demand response events, such as fans and lighting, optimizing energy usage during peak times. Some specific equipment they leverage in their energy reduction plans includes air compressors, hydraulic units, air cannons, scrap conveyors, and slitting lines, among others.

Plastics manufacturers can take more drastic action by shutting down all non-essential equipment, including molding machines, pumps, heat and control power, thermolators, towers, chillers, conveyors, air compressors, and dryers. They also turn off office equipment except for the main server. This thorough shutdown approach maximizes energy savings and financial incentives during demand response events.

Food manufacturers follow systematic shutdown procedures for high-load equipment, such as grinding, batching, pelleting, coolers, fans, and grain dryers, resulting in significant energy savings. They can also turn off truck garage breakers, ensuring effective participation in demand response programs while maintaining efficiency.

Chemical manufacturers, due to specific needs and safety precautions, identify production and conveyor lines to shut down during dispatch periods. They limit compressed air usage, evaluate motor loads, and adjust overhead lighting and refrigeration settings. These measures enable safe and effective participation during demand response events.

Wood manufacturers, especially milling operations, focus on reducing energy usage for work centers, HVAC systems, and air compressors. Seasonal adjustments to HVAC set points and shutting down non-critical lighting and environmental testing chambers allow participation in demand response events while maintaining essential operations. 

Stability, reliability, and long-term value from demand response

Leveraging and monetizing energy flexibility is a pathway to long-term success and competitiveness in the manufacturing sector. Demand response offers manufacturers a proactive approach to managing risk, reducing operational expenses, and protecting margins in an uncertain business environment. By transforming energy consumption into a strategic asset, manufacturers can unlock new revenue streams, optimize energy usage, reduce costs, enhance operational resilience, and contribute to grid stability. As global trade dynamics shift and market volatility intensifies, demand response provides a stable method for manufacturers to navigate uncertainty and thrive.

However, success in demand response programs hinges on adopting customized, realistic energy reduction plans. Working with an experienced demand response provider, like Enel North America, is critical to developing a realistic and achievable plan for success, as uptime is directly tied to production in the manufacturing sector.

The right partner should set you up for success. Enel will work with you and your team to develop a customized energy reduction plan tailored to your operations, identify the right programs for your business, and help you confidently participate.

The right partner must have experience in the markets. Enel brings more than 20 years of experience across more than 15 energy markets in the U.S. and Canada, helping you navigate the complexities of demand response programs to achieve significant financial and operational benefits. We support over 80 demand response programs and offer our DynamicDR software, which gives you real-time insights into market prices, demand forecasts, and optimal times to operate. 

The right partner needs to unlock long-term value. Since 2011, we’ve helped our customers earn over $1.9 billion in demand response revenue – and we can help you do the same.

Next steps

Many of your peers (and likely your competitors) are already taking advantage of this opportunity to protect their margins, their operations, and energy reliability in their community. Let’s connect and explore how you can benefit, too.

Want a deeper dive into the topics discussed in this blog? Check out our on-demand webinar, ‘Navigating uncertainty: how demand response helps manufacturers offset potential tariff impacts.’