4  FM quick reads on demand response

1. Manage Demand Response To Drive Energy Efficiency


Escalating energy and operational costs are a burdensome reality that managers are facing more often. The demand for electricity and, consequently, owners' utility bills are growing exponentially.

The energy industry is operating within a broken down system. Utilities need $736 billion to fix America's electrical infrastructure. When consumer demand for electricity peaks, it puts extreme stress on the electrical-distribution grid. This aging system hampers utility companies and independent system operators (ISO), and they are paying customers to accommodate the situation by temporarily reducing energy use during periods of peak demand.

Managers can use a variety of best practices to reduce a building's energy use. Improved energy efficiency, delivered through design and operation, is the first step towards reducing facilities' carbon footprint and building a sustainable future.

Maintenance and engineering managers can play a proactive role in preserving the existing infrastructure by participating in demand response programs. Demand response refers to the reduction in electricity use by end users in response to either changes in the price of electricity over time or incentive payments.

Demand response has received greater attention in recent years as a reliable and cost-effective way to meet system resource limits. These programs give customers incentives to lower electricity use when wholesale market prices are high or when system reliability is in jeopardy. Grid use, or demand, varies throughout the day and by season.

When consumers demand electricity at the same time — peak use time — this puts stress on the grid and drives up energy prices. Peak use time usually occurs in the late afternoon and early evening and is greater in the summer.

The power grid supplies the electricity demanded, and as the load grows, the aging grid becomes more and more stressed. Any overload of power can cause costly damage to facilities' systems.


2.  Things to Know Before Beginning Demsand-Response

Demand-response programs offer maintenance and engineering managers opportunities to deliver energy efficiency and savings to their organizations. And as institutional and commercial facilities continue to search for bottom-line benefits, such incentive programs from utilities have become more popular.

Before making the decision to take part in a demand-response program, managers need to weigh a number of factors. Among them are the program's technology requirements, ensuring effective communication with the utility and within the facility, and monitoring the program to ensure the program delivers the intended benefits.

The East Meadow School District in Westbury, N.Y., has participated in a demand-response program since 2008, focusing its savings efforts mostly on corridor lighting, lighting in non-essential areas, and the air-conditioning system.

The situation is a win-win for the school district, which was asked to reduce its kilowatt (kW) use by 30,000 per megawatt (mW) per year, which breaks down to 20,000 mW in summer and 10 mW in the winter. If it hits those targets, the total annual benefit is more than $3,000. However, the school district does not incur any penalties if it does not meet its targets, which makes participation in the program more appealing.

Managers should not make the decision to take part in a demand-response program lightly, considering all the factors involved, such as downtime and the impact a demand-response event can have on occupants and staff.

Before the East Meadow school district opted to participate, director of operations Patrick Pizzo conducted research and made recommendations to district officials regarding the way the program would directly and tangibly affect building occupants. After doing the research, he took his findings to a committee that made the final decision. As he says, in a school setting, anything that is going to necessitate a change in the building's operation should be initially investigated in collaboration with occupants who will be affected.

3.  What You Need To Know When Calculating Demand Charges

Calculating demand charges on your electric bill can be tricky if you're not an expert. Here's what you need to know when calculating demand charges.

1. Understand the electric tariff(s) for your account(s). It may be seen on the bill as an alphanumeric (e.g., EL 8). Your utility account rep should be able to break out all demand charges, which may appear separately for generation, transmission, and distribution.

2. Review a year of bills and cull out the dollars charged for demand. Divide that annual cost by the total electric spend to derive the percentage cost of demand. If that number is under 20 percent, using average electric rates for all upgrades may be acceptable. If greater than 20 percent, make it a rule that all calculations of dollar savings be performed using real tariff rates instead of average pricing.

3. View your hourly load profiles for at least one hot day, a cold day, and an intermediate day. Many meters now report usage in the short time intervals needed to do this. Your utility may even offer web access to that data. If not, various methods exist to meter demand on your own. Doing so will show when peaks occur, and help find ways to control them. Various types of real-time dashboard software and services are also available to do this for a fee. A web-based course on load profile analysis is offered by the Association of Energy Engineers (www.aeeprograms.com).

If you're looking for ways to cut demand, train facility personnel to avoid unnecessary demands (e.g., equipment testing) during peak hours. Where feasible, adjust operating schedules to minimize or shift activities during peak load hours. In industrial facilities that use electrically-powered fork lifts, for example, the units are plugged in for charging at the 3 p.m. end of a shift, but a timer and relay postpone the charge cycle until 10 p.m., thus shifting about 50 kW of peak load.

4.  Understand How Rates Change To Manage Electricity Costs

Electric rates continue to rise, and to mitigate the impact, smart facility managers are examining options for controlling their usage. Care is needed, however, in the economic analysis of such upgrades. Some efficiency choices may reduce consumption more than peak electric demand, and using average electric rates to evaluate them may result in disappointment. Understanding how rates are changing may go a long way to navigating those changes.

Unlike residential electric rates that charge only for the kilowatt-hours (kWh) used each month, commercial facilities may be billed for both consumption and for how quickly they consume electricity, also known as demand. That speed of electric use is measured in kilowatts (kW), or in kilovolt-amps (kVA). Think of a kW as a kWh per hour: Your peak kW demand is the fastest rate of electricity use during a monthly billing period.

Demand charges are typically based on the highest peak kW seen each month. Depending on the tariff, that peak may either occur at any time, or be based on a time window such as 8 a.m. to 6 p.m. on weekdays. It is not, however, based on the very brief instantaneous demand spike that occurs when a motor or light is first started. Instead, it's often calculated as the highest kWh consumed in a 15-, 30-, or 60-minute period during a month. That consumption is divided by the length of the time interval to derive the peak billed demand.

This means that a single rapid usage, such as running all chillers for 15 minutes at one time during a hot spell, perhaps only once in a month, could set the peak demand charge for that month. Where a ratchet (also called "contract demand") charge exists, such a spike could also set a charge that would be levied each month for an entire year.


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