4  FM quick reads on demand response

1. 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.


2.  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.

3.  What Is Smart Grid, Precisely?

Today's tip is about how you can best prepare your buildings for the new smart grid.

But first, facility managers need to understand what smart grid is, and what it isn't.

Basically, "smart grid" describes increased capabilities in the nation's energy grid that will allow for two-way communications between facilities (and even devices) and the utility. The smart grid will also provide better power reliability and quality, and better efficiency in transmission.

Facility managers have been hearing for years that smart grid is coming, and there's been tons of advice from vendors, consultants, utilities, and other industry experts about how facility managers should prepare to best reap the benefits. But here's a little secret: Smart grid, in large part, is here!

One of the sure signs that smart grid is here is the increase in automated demand response programs. There's even a credit in the new version of LEED - LEED v4 - for demand response. Even though many facility managers may not immediately recognize this as taking advantage of smart grid, an ADR is, in fact, exactly what a smart grid provides. Smart energy management systems that ratchet building systems up and down automatically during peak demand periods are commonplace now. Here's one simplified example: A smart meter can send a signal to the BAS so that a variable speed drive is slowed by 20 percent for 10 minutes. This reduces the motor's energy use by 40 percent. Once the 10 minutes are up, the VFD goes back to full speed and a different VFD is slowed. Occupants are unlikely to notice the change, and peak load is reduced. Small changes like this could add up to huge savings once facility managers become adept at looking for the many energy-saving opportunities smart grid provides.

The next evolution of what we're commonly calling smart grid - if we define smart grid as a s sort of catch-all term to refer to how utilities and facilities will interact - is real-time pricing. Facility managers will be able to program energy management systems to optimize how the facility uses energy when energy is the cheapest. They may not necessarily save a tremendous amount of kilowatt hours, but they'll certainly save cost.

While many of the overarching benefits of smart grid accrue to the utilities, these advantages are ones facility managers can take advantage of now. Explore these options with your local utility, if you haven't already.

4.  Involve Utility As Part Of Demand-Response Decisions

The first step for managers in determining whether to participate in a utility demand-response program is to bring the local utility into the process. Programs vary by utility, as do requirements and benefits. To benefit the utility and the customer, programs must be designed to meet the operating needs of the facility.

The utility can explain participation requirements and is likely to have several years of data on energy use and metered demand for the facility. Both data sets are necessary for managers to evaluate the potential benefits of program participation.

The first indication of a facility's suitability to participate is its load profile. A relatively flat load profile is less likely to produce financial benefits for a customer than a profile with a significant difference between peak and off-peak hours. By comparison, a load profile with a large variation offers potentially large benefits.

But a facility's load profile only identifies the potential benefits from participation. Managers also need to identify and quantify individual loads the facility can curtail or shift to off-peak hours to meet program requirements. The first step in the process is to identify and quantify major electrical loads that contribute to a facility's peak demand. The next step is to evaluate each load for its potential to temporarily interrupt their operation during peak hours or to shift the time they operate to off-peak hours.

The key to successful participation in a demand-response program is support within the facility. Managers who try to take part in demand-response programs without the support of the facility's occupants are more likely to fail. When managers try to impose programs without understanding occupants' willingness to participate, everyone becomes an exception.


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demand response , peak demand , energy use , energy efficiency

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