December 2008
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Babel Buster Network Gateways: Big Features. Small Price.
Control Solutions, Inc. - Minnesota

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The Lie in Demand—Response

We encourage only the crudest, least effective energy savings, while denying the market the energy signals that would cause better.

Toby Considine
Toby Considine
Systems Specialist,
Facility Services, University of North Carolina – Chapel Hill
The New Daedalus

Contributing Editor

Traditional demand–response (DR) is a machine to machine interaction that is based upon temporarily providing unacceptable degradation to a building's performance. The argument goes something like: "It really helps the grid a lot. It only happens six times a year. It won't have any effect on the business because it is so rare." This hurts the utilities because it is not true, and will be even less true in the future. This reduces the credibility of those making the argument, which reduces support for the effort. This is bad because the effort is important.

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DR is important because we, as a society, have trained people over a number of years to misuse energy. The scarcity and abundance of energy vary across the course of every day. 17% of the generating capacity of the grid is used for less than 110 hours / year. Even on normal days, in which power use is nowhere near the peak, the true cost of power, on the wholesale markets, predictably swings from more than three times what consumers are paying for electricity to negative.

Negative. That's right, this scarcest of resources, in the news every day, gets a negative price. What else gets a negative price? About the only thing I can think of is tomatoes in Buñol, Spain. In Buñol each year, they have the Tomatina Festival, in which the entire town, and as many as 40,000 tourists, engage in a huge overripe tomato fight. The grid has a similar surfeit each day. The large base generation power plants have one speed, flat out. These plants must pay to put power on the grid for certain portions of each day. Some part of my mind wonders, what undergraduates at engineering schools might do to celebrate a Tomatina of Energy…another parts looks in the average commercial building and thinks we may already have one.

We ignore these market realities, and order or pay energy customers to turn off things on just a few days a year, to manage the peak. We encourage only the crudest, least effective energy savings, while denying the market the energy signals that would cause better. Because these signals are so crude, and the techniques external to business, they can only be inconveniences. Inconveniences mean that the bulk of buildings, whose first business rule is "don't annoy tenants", will not participate.

When power operators and energy regulators prepare for just a few DR events, a "half dozen per year", they response preparations to only the crudest of responses, and these provide only minimal response. A better strategy would engage business operations to provide for larger response from a wider range of participants. For minimal effects, and for only six times a year, we will not see such engagement. Therein is the lie at the heart today's DR conversations

Reliable Controls Everyone knows that as renewable energy increases on the grid, energy supplies will become less predictable. Everyone knows that we are establishing ambitious goals for renewable energy. As the percentage of energy supplied by renewable sources rises, we will see larger and less predictable swings in energy available on the grid. The inevitable result will be more DR events, possibly more per week than there is now per year. DR events will also be larger in magnitude than they are today.

Perhaps it is the management mantra of Quality Management and Quarterly Results that keeps us form honest discussions. Perhaps it is that Utilities Commissions do not want to hear the facts. Perhaps it is simply the long developed reflex of misrepresenting the quality of analog ready power as adequate for the digital world. Whatever its source, it serves to prevent the necessary conversations to fully engage both sides of energy transactions in planning for the future.

Demand response events will be much more common in the future than they are today. Future DR events will require a much greater participation than they do today. When renewable energy grows beyond today's paltry percentage of total power, grid reliability and predictability will get much worse.

If we begin telling the truth, markets will begin to develop around local solutions. If we let building owners know what is coming, they will begin to buy products that defend their buildings and tenants, and thereby be able to support larger DR. We all need this to start happening soon.

It is time to start telling the truth about Demand-Response.

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