October 2010

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Getting Grid Connected
Drive Increased Energy Savings and Earnings with Contextual Electricity Information, Dashboards and Integrated Demand Response
 

Rich Quattrini,
VP Marketing and Product Management,
EnergyConnect Inc.
 

rquattrini@energyconnectinc.com
 

Energy represents a significant percentage of total corporate expenditure and in many cases it is used inefficiently. Meanwhile, internet adoption, mobile communications, social networks and a global economy have made us more connected than ever. In fact, one can argue that the proliferation of information technology and computing capabilities—interwoven within the century-old energy infrastructure—are key factors driving many smart grid trends. Being more “energyconnected” seems a logical next step in the right direction.

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Sensible Compromise Mitigates Some Disconnect

The smart grid is evolving on many different levels. Demand response, one of the first pieces of the smart grid to emerge, is a case in point. Since the 1980s, utilities have encouraged demand response in various forms to reduce demand in peak situations. Today, utilities, grid operators and third-party curtailment service providers have taken those efforts a step further, coordinating closely with large commercial/industrial customers to reduce loads during extreme demands.

While initial programs have been successful, there is still plenty of room to expand the reach of existing resources or bring new resources into the mix. One factor holding back adoption is that customer needs are often at odds with the goals of the regional transmission operator (RTO) or utility (see figure 1). Energy users want the lowest cost supply and want the flexibility to use electricity whenever they want to keep their businesses going. Utilities and transmission operators want predictability, control and on-demand reserve supplies to ensure everyone gets the power they need.

Figure 1

The scale of the mismatch can sometimes be significant. One of the most under-adopted areas due to this mismatch has been price-based demand response. But the good news is that we can come up with a win-win scenario – using some common-sense compromises and the right tools.

In order to drive a large-scale response to price, an RTO or utility must be willing to give up some level of predictability. Most customers, especially in the automated building world, will not be able to quantify exactly what they can drop, or how long they can maintain a load drop. They also do not want to face undesirable consequences if they fail to meet their targets. In this area, the PJM RTO has made excellent strides using a reasonable, forward-thinking approach. They have been successful with price response because they’ve eased up on stringent demands for predictability, dramatically increasing demand-side participation by large commercial and industrial customers. In turn, the benefits cycle back to the grid and to customers with the clear payback of lower prices and higher reliability.

A second, and perhaps even larger reason price response has not had higher adoption is that price signals tend to be too simplistic. The typical energy consumer has a hard time understanding the exact implications of what earning or saving $0.50 per kWh in a certain time period really means. This lack of clarity and direction often leads to inaction.

Providing information in terms the customer can relate to and act upon tends to have much greater impact. Rather than simply telling customers their rate is going up for a few hours, why not frame it more in their terms? For instance: “If you let the temperature float up 3 degrees between 2PM and 6PM tomorrow, you can earn $500 in the form of a demand response payment or energy savings.” Quantifying the value against specific action will provide much more motivation for customers to take measurable action.

Connecting to Actionable Information Transforms the Smart Grid

Demand Response has the potential to emerge as the killer application for the new energy connected network. Today, big companies like Cisco, Google, IBM, Honeywell, Schneider Electric and Microsoft, as well as smaller companies like EnergyConnect, Site Controls and Agilewaves provide technology-driven energy products and services. Electricity consumers can now use integrated demand response technology that allow them to easily augment their traditional capacity or grid-dispatched “reactive” programs with price-based demand services. This facilitates increased levels of active on-demand participation all year round, not just when an emergency event is called. This approach to demand response can help prevent such emergencies right from the outset.

One such software as a service is GridConnect, which increases situational awareness to grid conditions, helping customers easily control their participation and reduce overall demand and “peakiness.” The software takes the complexity out of demand response participation by clearly quantifying the value of the energy users’ behavioral changes in their terms. Various “what if” analysis and scheduling options allow building managers to quickly evaluate the impact of different energy use scenarios. If customers decide to participate, signals to automatically initiate load shifts can be sent directly to their control systems to schedule automated demand response. This represents a fundamental shift from purely reactive demand response to a more proactive energy management approach with the added benefits of increased savings and earnings.

The core of the smart grid is the open flow of information. But that’s just one part of the equation: another critical component is presenting this information clearly and in a context that a specific electricity consumer can understand. Energy management tools leverage these capabilities to “inform and motivate” power users to effectively curtail or manage energy use, directly helping to improve grid reliability.

Informative Dashboards Make a Difference

As energy information becomes more abundantly available, the ability to distill it down to a few easy to understand pieces of information is critical. A well-designed dashboard takes the complexity out of large amounts of data and delivers visual metrics that allow users to quickly evaluate the impact of their actions. Executives need to hone in on high-level performance indicators and quickly evaluate their impact on the bottom line. On the other hand, managers responsible for day-to-day operational functions need to understand exactly what they need to do (and when) to meet budget goals.

As an example, the dashboard in figure 2 graphically displays a clear, customizable snapshot of several components designed to encourage smart energy management and drive demand response participation:

Figure2

Most importantly, dashboards should be designed from the users’ point of view, taking customer engagement and feedback into consideration right from the start. The idea is to give users the visibility, flexibility and control to better manage energy efficiency and conservation initiatives while maximizing demand response earnings across multiple buildings and facilities.

Getting Connected to Energy Earnings and Savings: Real World Example

In today’s challenging environmental and economic climate, efficient energy consumption and management is a top priority. Energy is one of the top three ranking expenses in building and business operations. The rollout of intermittent renewable sources such as solar and wind have increased the relevance of demand response as an important grid resource. But it is unlikely we will realize the full potential of demand response in terms of environmental and economic savings if it is too cumbersome for easy participation.

Organizations in such diverse sectors as manufacturing, retailers, office complexes and recycling are already realizing the benefits of an integrated approach that takes the complexity out of demand response. One especially responsive sector includes universities and colleges—early adopters who recognize that innovative demand response technologies present an extremely viable and lucrative method to both leverage existing building automation systems and fund additional efficiency, conservation and sustainability efforts.

A case in point is Pennsylvania-based Bryn Mawr College. With a historic campus of 50+ buildings, it showcases how innovative use of demand response delivers significant energy and cost savings, even at an institution where the average age of the buildings is over 88 years. In addition to being on call as a reliable resource in the PJM emergency program, Bryn Mawr extends their participation by voluntarily reducing load when wholesale prices are expected to be much higher than their retail rate. Through EnergyConnect’s price response platform and scheduling screens, their facilities team has a clear understanding of load profile and energy usage patterns as related to campus activities and weather, among other factors.

CatNet Systems Bryn Mawr has generated over $300,000 in cost savings and avoided over 2,000 tons of CO2 emissions since 2007.  Through their efforts they have reinvested demand response earnings into control systems and building system upgrades. They have gradually upgraded all HVAC systems to include variable frequency drives (VFDs), further increasing efficiencies and demand response participation. The earnings also funded compact fluorescent light bulb replacements, improved heating systems in three dorms, a carbon footprint study and a windmill project. This virtuous cycle of earning and investment has set Bryn Mawr firmly on track for further campus improvements moving forward.

Successes like these make it clearly evident that beyond enhanced energy management and cost savings, participation in demand response delivers many added benefits:

+ Decreases the need for building new power generation
+ Reduces our carbon footprint
+ Prevents rolling blackouts and brownouts
+ Serves to improve the reliability and efficiency of the electrical grid
+ Makes environmental stewardship profitable

Inform and Motivate Approach Brings Many Added Benefits

As we move into the next decade we will start to see customers that have traditionally engaged in only low-touch capacity programs expand their role in the smart grid by extending participation to price-responsive load management and even ancillary services. They will become integrated demand response resources providing a blend of “command and control” type services with additional motivation to act on information based on price signals. For customers who may not be willing to subject themselves to command and control, there will no doubt be plenty of options to contribute with a less binding “inform and motivate” approach.

Wide scale adoption of smart meters and information access is enabling the availability of price response to nearly every user of electricity. Regardless of whether customers are incentivized by dynamic pricing, peak rate programs or demand response incentives based on wholesale market conditions, price signals—if translated into actionable information—will greatly extend any energy consumer’s participation in the smart grid.

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