November 2007

BTL Mark: Resolve interoperability issues & increase buyer confidence
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David KatzEMAIL INTERVIEW  David Katz & Ken Sinclair

David Katz, BA, MBA
Sustainable Resources Management Consultant,
and Project Manager for the Building Intelligence Quotient Consortium

Mr. Katz has extensive experience in technological products and program evaluations for capital projects in both the public and private sectors. Prior to establishing his consulting practice in 1993, he had 27 years of corporate procurement and financial planning experience with Canadian Bechtel Engineering, Johnson & Johnson and Ontario Hydro. He participated in the evaluation and award of major contracts, developed new procurement and power transaction policies, performed risk analysis and multi-attribute analysis on major strategic decisions. His current initiatives are energy management services, sustainable "GREEN" building design, renewable energy systems, distributed generation and Intelligent and Integrated building and energy management automation systems.

He is a member of the Continental Automated Building Association’s and their Intelligent Building Council. He leads the BIQ Consortium that has developed the Building Intelligent Quotient, an On Line Building Automation Ranking System.


The fact that the North American GRID system operators have finally created DR programs that are funded to the same degree as new generation capacity and are accepted by the reliability councils is a positive step in the right direction.

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Sinclair:  What primary motivation brought you to the first DR-Expo recently in Chicago?

Katz:  All the recent articles on Demand Response (DR) in your newsletter were a great source of information and motivation. As a former electricity system planner that used to participate in the annual establishment of the Ontario peak and energy rates, and now an energy management and building automation consultant, I am extremely interested in contributing to the success of the new Demand Response Programs. The fact that the North American GRID system operators have finally created DR programs that are funded to the same degree as new generation capacity and are accepted by the reliability councils is a positive step in the right direction. As well, I wanted to continue to participate in Clasma events where I have the opportunity to demonstrate the Building Intelligence Quotient (BiQ) rating program developed for the Continental Automated Buildings Association. This first DR-Expo had a tremendous turnout of over 200 participants. The presentations and education on demand response from all aspects was significant.

Sinclair:  What were some key highlights of the Opening Keynotes and Closing Presentation and Mega Panel?

Katz:  Clearly the opportunities for the building automation sector to participate in the Sustainable Energy, GREEN and High Performance Buildings agendas was evident from the presentations and commitment by Constellation NewEnergy and Cisco Systems. Many major corporations now have a Climate Change perspective. Whether you call it Social Responsibility, Carbon Footprint Reduction, Green to Gold, Triple Bottom Line it is now evident that our governments are recognizing the positive economic benefits of energy reduction and a cleaner environment as part of a Sustainable future. All Clasma events such as BuilConn, GRIDWISE, ConnectivityWeek, and now DR-Expo and Grid-Interop bring the positive message of using the convergence of the Information Technologies and the Building and Energy GRID Automation Technologies to better communicate. Real time pricing in electricity can cause the price to sky rocket from the $30 - $50 per MW most of the 8760 hours to much higher prices for about 200 peak hours with some ISO's reaching their maximum cap of up to $1000 MW for a few hours a year. A recent example presented was the reduction through a Demand Response request in one peak period that cost the ISO $ 5-6 million but this reduction in the peak demand lowered the market-clearing price to save them approximately $650 million!

The concluding presentation by Andrew S. Winston on his best selling book "GREEN TO GOLD" was a perfect fit and inspirational to all. It showed the many companies and agencies that are turning from the old industrial polluting approach and making the paradigm shift needed to be sustainable in the future. In additional to Demand Response we need to improve the energy efficiency and incorporate on site renewable energy options.

Sinclair:  What are some of the key forces driving the Demand Response and how do these companies see it as Sustainable Energy?

Katz:  The recent ASHRAE State of the Society Address included the reference to changing the way we build new buildings to make them carbon neutral. "The Architecture 2030 Challenge and the AIA Green Buildings Coalition have as their central goal the achievement of net zero/carbon neutral buildings for all building stock by 2030. ASHRAE is one of many organizations that have committed to support those goals by developing tools that are needed to achieve these objectives."

The Clinton Climate Initiative recently announced the creation of a global Energy Efficiency Building Retrofit Program that brings together a number of the world’s largest energy service companies (ESCOs), the world’s largest banks, and sixteen of the world’s largest cities in a landmark program designed to reduce energy consumption in existing buildings. Many of the ESCO companies are CABA members and will use building automation to reduce energy and peak demand. New cities are being invited to join and the global interchange of information will contribute to more energy management knowledge and best practices.

Hopefully all these carbon reduction efforts recognize the need to make energy cleanlier and use it more efficiently so that the new many Net Zero Challenges will be achieved. The presentations all showed how companies could make a profit by applying what they already do well but to the new challenges that respect the environment, the population and the shareholders.

Sinclair:  How does the improved building automation technology contribute to the Demand Response opportunities?

Katz:  In order to participate in Demand response and receive the financial incentives, improved building automation capabilities are required to shed the electrical load for the agreed upon duration and to document the monitoring and verification information to receive the DR payments. Whether the DR is through an aggregator or direct participation, the independent system operators (ISO) must be certain the highly volatile electrical load has been decreased by the DR action. All the presentations in the Technology Track that I attended had some elements of either recommissioning and reprogramming the existing building automation to ensure they could provide the Demand Response load reductions, installing additional building automation and peak load reduction energy technologies without too much sacrifice of comfort and safe operations. DR funding pays for the improved building automation capabilities but a baseline is always needed to justify the expense and prove the reductions. The CABA BiQ is an online tool to establish a baseline rating of the existing building automation intelligence. As well the BiQ can connect the users to additional sources of information to educate all the players that must be involved to successfully install and commission the additional building automation points that must respond to the future requests for Demand Reductions.

Sinclair:  What did the Business Track sessions cover and how were they received.

Katz:  As with all Clasma events the concurrent tracks are so interesting you wish you could be at all of them. My quick running back and forth allowed me to hear some of the business track presentations from the key Independent System Operators. As each GRID jurisdiction has different DR program rules and incentives, the networking opportunities were great as we learned from each other and the DR presenters got great feedback in each question and answer session. This was very useful for the current DR companies as they work with clients across many jurisdictions. Many of the presenters provided excellent website links to the wealth of documents on DR that the many energy research agencies have published. The ISO's operate with utilities that must provide extremely accurate metering information to participate in the electricity markets. The Demand Response participants also must provide significantly accurate information for ensuring the proper demand reductions occur relative to a baseline that shows clearly the building's load. While there can be some weather correlation, the DR payments ultimately come from the electricity customer and the regulatory bodies must ensure they are fair and reasonable for the benefits they provide the power system market. As the DR programs get implemented more broadly, and the ISO’s participate in more DR-Expos and their Peak Load Management Association, hopefully the DR programs will be more standardized and automated to increase the participation rates and make DR a permanent planned contribution to the GRID load management and not just a temporary peak reduction effort.

Sinclair:  Given the North American GRID and the many cross border interconnections how do you see the DR programs contributing to the NAFTA energy objectives?

Katz:  California has had a number of early Demand Response programs that have been reviewed by both Canadian and Mexican energy agencies as part of the NAFTA renewable energy and environmental agreements. While I'm not familiar with the interconnections in the US with Mexico, I am very familiar with the North East Grid interconnections from many years of working on power purchase agreements with the neighbouring Canadian and US utilities. Deregulated market forces now replace large exports of summer electricity from Canada under long-term utility agreements. Peak loads now occur in the summer in Canada stretching the capacity of some utilities as well as the traditional winter peak from electric heating in many of the public provincial utility jurisdictions. Hydro Quebec has a significant market presence in the North East GRID and the financial resources to expand its clean and renewable energy portfolio. With operational control over the James Bay water flows and the benefits of integrating their new wind projects feeding their massive transmission system they have significant opportunities to optimize their dispatch for DR and carbon trading programs in the future.

The Maritime Provinces also have interconnection agreements and many of the future transactions will reflect the market prices of DR since the request of your own customers to reduce load avoids the import of power from your neighbours at peak times and at high costs. While the Ontario Power Authority (OPA) was unable to send a representative to this first DR-Expo to explain their new DR programs, we had a number of Canadian participants. Paul Silverthorne, President and CEO, Dimax Controls made a presentation reviewing the new OPA DR program. It provides 1-3 or 5 year contracts and two duration options of 100 or 200 hours for a number of four hour load reductions over contract duration. I presented a number of other Demand Reduction technologies and on site generation programs offered by the OPA to show that in addition to Peak hours there are significant opportunities to lower load permanently and these also are provided significant incentives. In Toronto the BOMA chapter run the OPA incentive program that pays either $400/kW or $0.05/kwh for the annual savings of proven reduction measures of summer peak and energy. Canadian public utilities generally own or control the provincial transmission grids. While some electricity market deregulation has occurred in Alberta and Ontario it will require continuing structural and regulatory changes for each province to implement Demand Response. The Ontario DR experience will be very important to the future value of DR as the electric utility industry faces significant investment requirements.

Sinclair:  What is the future plan for DR-Expo and how do you see the automated building sector playing a major role?

Katz:  It was generally agreed that this DR-Expo should be repeated possibly within 6 months and possibly on the West Coast. As well the NewEnergy Alliance formed to promote the Demand Response industry will certainly grow its membership. It can provide the organizational framework to ensure all the necessary players from building owners, facility managers, building automation system integrators, energy management and demand response aggregators build the sustainable energy future together. Hopefully we can have a future DR-Expo in Canada as well.


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