September-October 2011

Responding to Demand

Enabling a smarter, stronger onsite power system through the use of energy management systems

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By Carol Brzozowski



Addressing the role of the interconnection between onsite power and the smart grid, E2America CEO Dara O’Neill says the ability for utility companies to connect to devices beyond the meter and gather consumption and usage patterns enables them to make recommendations and reductions beyond current capabilities.

“Once onsite connectivity reaches a critical mass, it provides the utility companies with the ability to manage their generation requirements more intelligently,” says O’Neill. “The ultimate goal is to have all electrical devices connected and monitored to create the most intelligent efficient network possible.

“The potential savings of a smart grid with this level of interconnectivity has far reaching benefits for every energy user,” he adds.

O’Neill says technology must address the future energy needs of the United States, where the electricity market uses almost 4 trillion kWh of electricity a year, with commercial buildings accounting for 37% of the total, representing an annual $120-billion market.

“With no end in sight for rising electricity costs, commercial enterprises in all industries have begun to realize that more needs to be done to reduce their energy costs and usage,” he says. “Intelligent energy efficiency technologies will continue to gain even more widespread attention and support, and businesses continue looking for ways to substantially reduce energy costs and usage.”

Additionally, as utility companies continue to offer greater incentives, and the government continues to introduce legislation that encourages and incentivizes energy efficiency technologies, more companies will be able to easily and affordably implement technology like E2America’s system, O’Neill says.

“Intelligently connecting devices to an automated network is already a reality. As automated technology adoption rates improve and accelerate, the current waste of energy will be reduced dramatically in the coming years.”

Vision and interactivity are the “essential keys” to Schneider Electric Demand Response Resource Center, says Phil Davis, Senior Manager–Solutions.

“By making energy characteristics visible farther down the supply chain, utilities will gain the ability to regulate their generation assets more closely,” he says. “For example, in a residential setting, this can diminish the need to provide 140 volts farther up the system in order to ensure 110 volts at the point of use.”

Interactivity allows two-way communications between the load and the utility, which, in turn, allows communications about the conditions at both ends of the supply chain, Davis says.

“With this knowledge, discretionary loads can be modified to combat issues of line congestion and power quality during period of heavy use,” he adds.

The market for Schneider’s systems include solar installers and energy providers.

Davis points out that by giving utilities greater visibility to conditions beyond the substation, “they could operate with less margin for error, thus becoming more efficient and diminishing the need for capital investments, reducing emissions, and increasing customer satisfaction by averting potential outages with earlier recognition of grid faults.”

Photo: Powerit Solutions Panel view of the Spara EMS in the main electrical control room at Four Star Fruit

Incentivized Efficiency and Smarter Storage
One of the outputs of the desire to have a smart grid is end users are being exposed to a lot more rates, programs, offers, and incentives to manage their use of power quite differently than they have in the past, says Bob Zak, president and general manager of Powerit Solutions.

“These incentives and programs make business sense for the users to do this,” he says. “As a result of all of these different programs, it can get quite complicated to manage this while at the same time you’re trying to make potato chips or something.”

Powerit Solution’s energy management system helps get a handle on that through automation, Zak says.

“It’s the same thing that automation has been doing for years for other value propositions as raw materials became very expensive and to treat waste became very expensive—it needed to be automated in order to do that correctly,” he adds.

Energy, the use of energy and the desire to be efficient in the use of energy, has to be balanced appropriately for what the site is there to do in the first place, Zak says, adding that, to that end, energy management systems play an important role.

“Let’s say you’ve got some onsite generation and some of these bid-in markets where power can be differently priced at certain times of the day, and you get paid to consume less or consume more,” he says. “Balancing that with the fact that you want to be generally efficient anyway and use less power at certain times, it can get very complicated to make sure you’re not negating the savings of one initiative by approaching another one incorrectly.”

Powerit Solution’s Spara technology enables users to automatically increase energy efficiency, cut peak-rate usage, participate in demand-response programs, and respond to dynamic pricing.

Spara, which means “save” or “conserve” in Swedish—anticipates usage spikes, making precise adjustments to avoid high peak-rate charges, and also responds immediately to signals from utilities, allowing users to participate in smart grid programs such as demand response and real-time pricing.

“You’ve got to be able to capture those value propositions in a scalable and easy-to-use way,” says Zak. “There are a number of different flavors of demand-response programs out there, things like regulation market and spinning reserves, so there needs to be some sort of system the customer can go to with their strategy. I might take this set of fans or allow the temperature in this area to go so high, or I’m going to make sure I pile all of this material up in one spot, and I’m not going to process it right away because it’s cheaper for me to process it when the power is a different price.”

Building protection and comfort are other considerations, he says.

“There is a process, and this is one of the areas where power is focused on providing value. And that’s allowing them to set up how much authority they’re going to give the automation system to take action on its own.

“We call it embedded operator intelligence,” adds Zak. “So if you actually had a person who could run around at the speed of light and knew exactly what curtailments needed to be made, what would be going through their mind as to how far they could actually take it before they actually crossed
the line?”

From its work with various manufacturing facilities, Powerit Solutions knows about rules and constraints and offers customers a “fill-in-the-blank” choice to put into the automated system. Payback in the manufacturing sector can be challenging from a return on investment (ROI) standpoint, Zak says.

“It’s much different from a building where you can write it off over five years,” he says. “Most manufacturing facilities require a 24-month-or-less payback. In our project installations, we’re typically 18 months or less.”

There are “amazing opportunities” for investing in energy management systems, Zak says.

“For smart grid programs, some of those actually emerge in the form of incentives to offset the expense that the end user has to realize as they invest in this automated technology. They can get parts, or all, of the system paid for. We’ve done many projects where the final cost to the customer against a financial gain they would get was in the two-month or zero range.”

Photo: Powerit Solution Demand Response configuration screen in Spara View

Onsite power is a way for a site to better manage how much power they’re drawing from the grid, Zak says.

“It should be managed as an emergency or backup basis, and today, it can be integrated in as a tremendous enabler to monetize drawing less from the utilities,” he says. “We’re very interested in battery technology. Our expertise lies in making curtailments and asking loads to use less power when the facility is about to reach a peak demand situation.

“We could just as easily pull in some sort of storage technology or onsite generation at that same time,” he says. “The net result to the grid is the same thing. They got curtailment when they needed it and you satisfy that win-win.”

It can get complicated with generation onsite or storage, and there are several different initiatives going at the same time, adds Zak.

“Let’s say you want to get into energy efficiency. You’re going to use all of these fans, pumps, and blowers as little as possible, and at the most strategic time. Then let’s say you’ve got a demand-response program that’s an emergency program during the summer where you get called to use less power if needed. Then, you’ve got a time-of-day situation where you might be following the real-time price of electricity, so all of a sudden on a hot summer day, this kicks in. If you’re not careful, you can curtail in one area and shave your peak load, only to miss out on a tremendous earning opportunity during a demand-response event.

“Onsite generation and power systems give you that added flexibility from a program participation standpoint in addition to all of the traditional benefits that it offers,” he continues. “It gives you that added flexibility to optimize your participation in all of these events.”

Look to see more programs going forward, Zak says.

“Recent rulings say we’re going to treat customer curtailments or customers drawing less from the grid in the same way we treat a power plant. We’re going to monetize it in the same way, and that was a big step. Now that’s legitimizing demand-side curtailment and demand response as a reliable resource when it comes to the assets that a region has with its overall load.”

There will be more consolidation as well, Zak says.

“Right now, it’s confusing for end users because they’ve got a million people calling on them,” he says. “It can get really confusing to the point that as soon as someone says ‘energy’ on the phone, they want to hang up.

“You’re going to see some consolidation,” he adds. “You’ll see some programs crystallize. You’ll see end users themselves placing a lot more emphasis on this because the dollars are getting more significant. Instead of something becoming more secondary to operations, it will become more a part of operations like it has become over the years.”

Smarter Buildings
EnerNOC’s system is focused on four basic energy management strategies that large commercial and industrial operations look to employ: demand response, energy efficiency, supply management—the actual commodity management—and carbon management, says Gregg Dixon, senior vice president of marketing and sales for EnerNOC.

“Those four elements comprise what we think of as total energy management,” he says.

EnerNOC has created an Energy Management Application Platform delivered from its Network Operations Center (NOC) to supply four applications to assist businesses and organizations in saving energy and its associated costs while helping grid operators with rising demand.

“So long as a facility has a building management systems, they act as a gate to our energy management applications with the software that extracts the energy savings,” says Dixon. “We like to say building management systems aren’t efficiency systems. There’s a lot of intelligence that they don’t have that we really focus on building into a building management system.

“The way we look at a traditional facility that already has a building management system is if you tune that building management system properly to capture full energy savings, typically you’re going to see 10% to 25% total energy bill savings, and it obviously runs the gamut,” says Dixon. “There are lots of variables like your bill and the vintage of the building management system.”

EnerNOC focuses entirely on low-cost savings that have a 12-month-or-less payback.

“Most customers have a hurdle rate that has to be below two years, especially in this economy,” points out Dixon. “Anything that’s over two years is a real heartache for a lot of building managers and owners because leases often don’t go past two years for their tenants. Those buildings get turned over fairly frequently, so the folks who are investing in these systems want to see as quick a payback as possible.”

Addressing the interconnectedness between onsite power and the smart grid, Dixon points out that an energy management system that is integrated into a facility that also includes onsite generation of any type—whether it’s wind, solar, backup generation, cogeneration—is going to benefit from being connected to the energy markets that might value those resources.

“If a building management system or energy management system is an island unto itself and not talking to energy markets—a simple example of which might be receiving wholesale market price signals to curtail power or to run onsite generation at a higher level—then they’re not extracting the full value of the investment,” he says.

Dixon says energy management is in its infancy.

“Despite the fact that we have decades of consuming energy, we’re really still at the early stages of figuring out how to consume it and produce it as efficiently as possible,” he says. “We see technology continuing to be integrated into facilities across all four of these applications, so the future is one where we literally will create a world in which energy management is as integral as accounting to the operation of every organization.

“That’s very simply a nod to the fact that we believe the big trend here is the convergence of energy management and information technology,” adds Dixon. “You wouldn’t think about managing a business without fully integrated technology that provides real-time, high-quality data that supports financial decision-making. The day of the pencil and ledger are long gone to manage finances. Yet today, with energy management—if it’s done at all—we do it with a pencil and piece of paper so we see that information technology is going to get integrated deeper and deeper into facilities to automate and make easier energy management.”

Siemens recently purchased an energy management hardware and software provider called Site Controls, creating a new business segment within Siemens called Retail and Commercial Systems (RCS) and keeping “Site Controls” as the name of the product line for retailers, health clubs, and other chains.

“Site Controls was originally founded to serve as a nexus between distributed retail chains and the smart grid,” says Dan Kubala, director of marketing for Siemens’ RCS.

Through the Site Controls Platform, Siemens controls and automates key energy-consuming devices at such facilities as retail, restaurants, and banks. Those devices include HVAC, lighting, signage, and refrigeration.

“The fundamental value we deliver to retailers is energy efficiency 365 days a year, 24/7, but we also offer intelligent load management, a solution which enables customers to participate in smart grid programs such as demand response,” says Kubala.

That platform addresses a portfolio of buildings within a utility service area that could include, for instance, office complexes, hotels, and other large commercial facilities, combined with hundreds of retail buildings and restaurants.

“We might have buildings of different load profiles and usage patterns, and when the utility needs to reduce demand, due to an unforeseen grid emergency for example, they send us the signal and we are able to respond in as little as five minutes,” says Kubala. “We not only automatically reduce demand across a large portfolio of buildings, but also provide the utility near-real-time feedback on the aggregate load reduction.”

As the system is executed through automation and technology, it’s also monitoring the health and occupancy of the equipment onsite.

“If a single site is highly occupied, a hotel is having a wedding that day for instance, or the retailer is having a sale or there are mechanical problems with the air conditioning equipment, that particular site is automatically opted out of the demand response event for that day,” says Kubala. “Our guiding principal is ‘first, do no harm’.”

A set of predefined rules and parameters is established with each client.

“If you go to a retailer and you sign them up in a smart grid program or demand-response program, the first time an event is called and you raise the set points too much and customers and staff complain, that will be the last time it happens,” he says.

Thus, Siemens works strictly within a customer’s established corporate standards.

“We discuss what changes we will make to set points, lighting levels, and disablement of non-essential equipment during a load management event,” says Kubala. “Whatever customers want to do, whatever they are comfortable with, we’ll set those criteria.”

During a real event, Siemens automatically checks back with the site every five minutes to ensure there are no problems.

“If something goes wrong, we instantly revert back to normal operations and set points,” says Kubala. “That protects the minimum for the site. For some sites, there is a portfolio effect. Sites that are lightly occupied and sites where everything is working just great can do a deep dive and drop more load than average. We take the risk of performance; the building owner doesn’t have to incur a financial risk because of problems with an individual site during a particular event.

“In the past—and with other approaches—in order to participate, each individual site had to bid in a certain amount and assume any financial risk associated with failure to perform during events,” says Kubala.

“If that site didn’t make its bid, it didn’t matter what the other sites did. This system allows them to aggregate performance. This new automated and intelligent approach facilitates participation by customers who would otherwise disregard the opportunity to participate in demand response due to customer comfort and operational risk.”

The typical payback for energy management system is between 12 to 24 months, Kubala notes. The revenues generated by participating in utility sponsored load management programs raise the ROI even further, he adds.

“We’re typically driving energy savings at about 10% to 15% for a restaurant because not a lot of their load is controllable, whereas for a retailer we see between 15% and 25% on the average in kilowatt savings across the chain,” he says.

Smart Grid Integration
Siemens’ Intelligent Load Management platform also enables retailers to participate in smart grid programs in such a way that they don’t have to involve their store managers and to do so in a way that they don’t put their stores at risk, Kubala says.

“They get cash payments from the utility for making their capacity available to the grid during an event,” he says. “We manage all of the paperwork and the events on their behalf, so that allows them to benefit from smart grid programs—without adding overhead or distracting and tying up their internal resources—today.”

More jurisdictions in the utility industry are rolling out not only demand response programs, but capacity bidding programs and direct wholesale market participation options for demand response, says Kubala. Siemens is participating in a new San Diego Gas and Electricity (SDG&E) program, the Demand Response Wholesale Market Pilot.

“It’s not just driven by capacity problems,” notes Kubala. “It’s the ability to use available resources and to bid them into the market against physical generation assets. Because there are real-time metering systems and an aggregation platform, it allows a wide range of buildings to participate in a much more meaningful way in smart grid programs.”

“Smart Consumption”
Siemens calls the ability of a building to react to a diverse set of constraints and opportunities “smart consumption”, says Kubala.

“For example, buildings need to be much smarter about how they consume electricity and responding to price signals” he explains. “I might have a different set of profiles in terms of my building’s operating parameters, based on electricity at 10 cents a kilowatt-hour versus when it spikes to $1 a kilowatt-hour. Because of capacity constraints, I’m going to look at things a lot differently. We definitely see that as a trend of the future.”

There are many challenges in managing energy in a major retail operation such as Michaels, North America’s largest specialty retailer of arts and crafts.

“With more than 1,045 stores and a focus on customer service, it was important to put an automated program in place that saves our store associates time and our company energy and money,” says Robin Moore, Michaels Vice President of Store Development and Construction.

A few years ago, Michaels realized significant energy savings after installing Site Controls’ energy management system throughout its retail locations.

“The Site Controls units allow us to remotely set standard lighting schedules across our chain and air temperature set points that flag temperature deviations so we can monitor and make adjustments to stay as energy efficient as possible,” says Moore.

Photo: E2America System architecture schematic

“Rather than set the store temperature at 70 degrees for the entire summer, we can now set temperature points to the correct comfort air temperature and save electricity at the same time,” she adds.

Moore says a wealth of important data comes from the Site Controls system that helped Michaels generate significant savings when the system was originally installed five years ago.

Also, the retailer is seeing additional savings between 10% to 13% from recent upgrades.

“Site Controls’ system provides a smarter and stronger control system by giving Michaels the information we need to make intelligent decisions,” notes Moore. “It has been a powerful partnership for our company.”

Smarter HVAC                    
“The cost of energy is increasing for everyone, including the utility companies,” points out O’Neill. “Typically, HVAC systems account for a large portion—in many cases, more than 50%—of the total energy used by commercial buildings.

“HVAC units generally over-consume and under-perform due to a number of factors, including poor initial building design, lack of proper maintenance, poor control strategies, and advanced equipment age, to name a few reasons,” adds O’Neill. “More and more, businesses and utility companies are turning to energy efficiency programs to gain better control of rising energy costs.”

The E2America technology is an intelligent HVAC control system that is automated, self-refining, wireless, and retrofitted. The system is able to ensure maximum thermal comfort in all areas of a commercial building as the it not only addresses a building’s inside environment, but the environment in which the building is in.

In addition to the reduction of kilowatt-hour energy, E2America helps utilities with a demand response program by assisting in the management of kilowatt demand.

“This allows the utilities to have greater knowledge and control of the peak demand times using its smart grid,” says O’Neill. “By reducing kilowatt-hour consumption and kilowatt demand through E2America's technology, utility companies have a better understanding of how to manage the generation and transmission of electricity on their grid.”

O’Neill points out that utility companies are recognizing the value of technologies like the E2America system and many now offer substantial incentive programs to businesses that implement energy efficiency programs. E2America is a Trade Ally with companies such as Touchstone Energy Cooperatives, Progress Energy, Duke Energy, GreenCo, and ElectriCities.

E2America systems are designed for commercial buildings and are currently installed in restaurant and retail chains, including McDonalds, Bojangles, Taco Bell, and Golden Corral franchises, as well as other commercial buildings, with plans to expand into larger commercial buildings and the hotel industry.

Providing customer comfort—and employee comfort in the cooking areas—while operating HVAC units more efficiently can be a challenge for restaurants.

“Because the technology takes into account a wide range of factors instead of just target set temperature for controlling the HVAC system, the E2America system allows the HVAC units to run more effectively without causing disruption, while also providing a more comfortable climate for staff and customers,” says O’Neill.

One customer of the E2America technology is Platinum Corral, a multi-state franchise operator of Golden Corral Buffet-Grill restaurants. Platinum Corral recently signed an agreement to install E2America’s technology in all 30 of its restaurants. While Platinum Corral had previously implemented simple measures in an effort to reduce its utility bills, including scheduled and preventative maintenance on its HVAC compressors, the company was not seeing a significant savings and was typically paying around $9,000 per store every month for gas and electricity costs.

Platinum Corral initially installed the system in five of its Golden Corral restaurants and immediately saw its electricity bills decrease by as much as $700 per store each month, typical of most installations.

Because the E2America technology is retrofitted, Platinum Corral was able to install the system directly to its existing HVAC units, which included various brands ranging in age from one to 25 years. As the company installs the E2America technology in all of its locations, Platinum Corral expects to lower its electricity costs by as much as $252,000 annually. A typical E2America implementation yields ROI in 18 months or less.

Demanding Futures
Energy will be the focus of the economy and people’s lives far into the future, Davis says. There are a number of cost savings that are derived through various environmental and financial avenues. Reduced operating costs and associated paybacks include:

The ability to more closely match generation with load conditions reduces stress on grid equipment and can significantly lengthen life.

Knowing the exact location of a fault makes field dispatch more efficient since crews know where they need to go, the tools and skills required for repair, and the replacement equipment potentially needed.

Gaining knowledge of deteriorating equipment allows repair prior to failure. This eliminates the stress of a restart from a blackout, which is very costly, and lessens the potential of complaints to the PUC, which required administratively expensive replies.

• By knowing exact conditions, utilities no longer have to overbuild infrastructure to provide an error margin for the unknown.
• In the event of a grid failure, the affected region can be isolated very quickly, preventing a blackout from spreading, and preventing a local problem from affecting large regions.
• Consumers are rewarded by selling power to grid at high purchase rates and then repurchasing power at lower rates. Offsetting demand in this manner affords the consumer with no sacrifice of comfort or control of their own energy consumption.

Photo: E2America EMS systems excel at assessing variables that can impact energy usage.

“Our energy consumption will require further and further management to continue to provide consumers with secure, reliable, efficient and green energy,” says Davis. “The move to the smart grid will be evolutionary due to the complex regulatory process, and because the current infrastructure would be costly to replace quickly.”

Additionally, enterprise software systems must be configured for the “new world”, and people will be trained in new skills to manage it, he adds.

“However, the endpoint likely will be much higher levels of automation for all energy users, greater visibility into how energy is used, and what savings opportunities may be possible,” says Davis. “Overall emissions should diminish significantly, and potentially premise energy consumption could diminish as much as 30%.

“More significantly,” he continues, “lessons learned from telecom, the Internet, and other changing industries—coupled with the protocol and standards work undertaken by NIST [National Institute of Standards and Technology]—will mean a more modular energy infrastructure and one that can be upgraded in the future relatively easily and efficiently.”


Author's bio: 

Carol Brzozowski writes on the topics of technology and industry.