By integrating peak shaving and demand response, pairing onsite power with a smarter grid can spur substantial savings and help address future energy costs.
The Bradley Home and Pavilion in Meriden, CT, has been celebrating its 70th anniversary, so it’s no late arrival on the building scene. It needed to take a practical, lasting approach to its energy costs in the long-term care facility. The home provides 74 beds in residential care and 30 beds in the skilled nursing unit. In the winter, space heating and water heating come from three dual-fuel boilers (natural gas and #2 fuel oil), and, in the summer, the facility used three water heaters, with electric chillers also used, for cooling. First, there was an evaluation or economic analysis done by Yankee Gas and Aegis Energy Services Inc. One practical solution was to install a 75-kW cogeneration system from Aegis.
Battery power storage may be a solution for many communities.
The Connecticut Department of Public Utility Control (DPUC) offers grants and other incentives to encourage businesses to invest in their own generating systems. Grants for baseload generation are $450 per kilowatt, but the Bradley Home gets an additional $50 per kilowatt because it is located in the 54-town section of southwest Connecticut, where power congestion is most prevalent and reliability improvements most needed. The grant reduced installation cost by $40,000 and made the power grid in that area more “smart” and efficient. The system uses natural gas-fired cogeneration. While traditional power plants are around 30% efficient, combined heat and power systems are up to 84% efficient. Environmentally, the clean-burning natural gas process produces fewer harmful pollutants such as nitrogen oxides, sulfur dioxide, and carbon. The Bradley Home expects to save about $30,000 per year and the unit to pay for itself in about four years.
“We’re killing two birds with one stone,” comments administrator Molly Savard. “Not only do we expect to see substantial savings per year, but we’re addressing our future energy costs, too. We’re being bombarded on all sides by increasing costs, so anything we can do to keep costs under control and help us to better care for our residents is welcome news.” The Bradley Home is not a fancy new building, but its energy progress seems to indicate that a smarter grid is attainable, affordable, and there may well be systems (like that installed by Aegis) that can achieve better, everyday results than the proverbial tried-and-true most of us have accepted as unchangeable (and unreliable) for years.
Demand Response Has Several Interpretations
We see the phrase “Demand Response” almost as often as we see “Smart Grid” and know instinctively that there are different interpretations, used as often as not to support a particular product or service. Most of the interpretations contain a wealth of truth, because any Demand Response may include many excellent features.
“There are some misconceptions about demand response,” advises Bob Zak, General Manager and President of Powerit Solutions, North America. “Many businesses think they can’t participate because there’s no way they can reduce power by the amount required and maintain their production capacity. Our customers, however, find they can do that. Just to be clear about what we are talking about, demand response programs are offered by utilities or power system operators. They let businesses earn money by curtailing their electricity use on demand.
There are two basic types of demand response programs, with some variations in program details. Standby/reliability is where the user commits to specific load reductions when the grid is under stress. These are infrequent events and often last two to four hours. In reserves or market-based programs, users agree to cut usage based on a set price. They can decide daily, or on shorter notice, whether they want to participate. Programs are quickly emerging where events are more frequent, have very short notice, and usually last one hour or even just minutes. The variety of programs is growing (providing more choices for end users), and the payouts can be meaningful, so they should be reviewed regularly as a viable option. Powerit sees demand response as an opportunity for users to reduce their overall energy costs while contributing to state and national efforts to relieve stress on the grid (and avoid building new power plants).
The Spara technology (from Powerit Solutions) hooks up to a utility’s or aggregator’s automation system. Spara helps customers outsmart rising energy costs by predicting usage spikes and managing power use to avoid high peak-rate charges (a form of peak shaving, if you want to see it in that light).
“We are helping to drive the adoption of OpenADR, the emerging standard for communication between supplier and user systems,” continues Zak. “We were one of the first providers to offer a smart DRAS [demand response automation server] client in a commercial product. Another misconception out there—the opposite of fearing demand response—is that you’ll never have to actually do anything. Some businesses signed up for interruptible rate programs 10 years ago and have never been called on to reduce power, so they think they don’t have to be prepared. We think the tide is turning. As pressure grows on the grid, utilities are going to be calling on those old agreements, much like their other operating assets. That’s already happened in Texas, and it was a very expensive surprise for many long-time participants.”
As to participation by those with onsite power programs, Zak reminds us that, as Powerit Solutions’ energy management system often becomes the user’s primary platform for managing their power use, onsite generation resources must be considered in decisions made about how various sources of power are used at any site.
“When we say Smart Grid today, we really mean distributed intelligence,” says Ross Malme, Partner in Skipping Stone, energy market consultants who collaborate with their clients on ideas, strategies, and tactics, and then provide an array of complementary services required to turn those ideas into successes. “Our grid has been intelligent for quite some time. Sophisticated models, well vetted contingency plans, double redundancies, and a population of talented engineers all contribute to this intelligence and to a centralized command and control structure. By creating a sensory network spread across our transmission, distribution, and local consumption systems, we open the eyes and ears of our control rooms to information and inputs once impossible.”
According to Malme of Skipping Stone, Phil Davis of Schneider Electric, and other experts in the field of energy, the evolution of the grid to smartness has similarities to desktop computing. The maturation of the Internet has allowed myriad devices to communicate with each other without regard to origin or operating system, or a central planning mechanism. Buildings control companies (such as Schneider Electric and its competitors) have systems with unprecedented energy management capabilities. One goal for the leaders in demand response programs is to establish some standards that will guarantee interoperability. The potential, without this interoperability, can strand investments and paralyze efficient decision making.
|Photo: Powerit Solutions
As technologies are the solution, so control boxes will play an important role in smartening the grid.
Components for Successful Smartening
Is there a role for onsite power and techniques, like peak shaving, to play in smartening the grid? “In an ideal world, utilities as grid operators would send out exactly the amount of power needed by the loads on each circuit, and those loads would not vary,” observes Davis, Senior Manager of Demand Response Solutions for Schneider Electric. “That’s the ideal, but it’s also not always the norm, given the varying circumstances for needing energy supply. The best alternative is robust communication between load-side and supply-side systems. For example, the control rooms would like to know what resources are available, how quickly they can react, for how long, and in what amounts. Demand-side resources also can offer targeted responses confined to limited areas, and can help the utility extend the life of capital assets like transformers. The key is two-way communications.
“Utilities should be an integral part of the planning and operation of demand-side resources,” continues Davis. “Financially, many utilities offer incentives, specialized rates, or performance payments that can have a material impact on project economics. Companies like Summit Energy [now acquired by Schneider] that are experienced in this area can often negotiate an attractive package of benefits in this regard. Operationally, the more quickly a resource can respond to utility needs, the more valuable it is. The gold standard is total automation from utility control room to demand-side resource.
However, on the demand side, facility managers, for example, do not always agree with this approach. There is concern that a utility signal might conflict with an internal operational need or that it could disrupt carefully commissioned systems. There are ways to address these concerns, but this requires a cooperative atmosphere between utility and customer and often the expertise of a third partner experienced in these system interoperations.”
It’s natural enough that manufacturers and service providers should see their own offerings as most important in this improvement of the grid, but there are many aspects to be considered. Some smartening comes from the very products used; some comes from concepts or attitudes. Some would put the whole burden for efficiency on the customer; others would place the onus elsewhere.
What about the concept of storing energy so that it is available when there’s an outage?
“Energy storage is the real key to unlocking the full potential of the smart grid, by improving reliability, efficiencies, and costs,” observes Bill Joss, Director of Utility Sales for International Battery. “Integrating and balancing intermittent solar or wind generation for load leveling, peak shaving, backup power, frequency regulation, and demand response applications require that energy be stored and available during the greatest times of need if it is to be truly beneficial to utilities and their customers.”
“Due to their near-100% efficiency, scalability, and versatility, large-format Lithium-ion rechargeable batteries—like those made by International Battery—are proving to be an optimal solution for high-energy-density applications, by providing the reliability and ramp-up needed for interconnection to the grid,” adds Joss.
Such distributed energy storage (DES) solutions are scalable from 200 kWh, up to megawatt-hours, and can help manage the overall load from the utility. If there were a network outage, the stored energy could keep homeowners blissfully unaware of a problem for a period of time. The batteries could extend the life of a local transformer by leveling its load so that it doesn’t overheat. Adding energy storage in certain tight feeder areas helps prevent overloading the circuits and provides the utility with capital deferral, so it can see how and where the load is going to grow before upgrading the infrastructure. Utilities can look at energy storage as protection strategies to manage power flowing to and from multiple directions.
“Using distributed energy storage to level out the demand and consumption peaks and valleys is a substantial advancement,” asserts Joss. “Going forward, it’s not a question of if there will be enough energy generated, but rather how our aging grid will deliver it to the end points. Finding a way to make our delivery system more efficient and more robust going forward is a must.”
For El Paso Electric, serving 10,000 square miles in the Rio Grande Valley in West Texas and South Central New Mexico, AES Energy Storage (a division of globally successful AES Corporation) is proposing a 100-MW advanced battery based energy storage project to meet peak power requirements without the need to construct a new, low utilization power plant. (The utility has announced it will expand its electricity supply by hundreds of megawatts, with the goal of increasing the reliability and quality of the power it provides to its more than 370,000 customers at the lowest reasonable cost and in an environmentally acceptable manner.)
The AES project, if constructed, would be the largest of its kind in the world and will provide unparalleled operational flexibility to the utility. It would be able to ramp up or down quickly as needed to maintain a safe a reliable power grid, without relying on environmental resources. The project will enable El Paso Electric more efficient use of their most cost-effective and cleanest power resources, supporting both high- and low-load conditions, while also supporting integration of new renewable generation. A similar system from AES in Chile was recognized recently by the grid operator as one of the best performing reserve units in the region. Performing continuously for 18 months, the project has brought significant improvements to the efficiency and reliability of Northern Chile’s power grid.
In news related to storage as a sensible way to smarten the grid, Saft, leading global designer and manufacturer of high-tech industrial batteries, has inaugurated what it calls the world’s most advanced automated lithium-ion battery factory, in Jacksonville, FL. This high-volume production facility is dedicated to building advanced lithium-ion cells and batteries for energy storage for renewable energy, smart grid support, broadband backup power, transportation, and defense. Saft’s 16th facility worldwide is a unique example of technical innovation, including the production of 1 MW of solar power from the largest rooftop photovoltaic system in Florida. The fact that 300 new jobs will come with the new facility is surely a sign of smartening not only the grid, but also the whole economy.
Does the Grid Include Distributed Energy?
It would be wrong to believe that only traditional electric transmission and distribution systems are part of the smarter grid we are all trying to develop. “Demand response and distributed energy play an important role in advancing the Federal agenda on smart grid,” confirms Eric Lightner, Director, Federal Smart Grid Task Force, US Department of Energy (DOE). Lightner is also manager of the Smart Grid R&D Program within the DOE Office of Electricity Delivery and Energy Reliability. “Both demand response and distributed energy are embedded in the characteristics of the smart grid and are more prominently featured in two of them: enabling active participation by consumers in demand response, and accommodating all generation and storage options.”
In pursuit of distributed energy (onsite power) for peak shaving, for example, the DOE has invested $55 million, with a total project investment of more than $100 million when you include private sector cost share, in nine demonstration projects in eight states on integration of renewable and distributed systems to achieve a maximum of 15% peak load reduction on distribution feeder or substation. As of now all the projects are progressing beyond lab-scale in field-scale integration phase. (See events.energetics.com/smartgridpeerreview2010/agenda.html for some interesting reports on these projects.)
“Currently, the DOE is planning for new R&D projects on microgrid development, which will involve integrating distributed energy with local loads to provide high reliability of electricity services in a cost-effective manner,” adds Lightner.
Many customers think the Smart Grid is something new. That’s probably because the phrase hasn’t had much hype until recently. A smarter grid has been working and providing benefits for users in the industrial and commercial sectors for some years. Look back to past issues of Distributed Energy to see how concerned and committed energy users have been tackling (and beating) the problem.
“Honeywell’s Novar business helps large retailers achieve 20% to 40% improvement in energy efficiency and maintenance costs, and a 10% to 20% reduction in peak use,” advises Tariq Samad, corporate fellow at Honeywell Automation and Control Solutions and a member of the IEEE Smart Grid Steering Committee. “Providing energy management and controls systems [EMCS], remote energy management services, and relying on the Internet and standard protocols for communications, Novar manages customer sites in the United States representing about six gigawatts of load.”
In an article in which Samad suggests that we could all benefit from the lessons in the commercial and industrial sectors, there are three suggestions mentioned. Firstly, consumers should own and control their detailed consumption data. Yes, utilities and energy companies need access to consumption data for customer billing and to assure grid reliability, but, beyond that, consumption information must be under the customers’ control. Any sharing must be with their explicit authorization. This is standard practice in the commercial and industrial sectors; it should now be the same for all consumers. All of us are homeowners or tenants, and there is no reason why all information about our energy habits and uses should not be available to us.
A second lesson from those who have already smartened their grid is that the user or consumer should have direct access to their consumption data.
“Real-time or near-real-time access to consumption data is critical for managing electricity use and expenditures,” asserts Samad. “Even before the advent of smart meters, commercial and industrial companies were investing in advanced metering technology that could monitor and communicate this information to their energy management systems.”
For home consumers, direct communication of data from smart meters to inside the home may be the only feasible approach for providing acceptably short delays, such as a few seconds. Such direct communication is also more cyber secure (an increasingly significant area of concern) than convoluted routes via the utility or third-party networks.
Lesson three is that demand management information should be communicated over existing infrastructure wherever possible.
“Commercial and industrial customers rely on the Internet and other existing media to obtain price signals and other messages from utilities and service providers,” notes Samad. “So why should we seriously entertain proposals for large-scale deployment in the residential sector of alternative advanced communications systems? To be sure, a small minority of consumers does not have access to the Internet, cellular, or other existing communication infrastructure and will need to rely on meter-based communications.”
Changes That Can Be Acceptable to Everybody
Nobody, as far as I can tell, is suggesting that electric utilities as we know them should go out of business, nor that the traditional transmission and distribution of power should be eliminated. The smartening of the grid implies that all sources of power will work together, that cooperation rather than competition will bring the best to consumers and providers. There is a suggestion that “decoupling” may help. Decoupling separates components to make them visible to customers. For example, in many instances, utility rates are bundled with the rates that cover the costs of energy, transmission, and distribution tied in with various administrative costs. If utilities can recover their costs plus a reasonable margin independently of the amount of energy consumed then they should be neutral about energy efficiency programs.
If regulators could also allow a return on service expenses as well as hard assets, utilities could develop more enthusiasm for the programs proposed for energy efficiency. Such collaboration could bring wonderful results because energy is a shared resource. There are no winners or losers. We all win or we all lose, so collaboration across public and private stakeholders seems vital to addressing today’s energy dilemma, explains Davis at Schneider Electric.
“Today, utilities may lack visibility to grid conditions downstream of substations,” says Davis. “There’s no feedback mechanism. To compensate, they often send out more power than is necessary. Real-time communication between consumer and utility systems could lessen this disparity and have significant savings potential.
“There are many other technical examples, but a key role is non-technical,” he continues. “The nature of utility infrastructure requires a long-range planning horizon unlike anything seen in industry. If there are key demographic, legislative or regulatory changes in the midst of the, often, 15-year execution period, utilities risk having ‘stranded’ assets for which capital has been spent but which can’t generate revenue. Cooperation between customer and utility planners can help mitigate this risk by making better use of planned distributed resources.”
Author's Bio: Paul Hull is a frequent contributor to Forester Media publications.