Onsite power has become a critical need. By incorporating an energy management system, it’s possible to create a dependable supply of energy and still lower energy bills and reduce the energy footprint.
Energy is one of our most important, costly resources and needs to be managed, believes Bob Zak, general manager and president of Powerit Solutions, Seattle, WA. “We are facing increasing rate schedules and costs, as well as an increasingly unstable energy market,” he says. “There’s a lot of risk; it’s a volatile market.”
With the instability in the market and other costs going up, he sees a renewed emphasis on managing beyond just paying the bill. “We have to learn how to manage energy,” he says.
One method Zak considers effective for managing energy is employing demand control, incorporating intelligent rate management. It is the process of understanding where, when, and why energy demand spikes occur and taking measures to reduce or shift them with minimal impact on operations. “You have to manage for efficiency and demand, with greater emphasis on demand,” says Zak.
Because 35% of the bill is based on demand, he indicates, reducing usage can lower bills. The same work can still be done—just with less electricity.
The strategy revolves around intelligently managing loads with the help of technology to lower the peaks of synchronization, using a generator to offset peaks if necessary. “Coincidental loading takes the highest 15-minute period of the month to calculate your charge,” he explains. “If you lower your peak, you lower your bill.”
Demand response participants reduce energy usage or switch over to backup generation during times of stress on the electric grid, such as during temperature extremes.
The key is incorporating a system dedicated to managing energy usage. “You need automation,” insists Zak. Powerit’s Spara EMS software works with a company’s existing automation to help manage consumption to regulate demand charges and enable demand response (DR) participation.
Using a technique called predictive demand control, the energy management system monitors a facility’s use of power, uses high-level calculations to predict the timing and severity of potential demand peaks, and implements predefined load reduction as required.
With intelligent DR, end users retain the ability to tightly control the impact of load curtailments of production or building comfort. In the past, demand response was prone to error, as it was handled by manual operators turning loads on and off. With technology, the user can accurately dial in how much demand response participation they want, knowing what action the system will take and, as a result, the impact of those curtailments. Ultimately, this reduces the guesswork associated with load shedding and enables increased and more reliable levels of participation.
“How you use electricity affects costs,” reiterates Zak. He believes we must modify behavior for savings and better use of energy. Unfortunately, he adds, the only way to change user behavior is by making it more painful (i.e., expensive) through peak demand charges.
Some areas are already on top of the situation. “California is acutely aware of how they’re billed for power,” he says. “Texas and the Northeast are educated on power.”
Still, despite the growing awareness and less regional differentiation than five years ago, there’s room for improvement. “Just as most companies have a dedicated HR person, now they need energy managers,” says Zak.
Until dedicated energy managers become common practice, companies turn to experts like Powerit, for help lowering their energy bill and footprint. “They gravitate to us because we supply easy-to-understand solutions,” he adds.
One of the companies that turned to Powerit for energy guidance is Donsco Inc. The Mt. Joy, PA-based plant produces metal castings for industrial applications such as off-road turbine engines. Scrap metal is melted to liquid form and poured to make castings in ABP coreless induction furnaces that hold 3 tons of liquid metal and operate at 2.5 MW. “It takes a lot of energy,” notes Jesse Fluck, plant manager.
Industrial end users account for one-third of the electricity consumed in the US, claims Zak. “That’s a significant amount of electricity.”
Donsco management began looking for ways to reduce the company’s electric bills. “The utility companies have demand charges,” says Fluck. “The electric company adjusts rates for peak times.”
However, money wasn’t the only consideration. As Fluck points out, his industry is the biggest recycler and his company is always looking at ways to reduce our carbon footprint and save the environment.” When Powerit contacted them, they were more than interested.
Powerit software monitors the furnaces, shedding power to stay below predetermined limits. If all Donsco’s furnaces were powered up simultaneously, the power would top out at 5.6 MW. Instead, Fluck explains that they use a batching process, so power is not continuous. “We played with the levels at first,” he recalls.
In the end, they set it at 4.5 MW, with a maximum of 4,800 kW at any one time, and designated which furnaces have priority, so there will be no decrease in production. “If we set the maximum too low, it would affect production, because we would shed too much.” At most, he says, they shed for only 4–5 minutes during a 15-minute period.
Since installing the software, Donsco’s cost per kilowatt-hour has gone down. However, Fluck says the savings from reducing demand hasn’t paid off yet. “We haven’t seen the savings from the software for what it was intended, but there are other benefits.” They’re using the software for other things, such as DR.
EnerNOC's customers can choose to enact their DR strategies manually, or have it atuomatically enact their strategies remotely from its Network Operations Center.
Donsco subscribes to two programs: synchronized reserves, which places them on stand-by according to a weekly schedule of specific hours they’re able to shed megawatts and automatically implements the power down; and emergency response, which typically shuts them down for six hours with as little as three- to four-hour notice.
The cash saved is greater than the payment for the system, Fluck says. In addition, he lists other reasons to get the system. “Deregulation is coming in 2010, and we’re not sure where costs will go.” He knows where he wants Donsco to go; however, he hopes to be dynamic with pricing by using real-time pricing in the future.
Fluck is using the system as a training tool for melt personnel. “Each furnace is connected to the software so we can see the power used,” he says. “It can be dangerous if there’s furnace failure or procedures aren’t followed.”
He can easily monitor maintenance records and even watch from home as the guys charge the furnaces. Training benefits something that’s not so obvious: the savings on coils. “They cost $25,000,” he notes. “You don’t want to have to replace them due to not following procedures.”
By incorporating a DR plan, customers change their electric energy usage in response to rate schedules or incentives offered by utility companies. “Utilities pay customers to drop load during peak times so they can provide cleaner, more reliable power,” elaborates Zak.
Power comes from different sources throughout the day. During periods of peak usage, power could come from “dirty” sources. Reducing usage during peaks through a DR strategy can lead to a more stable energy supply.
Although it’s been around for years, DR is emerging as the leading method of dealing with increased stress on energy supplies during periods of high usage, such as peak summer hours. Instead of building additional power generation plants, the utility companies hope to lower systemwide demand during peak times through controlled loads. It has proven less expensive for utility companies to offer incentives for industrial and commercial users able to reduce their usage during these peaks than to produce additional electricity.
Benefits of participating in DR include:
- Lower energy costs
- Reduced price volatility
- Improved security of energy supplies
- Relief of network congestion
- Reduced risk of failures/blackouts
- Cleaner environment
- Conservation of natural resources
An added benefit is payment for being available as a resource, notes Laurie Wiegand-Jackson, president of North America Power Partners LLC (NAPP). Clients may or may not get called on, depending on the type of program they select. “There are creative ways to structure programs to fit the client,” she says.
NAPP’s on-call peak summer/winter program varies by region and is strongly weather dependent. Due to the economy, Wiegand-Jackson reports that overall demand is lower because business is down.
The on-call short-notice program responds to the short-term emergency needs of the grid. Wiegand-Jackson says calls are infrequent and typically last 30 minutes or less. “They’re related to mechanical failure or other problems on the grid, not weather.”
The third program NAPP offers is the self-schedule program. Dependent on weather, grid demand and available supply, it pays a specified price hour-by-hour for cutting back in peak times. There is no standby payment.
Because acting as a DR resource requires reducing use of electricity at key times—whether due to pricing or the needs of the grid—Wiegand-Jackson says NAPP develops customers with flexibility in their use of energy.
“They have to understand the requirements and determine how to cut back usage,” she says, adding that most times, no additional systems are needed—just management. NAPP helps its customers manage resources and maximize revenue streams. “We have the same goal as the customer because we share the revenue stream.”
Most of NAPP’s customers are mid-size to large commercial and industrial companies, many in vertical markets such as manufacturing and recycling, data centers, schools and higher education, real estate, water, and wastewater treatment plants. “Greenhouse gas emission reduction is very important for some customers, especially foreign-based customers accustomed to the Kyoto Protocol and publicly traded companies, where there’s a movement to disclose carbon footprint,” states Wiegand-Jackson. “Shareholders want it reduced in preparation for legislation on the carbon tax. Carbon is a liability. It’s either tax or reduction.”
The Kyoto Protocol is an international agreement related to the United Nations Framework Convention on Climate Change. It sets binding targets for 37 industrialized nations and the European community for reducing greenhouse gas (GHG) emissions by an average of 5% against 1990 levels during a five-year period from 2008–2012. Adopted in Kyoto, Japan, in 1997 and enacted in 2005, the Protocol has been ratified by 184 parties. It places a heavier burden on developed nations under the principles of “common but differentiated responsibilities,” based on a history of industrial activity that is held responsible for high levels of GHG emissions.
|Photo: Powerit Solutions
Until dedicated energy managers become common practice, companies turn to experts like Powerit for help lowering their energy bill and footprint.
Even private companies want to be green, Wiegand-Jackson says. In addition to greenhouse gas reduction, there are financial incentives for implementing a DR program. “The financial gains give them something to show right away, but they also like the feeling that they’re doing their part with grid emergencies,” she says.
The grid is aging. “It can’t keep pace,” announces Wiegand-Jackson. In fact, the driving force in forming NAPP three years ago was the increased demand on the grid. “Demand response is the best way [to deal with it], and we’re one of the earliest providers.” It’s the “other benefit [of DR] we don’t talk about much: improved reliability of the grid.”
But she admits that not everyone is ready for demand response. “It’s great to have customers pilot different types of technology and be on the cutting edge, but it’s a fluid, dynamic market. Customers need to understand and be flexible.” NAPP has to choose and educate the right type of customer for a successful outcome.
Learning to Conserve
Those in education appreciate the need for ongoing education, so when Stephen Durfee, energy manager at Olin College of Engineering, in Needham, MA, did an audit and assessment of all existing systems—HVAC, lighting, plant operations, central system, etc.—in 2006, he reached out to NAPP.
Citing uncontrolled costs and consumption, he says college administrators realized the need for aggressive management. Together with NAPP, they “found a lot of room for improvement,” applied best practices, and instituted a preventive maintenance program. The chiller plant was upgraded, and opportunities were discovered, involving variable frequency rates and lighting controls with occupancy sensors. “We needed to recommission things per what was needed versus how it was designed,” he says. “We needed to schedule better.”
The 400,000-square-foot college was built in 2002, but, interjects Durfee, “just because it’s new doesn’t mean it’s energy efficient.”
Upgrades helped reduce Olin College’s natural gas use by almost half. In the three years since working with NAPP, they have achieved a 40% reduction in energy consumption and lowered their emissions to 4,000 tons of carbon.
First, says Durfee, the NAPP energy team had to figure out how the new school, with nearly 300 students and largely outsourced staff, operated. When their boiler plant was found to be running inefficiently, it was retrofitted with a combustion efficiency control system to reduce energy use. A building automation system for HVAC was installed to limit thermostat settings in the dorms.
It’s been a matter of locating opportunities, funding, managing protocols, and reporting results, Durfee reflects. Olin College is not enrolled in a DR program, but when demand is high, the call goes out to shed load, and “we run our generator a couple hours.” Notice is received as much as one day ahead of the event, typically in response to hot summer hours, and administrators issue notice throughout campus.
It’s been “seamless,” he reports, with no problems. “It’s part of the culture here. The kids are into sustainability; they look at emissions.” It’s so much a part of the culture that Olin College wrote an energy policy and incorporated it into the curriculum.
Properly monitored, it also helps the budget. Durfee reports $75,000 in rebates from the local utility for upgrades, such as the chiller, daylight harvesting, and a kitchen ventilation system (an $11,000 rebate for $40,000 installation costs and less than a 14-month return on investment). “It’s been an opportunity to reduce our carbon footprint and generate a revenue stream,” he says.
There are more opportunities in the future, Durfee believes. “There’s a lot left to do here: upgrade plant equipment, lighting.… We’ve made such a large reduction in our energy use; I’m surprised more people aren’t doing it,” he ponders. “It helps the environment.”
Restructuring Energy Usage
Although energy costs constitute one of the biggest expenses for many companies, fewer than 10% of facilities in the US are currently managing their energy usage through technology, estimates Gregg Dixon, senior vice president of marketing for EnerNOC, based in Boston, MA. But that number is increasing at a fast rate. Dixon claims it’s doubled in size every year for the last five years, due in part to the economy pushing customers into energy management for the cost savings, efficiency, and “green” benefits.
Technology is changing the way businesses, institutions, and utilities think about energy, driving them to better, more efficient usage. EnerNOC conducts an “old-fashioned energy audit” to understand a company’s operating characteristics and identify energy saving opportunities. “Most are no-cost or low-cost,” says Dixon. Often, a simple reprogramming of the management system is all it takes to get started.
“Building management systems manage mechanical systems, but usually don’t even control lighting and aren’t necessarily ‘intelligent,’” theorizes Dixon. “They’re not connected to energy market needs.”
He explains that many systems aren’t optimized or looked at on a consistent basis and don’t capture data over time, because the technology is not set up properly and isn’t monitored. For example, HVAC systems are usually programmed to an automated on/off schedule and set points. Then, they’re “left alone until there’s a complaint,” he says. “To avoid issues, they over-heat or over-cool—which is inefficient.”
EnerNOC finds schedules that have been over-ridden, broken components, inefficient set points, etc.—all of which could save money. “We continuously monitor and pull in 5,000 points of data, looking for energy efficiency opportunities.”
It doesn’t end there. Companies can generate cash through DR programs by reducing their electricity usage during peak demand times and can manage their energy consumption (and reduce operating costs) through energy efficiency. “We provide the technology overlay to building systems,” states Dixon.
The second component involves connecting the building management system to react to market needs. “Buildings consume energy without regard to demand,” he says. “We make the system intelligent, and we connect with energy market needs that value flexibility of energy consumption.” EnerNOC can program the ability to reduce demand and can trigger reduction based on price signals.
Companies like EnerNOC provide customers with energy procurement services to get the best rates. Bidding into the energy market to obtain favorable energy contracts adds more than financial benefits. In addition to lowering costs and even making money, through the use of DR, companies can help protect their communities from blackouts and brownouts, stabilize electricity prices, and help the environment by reducing the need to build more power plants.
EnerNOC shares revenue from DR programs with its clients. “It’s instantaneous and infinite payback,” summarizes Dixon. The payback can be substantial, even for minimal changes. Durgin and Crowell, in New London, NH, is a major forest resource company that produces high quality white pine lumber and byproducts. The company enrolled in EnerNOC’s DR program in 2007, earning money by making energy reductions during electric grid emergencies.
For the on-call reduction of 2 MW, Durgin and Crowell has earned $40,000 a year. “It sounded too good to be true,” recalls Malcolm Milne, compliance coordinator. “There weren’t any upfront costs, so we wouldn’t have to put up any money out of our pocket. All we had to do was comply.”
“We found that we were already pretty efficient, both in terms of equipment and operational procedures,” says Peter Crowell, vice president and general manager. “That’s why demand response really appealed to us—it was a new way to make money without making a lot of changes.”
Executives shut down the sawmill and kilns during DR events, making up production the next day. They receive 30-minute notification for emergencies that can last up to eight hours. They also participate in the day-ahead program, where they are on standby for shorter periods in exchange for additional compensation. Noticing that DR events typically occur on the hottest days, which are also the hardest days to work, they usually opt to shut down and send workers home.
Operating the sawmill, planer mill, and dry kilns at peak production requires more than 2 MW of electricity per hour. Steam heat, provided by an onsite, wood-fired boiler (supplemented in winter with two smaller oil- and/or propane-fired boilers) is also necessary to dry lumber.
Another EnerNOC customer earns even more: $100,000 annually since enrolling in 2007. Eastern Municipal Water District (EMWD) is one of the largest water providers in southern California, providing water and water treatment for more than 630,000 customers. It takes a lot of electricity to do that: EMWD’s bill totals more than $10 million a year.
Water plants are among the biggest consumers of electricity. Dan Howell, director of purchasing and contracts, cites recent statistics that attribute 10% to 18% of peak demand in California to water pumping and other water-related electrical use. Under EnerNOC’s Clean Green California demand response program, EMWD committed to reducing approximately 1.5 MW of energy usage by shutting down major electricity-using equipment at two of its main water treatment plants.
Because water has the ability to be stored, EMWD can usually accommodate short-term outages without a reduction in service. “We can store water in tanks,” explains Howell. “We have water coming in via our pipeline, and we have redundant sources, such as wells. So we have the flexibility to stop production at some of our facilities for a limited amount of time, with minimal effect on our operation.”
The flexibility is twofold, because EMWD can participate at varying levels by choosing to run its equipment at lower levels or shutting them down completely, and has the option of manually restarting if necessary. “This flexibility was really attractive to us,” says Howell.
Also appealing is the fact that by participating in events, EMWD helps add stability to the electrical grid during peak periods, providing much-needed relief for its electricity provider, Southern California Edison.
The Cost of Control
Zak anticipates greater communication between utilities as they synchronize with each other to coordinate power usage. “There will be greater emphasis on how power is used, more control of energy,” he says. That will require enhanced communication with customers and education about how power is used and controlled, which he believes will lead to motivation to manage energy. “There will be a lot of opportunities and motivation.”
There will also be some governmental “motivation.” Dixon says most states need renewable energy forms by 2025 and envisions several setting long-term goals of reducing up to 25%. Regulations are coming, confirms Jay Zoellner, president and CEO EPS Corporation, Costa Mesa, CA, and they will drive up costs. “There will be a carbon penalty or a way to trade to offset others—but you’ll have to be able to certify results,” he says.
EPS provides certifiable measurements, monitoring on a real-time basis. While most systems stop there, he says, they analyze and make proposals for energy and emissions savings. They will also implement results for cost certainty. Sensors take data across one plant or entire company for comparisons within the industry or with industrial standards, driving improvement as they monitor energy consumption by illustrating what’s efficient and why.
“It’s important to understand savings, the cost to get it, ROI certainty, and follow-up in real time,” says Zoellner. “It always comes down to energy costs.”
Saving starts with understanding how energy is used, and how carbon is part of energy efficiency. Zoellner discusses the link between energy consumption and carbon emissions, explaining that energy intelligence can reduce carbon emissions without adversely affecting production. “Their ability to produce doesn’t have to be impacted,” he says. “They can remain efficient without the loss of productivity, thanks to technology.”
For many businesses, reducing demand is a smart financial decision. Zak estimates Powerit can provide an 18-month payback. “It’s a closed-loop situation: Payback is very real. The automation demonstrates savings by slowing down consumption and usage. It’s extremely measurable—and that’s very important to end users.”
Zak predicts innovative options for products and solutions that use less power and manage power, as well as choices of where to buy power. “There will be more companies that will be providing hard solutions, more independent consultants in areas with complicated rate schedules, like Texas,” he says. “There are a lot of solutions on the way for end users. It’s going to have a big impact. This industry is growing rapidly, and a big part of the process is education: how to achieve curtailment, the risk of rate schedules, billing.…”
In addition to watching the bottom line, EPS customers, mostly utility, industrial, and manufacturing, want better sustainability ahead of the government requirement, Zak believes. “They’re used to doing business under the Kyoto protocol,” he says. “They understand producing lower carbon and can label and sell that and be competitive as an organic, low-carbon company. Even in this economy, companies want to be sustainable. Some do it to be competitive. It drives more value into the product, and they get more revenue.”
A valuable product can be traded for revenue. Dixon sees the industry headed toward renewable energy certificates, adding that some states are already there, including savings as a Renewable Energy Credit that can be traded for cash. It works because, he says, “Saving 1,000 kilowatts of energy is the same as producing 1,000 kilowatts of energy. But you have to be able to package [energy] into measurable and verifiable units to trade.”
Wiegand-Jackson foresees greater technological investment in the Smart Grid: a detailed advanced metering system combined with existing systems for control, a one-button DR solution, and more automation, including self-scheduling programs and remote control or direct control at the customer’s discretion. “Price-response is the next evolution of the Smart Grid,” she says. “The technology automates reduction when the prices are high.”
Automation is a bridge to efficiency. Because most customers are overwhelmed by data, it can be a barrier. Zoellner says that without guidance, companies don’t act on the information technology provides, because they don’t know what to do. EPS provides end-to-end solutions by deciphering data and offering direction. “We fill the role between the Smart Grid future and now,” he says. “We provide connectivity; we are the future.”
The future will also involve alternative fuels, but Wiegand-Jackson says the industry hasn’t integrated renewable resources at this stage. “When DR is big enough to not be affected by a negative impact on business, renewable energy can occasionally fill in the gaps,” she says. “The answer is storage.”
However, large-scale wind and solar development takes time. “It could take 10 years to develop large-scale renewable resources, facilities, and storage,” she adds. “We can’t predict how it will play out, but there is opportunity to develop alternative energy. In the meantime, DR plays the role of moving out resources for the grid to reduce load.”
By incorporating demand response, Zoellner believes there’s tremendous opportunity for sustainability, with energy efficiency filling the gap until alternative energy is practical. “First, we have to replace inefficiencies, then shift to alternative energy,” he says.
He considers cogeneration the most energy efficient. “Seventy percent to 80%, if you capture waste heat, it’s the big answer. Cogen provides the most effective, financially compelling results, carbon reduction, and energy efficiency. Distributed energy and cogen will play a huge role in the future. We’re doing the right thing, using all resources efficiently. The common denominator is that cost efficiency equals energy efficiency.”
Writer Lori Lovely focuses on topics related to transportation and technology.