At first glance, utilities and commercial electricity consumers do not have a lot in common. In fact, they appear to be on the opposite end of the spectrum. One supplies electricity, while the other demands it. One generally pays, while the other gets paid. And one is often irritated with the other.
However, in reality these two groups have quite a lot in common. Neither has very much visibility into what is happening at the distribution level. Both have aging infrastructure problems and are averse to expensive capital upgrades. Both require a greater level of data analysis and intelligence for decision support and more efficient operations. Most importantly, both are concerned with the costs of increasing peak demand.
Electricity is growing as the primary energy source by commercial buildings. According to the Buildings Energy Data Book published by the National Energy Technology Laboratory (NETL), electricity is around 80 percent of the commercial sector’s overall energy use, and it is growing 1.1-1.5 percent per year. Businesses are seeking viable solutions to consume less energy and to consume energy smarter, particularly in ways that will not compromise operations. Many consume electricity in spikes as high-powered electric devices such as HVAC, foodservice equipment and electric vehicle chargers cycle on and off. It is these exact usage spikes that cost retailers dearly. Commercial accounts pay for the energy they use and for something called demand. The customer is billed for the highest average 15 minute usage during a billing period. In other words, the demand charge will be a large part of the bill if the customer uses a lot of power over a short period of time, and much lower if power is used at a more constant rate. Demand charges for commercial ratepayers can range from 20 percent to 70 percent of the monthly energy bill.
At the same time, utilities must find ways to provide and maintain the capacity to meet peak demand. They are burdened with procuring expensive peak power, provide reliable service and avoid grid overloads and hot spots. A typical utility averages 34 percent distribution asset utilization throughout the year and only uses more than 95 percent of capacity on a handful of days — typically during the summer. This is expensive and unproductive. For example, from 2011 to 2013, Consolidated Edison of New York will spend over $6 billion in construction expenditures to keep up with rising demands.
With so many common interests, what is the best solution for mitigating rising energy costs and peak demand? The answer lies with software and embedding the grid with the intelligence to optimize current grid assets.
Learn, Then Manage
Understanding the behaviors of significant loads leads to better understanding of what happens when and why. For commercial buildings, electrical devices may cause demand spikes, which can dramatically affect the monthly bill. For a utility, loads vary widely depending upon the makeup of a neighborhood or the time of day. Once load patterns are understood, operational targets can be set and loads can be monitored and controlled to keep costs in check. Visualization into grid patterns and problem areas help improve asset utilization, and the utility can make adjustments before problems arise.
Much like people, grid assets work better when they talk to each other. Whether it is a microgrid with solar PV, electric vehicle charging and energy storage or individual feeders and local transformers, coordination is paramount to efficient asset utilization and minimizing costs. Through a tailored rules engine, a commercial building can place a cap on its consumption, turning down specific loads and lower peak demand.
For the utility, the rules engine can use the live intelligence to match up pockets of grid issues with available solutions and make recommendation to a human operator. This helps to avoid low voltage or outage situations before they occur.
Coordinate in Real Time
Through an open communication channel or a Network Operations Center (NOC), a utility can see the availability of useful assets to provide grid relief and call upon those assets in real time for automated and targeted demand response. The latter provides a revenue opportunity for building owners, even when they are a relatively small fish in the pond. Loads can be combined with other outlets in the area to qualify for load minimums. For the utility, automated demand response through a NOC helps increase compliance, mitigate critical peaks and lower overall costs.
In summary, software holds the key to making the most of existing assets, avoiding infrastructure investments, and taking preemptive action to avoid problems. It will link both commercial building owners and utilities and provide short term relief and long-term benefits to both parties.
Vic Shao is CTO at Green Charge Networks (GCN), a leader in smart grid software and distributed energy storage systems. GCN develops and operates systems that help electric utilities to increase grid reliability and efficiency, and the public and private sector to reduce energy spending. Our proprietary software, GridSynergy, allows utilities to optimize the efficiency and reliability of current assets by real-time updates on the status of grid assets, and recommendations for and execution of load relief. GreenStation is GCN’s commercial energy management solution. Learn more at www.greenchargenet.com. Vic can be contacted at firstname.lastname@example.org.