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|Integrating Demand Response into Strategic Energy Management|
This article is republished from the March 2017 issue of Strategies, AESP’s exclusive magazine for members. To receive Strategies, please consider joining AESP.
Integrating Demand Response into Strategic Energy Management
By Julie Blackwell
Utilities across the nation are embracing Strategic Energy Management (SEM) as a way to help their customers proactively manage energy. SEM offers an opportunity for utilities to connect with their customers at a higher level and provide on-going savings opportunities.
Through the strategic energy management process customers evaluate all stages of energy use at their facility, including operations, behavior, and equipment replacement or retrofits.
The utility also provides financial, technical and customer support to encourage success. SEM embodies customer education, facility improvement, and operation and maintenance (O&M) savings. Demand response strategies can be overlooked, which is unfortunate because they can be an asset to a customer's energy management plan.
Utilities are motivated to encourage demand response (DR) program participation because DR programs provide a way for utilities to balance generation (supply) and customer demand. DR programs also enable utilities to manage their interactions with their Independent System Operator (ISO) or Regional Transmission Organization (RTO) (i.e. selling interruptible capacity into the market). DR also provides options for "damage control" during unplanned interruptions to the system (e.g. trees, ice storm, tornadoes, floods).
The participating customer is typically motivated to achieve strategic corporate goals for efficiency, contribute to the bottom line and reduce costs. The customer leaves a SEM program with new energy management skills, a long-range plan and tools to achieve goals.
During the SEM process, customers define strategic objectives, and create processes and tasks to complete them. Customers can achieve goals of increasing profits and creating additional revenue streams by reducing their peak time usage, taking advantage of DR options and improving overall efficiency.
Customers should be encouraged to evaluate how DR could help them achieve short and long term goals. DR programs are customizable, providing customers with flexible options. For strategic planning, DR options should always be measured against the operational needs of the facility to ensure participation does not lead to issues with core business functions.
To encourage customer participation, utilities typically offer a variety of program and pricing channels to make it beneficial for customers to participate in load shedding and shifting activities. Examples include:
Bringing it together
As customers develop their energy management plans and protocols, DR should be considered and weighed against strategic objectives. Customers can rely on SEM facilitators, utility employees and engineering firms to assist with a DR assessment, including pricing options, equipment curtailment processes and levels.
Here is an example of how DR helped the fictional ABC Corporation:
ABC Corp. is interested in investing in a generator to improve their ability to provide uninterrupted production regardless of weather or power availability. Previously they have been unable to make a case to justify the cost of back-up generation. During an SEM facility assessment they included a DR analysis. They determined how much load the generation equipment would need to produce, and what it costs to purchase and run.
ABC Corp. found they could enroll in an interruptible program and commit 400 KW of reduction. The utility pays $8 per committed KW and allows self-generation as a curtailment option. By participating the customer would earn an additional $3,200 per month to offset the cost of the generator and maintenance.
ABC Corp. included in its energy management plan to track the generator usage patterns, the time it takes to get the generator running and the costs associated with running the generator. In a year they will use this information to do an analysis to see if there is an option to provide non-spinning reserve through the utility's other DR program options.
Julie Blackwell is the Manager of Program Strategy at Michaels Energy, a firm specializing in program design and implementation, research and evaluation, retro-commissioning and systems optimization.