Commercial Demand Response – An Untapped Resource for the Congested Grid

By: John Gruss, Vice President and General Manager of Enerliance

lobosAccording to the recently released National Climate Assessment, 2012 was the hottest year on record for the continental United States, and experts predict that temperatures are only going to rise. Couple this with an energy grid that is already under severe strain, and there can be no denying we’ve got a serious problem on our hands.

Every year an overstressed electric grid faces increasing challenges to cool and operate homes and buildings. As we approach summer, with heat waves that are growing longer in duration, this crisis could result in energy shortages and blackouts that are not merely a matter of disrupted comfort and lost productivity but are a serious threat to national security and human health.

To combat this potentially catastrophic situation, there are a number of strategies in place and in the works. One such strategy is automated demand response, which rewards people for reducing their energy use during times of “peak” or high demand on the electric grid. On a hot day, for example, a utility company can send a signal to its customers enrolled in the automatic demand response program, asking for permission to reduce their air conditioning by a couple of degrees. The customer always has the option to decline, but when they do participate in this demand response “event,” they see a credit on their next electricity bill, which saves them money in the long run.

There has been a great deal of talk about automated demand response of late, because, simply put, there have been a lot more extreme weather events (mostly due to climate change), forcing utilities to think of new and innovative ways to deal with peak electricity demand. The great thing about automated demand response is that, if participation is adequate, it can help offset the need to build and maintain new power plants by balancing demand and maintaining grid stability.

Residential automated demand response has received most of the attention of late, which is a big and necessary step in the right direction. But if we want to achieve significant gains in a short amount of time, we also need to be looking at commercial automated demand response for the heating, ventilation and air conditioning systems operating in large buildings and on campuses.

Consider this: A 1.8-million-square-foot building in Southern California can supply its utility with 1.4 MW of “negawatts” (megawatts saved through the reduced use of heating or cooling systems) just by implementing automated demand response. Quick division indicates that it would take roughly 600 2,000 square foot homes to produce an equal result if each home delivered an average of 2,300 watts of curtailment per event. Numbers like these clearly illustrate just how impactful commercial automated demand response can be in reducing our nation’s energy demand and achieving the scale of change we need to curb climate change on an accelerated timeline.

But there are two major hurdles to overcome if we want to see commercial building owners and operators participate in automated demand response programs: comfort and return on investment. Building owners simply will not join a demand response program if it means their buildings will become uncomfortable during demand response events. That’s because discomfort results in a loss of productivity, which results in a loss of tenants, revenue, and so on. Plus, the front-end costs of adding specialized intelligence to a building’s heating and cooling system are significant, and without a compelling financial reward for demand response participation, the investment is not practical, even if the environmental motivation is there.

This is where heating and cooling systems optimization technology for large commercial buildings, like Enerliance’s LOBOS (Load Based Optimization System), comes into play. With an energy efficiency optimization system that is also automated demand response compatible, the return on investment is realized within the first couple of years. That’s because even outside of automated demand response events, the system runs at maximum efficiency levels resulting in lower energy bills every day.

In California, a LOBOS-installed college campus is projected to achieve energy-efficiency-driven electricity savings of more than $600,000 in the first year alone. The everyday energy savings created by the optimization system justify the investment, and also provide the infrastructure to support advanced automated demand response functionality with minimal additional cost. With advanced automated demand response control, it is possible to precisely manage participation in demand response events with minimal to zero impact on tenant comfort. That’s because LOBOS will constantly recalibrate its usage relative to the event requirements and allocate available cooling resources to the areas of greatest need within the building, rather than arbitrarily plunging the usage down to a fixed level and holding it at a steadily low but uncomfortable level.

Today, buildings equipped with LOBOS automated demand response optimization offset almost 30 megawatts of energy from the Southern California electric grid alone. Enerliance’s internal projections indicate that if the system were deployed in compatible buildings nationwide, it could offer more than 25 gigawatts of automated demand response power reduction. That’s equivalent to the electricity generated by 21 nuclear power plants.

Commercial building owners interested in determining the cost savings associated with integrating an energy efficiency and automated demand response optimization system with their heating and cooling system are invited to use the calculator found on the Enerliance website. A zip code and the building’s square footage is all you need to explore the numbers.

Reports such as the National Climate Assessment foretell a pretty bleak future if grid strain is not addressed. Demand response is one way we can begin tackling this complex challenge. It’s good for people, businesses, and the environment, and will unlock a future that relies on intelligent, resilient, and clean energy solutions.

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