The volume of electricity needed at any moment in time is at best unpredictable. While electric utility planners do their best to estimate and model load levels in order to provide ample quantities of energy when equipment powers on, the cost of maintaining energy reserves is high. This expense is passed on to the business customer.
Industrial motors, pumps, and HVAC units oftentimes power on at the same time, creating peaks in energy usage. This surge in usage increases costs for the utility, since it has to ensure sufficient capacity to meet these peaks. Demand response programs can provide a symbiotic solution to reduce costs for both utility and business consumers, explains a recent article from Rocky Mountain Institute.
“With falling computer costs and rising demand charges, lowering peak demand can pay off very quickly for a business—sometimes in less than a year,” writes Edison Almeida, the article’s author and CEO of eCurv, Inc.
He explains that a tiny amount of energy use, occurring at times of high energy use, requires a lot of capacity that isn’t needed during other times. Shifting that demand—even by a few seconds—can have a big impact on your load profile and your energy costs.
Demand charges for commercial and industrial customers can amount to a significant portion of total energy expenses. Electrical bill studies show that 4% of business energy use is during moments of peak demand, yet accounts for about 40% of peak demand charges. Managing commercial loads with the array of demand management tools and software products now available has proven an effective way to reduce energy expenditures.
Some solutions inform facility managers directly when it’s time to turn equipment off, while others cue requests to accommodate them within a lower-demand window. Sometimes demand balancing can be as simple as queuing connected loads and keeping them from turning on at the same time. This is the approach that cell phone and Internet companies use, Almeida explains.
When you make a call or hit send on an e-mail, the common perception is that you are instantly connected to the destination. Instead, software receives your request and places it into a cue. There is a short window of time before your information is directed to the intended destination. And according to industry experts, taking advantage of this window of time with demand response software can significantly reduce peak demand expenses.
“Lowering peak demand,” writes Almeida, “also creates value for the grid.” A recent Rocky Mountain Institute study found a potential $13 billion per year in savings for the US grid with similar cuing and demand balancing support from smart appliances placed in households across the country.
How do demand charges impact your energy bill? Do you use demand management technology to mitigate them?