Demand response technology in the industrial plant makes immediate economic sense for early adopters

Sheila Kennedy, contributing editor, says cut power consumption during periods of peak price or demand.

By Sheila Kennedy, contributing editor

Demand response is the ability to curtail power consumption during periods of peak price or demand in order to reduce electricity costs or receive incentive payments. Industrial plants with the flexibility to shut down or idle production or temporarily switch to backup generation are prime candidates, as are large facilities with building controls that can automate reductions in electricity usage. Those with on-site generation capabilities such as photovoltaic solar panels can further benefit by selling excess electricity to the grid.

The benefits aren’t only financial, but societal, as well.

– Sheila Kennedy, contributing editor

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The benefits aren’t only financial, but societal, as well: actively controlling and sharing power increases service reliability for all electricity consumers and eases the integration of additional renewable power sources to the grid. Software and technology designed to measure, monitor and control energy usage in real time are making demand response easier and more automated than before.

Demand response 2.0: Early adopters of demand response were energy consumers selling back kilowatt hours (kWh) or capacity to the markets with advance notice, but it was a fairly manual task. When the time came to reduce consumption, if the person notified was busy or off duty, the program’s effectiveness would decline.

The paradigm shift is Demand Response 2.0, says Ross Malme, demand response director at Schneider Electric. It supports variable, unpredictable demand using energy management controls that modulate the plant based on the needs of the marketplace, while keeping the grid in sync. “A consumer might be an energy resource for 10 minutes at a time, 10 times per month,” he says. Automatically sent microinstructions can scale back variable frequency drives or dimmable ballasts, or control a chiller’s floating set point, for example.

“It’s not just about energy efficiency,” adds Malme. “It’s about making the energy bill an asset that can be monetized. With electricity costs rising and enormous volatility in prices, pushing the price risk on customers, it becomes more attractive to control costs and make money.”

Enabling technology: Large consumers can participate directly in the wholesale market, but for smaller energy customers, there have been barriers to participation. Now that the Federal Energy Regulatory Commission has acted to remove the barriers, aggregators can give small companies the same opportunities.

One software platform that manages demand response processes in real time is the Demand Response Business Network (DRBizNet) from Utility Integration Solutions (UISOL). The software is used in three wholesale markets in the United States to support multiple demand response aggregators simultaneously.

The market potential for distributed generation and distributed storage is huge and global, explains Ali Vojdani, CEO of UISOL. “As more of us buy solar panels and other technologies that connect to the grid, demand response becomes even more important, requiring sophisticated demand response management software,” says Vojdani.

On the hardware side, there are devices that receive demand response signals at the customer site and automatically execute load control actions through the building automation system or direct control of equipment. An example is Constellation NewEnergy’s Load Control Unit developed in conjunction with Lynxspring.

Revenue stream: In California, if you can turn off 100 kW or more of power on short notice, you can get paid as if you were generating that much power. The Proxy Demand Resources (PDR) program at California ISO (CAISO), which uses the DRBizNet platform, treats the ability to reduce power consumption the same as electricity provided by a power plant.

Rather than a fixed price, PDR uses prices set on the open market. “The consumer can bid in our day-ahead market or real-time market — offering to reduce demand by X number of megawatts according to resource-specific variables,” says Gregg Fishman, senior public information officer for CAISO. “They can offer both ancillary service capacity and energy.”

Payback: Alcoa’s Warrick Power Plant supplies energy to the company’s Warrick Operations aluminum smelter and fabricating facilities in southern Indiana and also sells excess capacity to the Midwest ISO wholesale market using OSIsoft’s PI System infrastructure. Weekly payments from the ISO helped to sustain the aluminum operation through the recent economic downturn and payback for the project was achieved in four months just on ancillary services, according to Brian Helms, power markets coordinator for Alcoa Power Generation, in his presentation at OSIsoft Users Conference 2010. Helms recommends implementing demand response to set you a little above your competitors. If you’re a marginal facility, it could save your business.

E-mail Contributing Editor Sheila Kennedy, managing director of Additive Communications, at sheila@addcomm.com.

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