Utilities: the Sound of One Hand Clapping

The Green Economy

February 23, 2010

The way utilities are forced to make decisions about capacity is like The Pottery Barn making daily staffing and inventory decisions based on the busiest shopping day of the year.

How much easier for retail if customers spread themselves evenly throughout the year. It’s the sound of one hand–the utilities–making decisions without any control over when customers will need power or how much.

Demand Response

Managing capacity is possibly the “holy grail” of future energy security, as it provides the ability for the utility and the user to manage how energy is used.  A report published last year by FERC, (Federal Energy Regulatory Commission), A National Assessment of Demand Response Potential, looked at four scenarios for energy use in the coming years, and made some estimates of potential energy savings from each.

1. No demand response
2. Business as Usual (BAU) with current demand response plans in place
3. Expanded BAU
4. Achievable participation
5. Full participation

The differing levels from expanded to full participation includes new or increased state initiatives, adoption of demand response technologies by all parties, and other best practices.

To provide some perspective, a typical peaking power plant is about 75 megawatts, so a reduction of 138 Gigawatts would be the equivalent of a reduction of 1,840 plants.  This is the same as  building a power plant every year since the Emperor Trajan ruled the Roman Empire. It is also about ten times the number of utilities currently regulated by FERC.

Viridity Energy

Viridity Energy is a major player looking to help energy users and utilities start working together.  By giving control to users through a sophisticated suite of technology, customization, and energy consulting, Viridity is providing the second hand clapping: integrated demand response.  Their solution packages together the technology for monitoring and pricing energy at the user level, with existing systems for control, and integration of renewable resources.

As Audrey Zibelman, President and CEO, of Viridity Energy noted, utilities are under increasing pressure to use all their resources better,  as demand rises while consumer acceptance of higher rates has never been lower. The factors that can affect demand–especially peak demand when energy prices are hightest, and the utility is drawing on the most resources–is a combination of:

• Knowledge: users need to know how much energy they are using, when and how much that energy costs

• Control: ability to turn on or off appliances to reduce costs

• Renewable resources: user defined, built and installed energy such as wind, solar and geo-thermal

• Intelligent capacity: managing the storage of excess energy from low peak (low demand) hours to high peak (high demand) hours.

Viridity works with both sides of the equation: utilities as well as users like Universities, Corporations and hospitals.  Her company seeks to bring a innovative ideas to the table, one of which included using library books to store cooling generated during low peak evening hours, that helped reduce demand during the warmer, high peak daytime hours. Just a small slice of the overall strategy, Viridity helps large consumers become grid suppliers who make money from the grid, by managing their use and developing resources from renewable resources such as wind, solar and geothermal.

RealWinWin

Another company, RealWinWin,  helps owners and operators of commercial property identify energy efficiency opportunities with lower capital requirements and lower operating costs.  Because they are experts in Federal and local incentives–including tax and grant programs, rebates and other opportunities–their clients can plan long term strategies to reduce overall operating costs that benefit everyone.  Doug Bloom, CEO of RealWinWin, mentioned that the annual electrical efficiency market is as much as $1 Billion.  RealWinWin has helped companies such as Jones Lang LaSalle and CB Richard Ellis see the benefits of energy efficiency for both owners and tenants–an important step in commercial real estate.