Utility deregulation creates market opportunity

The deregulation of the power industry is providing opportunities for the customer side of the meter load management that have never existed before. The emerging variable pricing structures have the potential to create real value for both the utility and their customers. Power companies can use them to balance the load on existing generation, transmission and distribution equipment, and consumers can use the fact that rates vary to shop for the “best deal” to lower their energy expense. But, to reap the full benefits, commercial and industrial customers need to deploy systems to fully manage how they buy and use energy.

 

Power users would like to have the flexibility to buy energy at lower rates, but this often means buying it at times when other users don’t want it – typically, the middle of the night. Changing their business hours is not practical, and they don’t want to constrain their operations in the middle of the day while rates are high. An emerging and compelling solution is energy storage.  If a facility can buy energy when it is at the lowest cost, store it, and use it when energy is more costly, that facility has the potential to save a good deal of money.

 

Another dynamic involves opportunities to capitalize on market incentives that require reduction in consumption to gain financial benefits. Some utilities are paying customers to reduce their loads at critical times. With the ability to release stored energy to meet a portion of the building load, a facility can reduce its consumption of grid power and capture the rewards while conducting “business as usual.”

 

Glenwood Management, an owner of high-end luxury apartments across New York City, is a visionary and early adopter of intelligent energy storage. For the last four years, they have been exploring how emerging technologies might save them money in the emerging transactive energy market that has resulted from utility deregulation in New York.  

 

Testing the benefits of energy storage

Glenwood installed one of the earliest and largest behind-the-meter (BTM) energy storage systems in the country in August of 2012 at the Barclay Tower, a 58-story luxury building in the Tribeca section of Downtown Manhattan (Figure 1). The intelligent energy storage system, contained two megawatt-hours of storage and qualified them to receive Con Ed’s standby electrical rates because the storage represented in excess of 15% of the building’s peak electrical load. This means that the Barclay is charged a flat rate based on the building’s historic peak load, plus a daily demand charge based on weekday usage between 8 AM and 10 PM. 

 

With more than two years of operating results, the team at Glenwood has had the opportunity to explore and test a number of operating models for the system. The energy storage solution guides daily operations of the building by downloading day-ahead pricing information from the New York Independent System Operator (NYISO) and using this data to make decisions on the next day’s operations. One alternative is to limit the building’s demand during operational hours (demand capping), satisfying the need for high-cost power with energy purchased earlier at a lower rate. Figure 2 shows how demand capping flattens the Barclay’s peak power requirements on the utility, saving money without causing any change in the building’s operation or impact on its residents.

 

Alternatively, the system can support a different type of operation during critical power events or the summer air-conditioning season (typically June through September). For both of these types of load reduction programs, the storage system can be configured to release a constant power output for a set amount of time, typically four hours in the afternoon. This type of load reduction helps lessen the impact of high power draw from all users during a critical power event or a summer afternoon that drives air-conditioning load. Both programs are available for an incentive from Con Edison, NYSERDA, or NYISO, depending upon the program specifics. Since the Barclay Tower is under a Standby Power Rate, it can skip a days worth of typical demand reduction and change operation to support these types of critical power events with minimal financial input. This type of flexibility is one of the reasons behind-the-meter energy storage systems are poised for rapid deployment in the NYC market.

 

During one critical period: the week of July 15, 2013, when the city was experiencing a heat wave and NYISO and Con Ed were calling for significant load reductions, the system in the Barclay Tower went into demand response mode, delivering a 100 kW reduction of the building’s 500 kW peak load and maintaining this level of reduction for a period of four hours as required in order to participate in the NYISO load reduction program. The system was able to use energy that was purchased off-peak at 6 to 8 cents per kWh overnight to reduce building load when prices had increased to 28 to 31 cents per kWh in the heat of the day. Glenwood saved money, was able to keep 100 kW of load operational since it was supplemented by the stored energy, and the utility experienced lower demand at a critical time.

 

Also, if the Barclay Tower faces another extended outage like what occurred during Hurricane Sandy, the critical power support from the energy storage system will supply power to circuits that provide water, emergency lighting and the service elevator.

 

The above examples illustrate how Intelligent Energy Storage helps Glenwood Management derive multiple economic benefits from this unique installation. “With our intelligent energy storage system, we don’t need to reduce the total consumption,” said Josh London, Glenwood’s vice president of management. “We can change our mode of usage and select the operational mode that saves the most money for that day. We can store energy more aggressively at night and on weekends and save a significant amount of money.”

 

A look inside the energy storage system

A block diagram of the behind-the-meter energy storage system is shown in Figure 3. The system incorporates three core elements with the key element being a cloud-based control system that applies advanced algorithms to automate and optimize decisions about energy utilization in the building. The software tracks and predicts the price of power to identify savings opportunities, and measures real-time energy demand at the building level. The system ensures that stored energy can be immediately deployed to respond to demand, either from increased needs locally, or driven by utilities’ demand response programs, with no impact to the building’s operation or the living conditions for those working inside it. The system’s analytics leverage cloud-based data storage that is inherently scalable and highly reliable, with data being replicated throughout the system and secured via encryption.

 

At the core of the system’s hardware architecture are the power conversion and energy storage sub-systems. The power conversion system accepts and conditions power from multiple DC and AC input sources. The energy storage system manages the energy storage battery array (see Figure 4). The system is technology agnostic and capable of adapting to future advances in battery chemistries and power conversion technologies.

 

Erick Petersen is the vice president of marketing and business development for Demand Energy

Demand Energy | www.demand-energy.com