August 24, 2017
Gone are the days when energy providers served “ratepayers.” Today, they deliver power to “customers.” But perhaps “partners” would be a more accurate moniker. After all, what is demand response (DR), if not a cooperative effort between energy providers and consumers to keep energy flowing smoothly and cost-efficiently?
Whether through price signals or incentives, energy providers motivate consumers to curtail energy use during peak usage periods and shift it to off-peak hours. This enables providers to minimize the use of peaker plants and other expensive energy sources. With increased deployment of customer-sited renewable energy sources, DR efforts now also include curtailing self-generation (or consuming it) to mitigate outflows to the grid.
It has been a rather lopsided partnership, however, as commercial and industrial (C&I) customers have been reluctant to participate in voluntary DR programs.
Curtailment is a big ask
While it may cause inconvenience and some discomfort to residential customers, curtailing power to equipment and HVAC can seriously impact C&I operations. And even with the variety of incentives utilities have offered, many C&I customers remain unconvinced that DR participation will have a positive effect on their bottom lines.
Lack of clarity on the costs is a big factor. Utilities vary not only in the types of incentives they offer, but also in the penalties they impose when customers do not meet DR commitments during dispatches. And it’s up to customers to figure out if and how they will be able to meet their commitments. That requires up-to-the-minute insight into energy use and the ability to respond quickly.
Acknowledging this, customers interested in DR are increasingly working with technology providers and aggregators that offer automated services. Metered devices and machinery capable of receiving commands from a building management system (BMS) can be placed into a facility’s DR plan. With some additional control software, an automated response can be orchestrated.
However, this approach still impacts facility operations and is limited to machinery capable of accepting commands from a BMS. Consequently, demand response is still a largely manual process.
Easier DR is right behind the meter
What would be more palatable to customers—and more effective for utilities—would be to use the inherent load-balancing capabilities of customer-sited energy storage. At Green Charge, customers’ DR participation is managed by GridSynergy Software, so customers do not need to worry about responding promptly and effectively.
Unburdened as they are, customers do not remain uninformed. They know exactly how the system is responding, because the energy storage software provides a clear view of energy use in real time. Operational costs related to DR are no longer shrouded in ambiguity.
Using energy storage for DR also alleviates concerns about energy waste. When the response involves consuming excess energy from the grid or generation from a customer’s solar system, the energy surplus is simply stored in the battery for later use.
Well-positioned for future cost savings
While managing participation in a single DR program can be a hassle for humans, energy storage software is unfazed at the prospect of managing multiple programs. So, customers can enroll in several programs to maximize their incentive income. As DR programs evolve, the quality of response will also be factored into the compensation, and this will give participants with such automated DR response systems a decisive advantage.
Compared to automated DR response systems orchestrated with a BMS, customer-sited energy storage is a less intrusive technology. And it operates on the entire load flowing through each meter, eliminating the need for individual device upgrades.
Of course, demand response is not the only reason to invest in energy storage. Its ability to mitigate demand charges and enhance the value of renewable energy systems makes storage an essential component of a C&I energy management strategy. But at a time when utilities are highly motivated to promote demand response, using energy storage to manage participation becomes a powerfully good deal.