By James Jackson
From the June 2019 Issue
Energy cost reduction is a goal shared by operators across the entire food retail spectrum. In recent decades, many supermarket, restaurant, and convenience store chains have experimented with major energy retrofits, energy service company (ESCO) contracts, demand management, and even on-site generation to help address rising electricity costs in individual stores and across multi-site networks. As the energy and utilities sectors continue to evolve, traditional approaches to energy efficiency and demand response must also adapt to the changing landscape.
In many regions of the U.S., increasing contributions from renewable sources are helping to reduce the need to offset traditional peak demands. But renewable power availability often changes or is unavailable when needed most. At the same time, the widespread adoption of the Internet of things (IoT) is enabling operators to leverage smart devices, systems, and technologies to fine-tune energy consumption—all of which is helping to reshape the energy efficiency equation.
Nowhere is this more applicable than in supermarkets, where chains are rife with energy optimization opportunities among refrigeration, HVAC, and lighting systems. The average 50,000 square foot store incurs $200,000 in annual energy costs, resulting in 1,900 tons of CO2 emissions (the equivalent of 360 vehicles) in one year. Of these costs, refrigeration and lighting account for more than 50% of total energy usage.
Fortunately, with advances in energy management systems (EMS) and controls technologies, retailers now have the ability to automate energy best practices. These tools not only provide full building ecosystem optimization but also help operators capitalize on the potential for energy savings via utility energy incentives and available demand management opportunities.
Understanding “Consumption” And “Demand”
It’s important to first have a basic understanding of the difference between electricity consumption and demand, and how each impacts your utility bill. Consumption is measured in kilowatt hours (kWh) and refers to the amount of energy used during a billing period. Depending on geographic location, specific rate plan, and your utility’s standard and time-of-use (TOU) rates, kWh prices can vary widely. Understanding these factors is essential to developing a smart strategy that includes avoiding intensive consumption activities during peak TOU rate periods.
Demand represents the instantaneous energy load that a commercial customer (or building) places on the grid. Utilities use this as a measurement on which to base infrastructure planning and determine total load requirements of the electrical system. As demand increases, utilities draw from additional sources, often more expensive reserve sources, like coal and other fossil fuels.
Utilities measure demand in kilowatts (kW) based upon the actual power a consumer draws. Because demand costs can be potentially higher than consumption—with charges ranging from a few to several dollars per kW—demand can account for a significant portion of a monthly bill. In a typical supermarket where refrigeration, HVAC, and lighting systems are constantly in use to varying degrees, effectively managing demand costs is directly tied to how efficiently these systems are used and coordinated.
Some food retailers may also be subject to utility-imposed demand rachets, which allow utility companies to establish a minimum billing based on the highest instantaneous demand measured during a billing period. Essentially, utilities can lock customers who may have inconsistent or seasonal energy requirements into this high-demand rate to ensure they’re able to cover the consumer’s peak usage periods. If you don’t properly manage demand, it could result in a more costly, long-term rate structure.
Redefining Traditional Demand Response Programs
Researchers at the Lawrence Berkeley National Laboratory (LBNL) in California have recently turned their attention to evolving the state’s approach to demand response (DR). Traditional DR programs are comprised of voluntary agreements between utilities and customers, whereby customers receive financial incentives for reducing electricity loads during periods of high prices or when grid reliability is threatened. But with rapid deployment of renewable generation, slow power plant retirement schedules, and investments to California’s grid, the state is generating enough capacity to meet demand at peak times. This has offset the need for utilities to up investments in DR infrastructures, and caused disruptions in how consumers participate in traditional programs.
LBNL evaluated California’s energy dynamics and uncovered findings that are also relevant to other states with similar energy profiles. The study drew from 200,000 customer load profiles from the state’s three major utilities and evaluated them against a model of California’s evolving grid over the next 10 years. Like many states, California is benefiting from an increase in solar power and the continued shift of demand from midday to evening hours. The proliferation of smart thermostats and controls in commercial and residential sectors is also helping the state optimize energy consumption.
The LBNL study findings are helping researchers understand the amount of flexible customer load available and evaluate different methods for getting customers to change energy consumption habits, such as TOU, peak pricing programs, and day- and hour-ahead energy market plans.
With these strategies in mind, the study recommends replacing California’s traditional DR program with a four-pronged approach to incentivize consumers to adapt to the needs of the grid:
- Shape: reshape load profiles through TOU prices/incentives and energy-efficiency programs;
- Shift: move energy consumption from periods of high demand to those times when there is a surplus of renewable generation;
- Shimmy: dynamically adjust to loads within minutes or seconds in response to grid disturbances or short-run ramps; and
- Shed: curtail loads to provide peak capacity and support the grid in emergency or contingency events (much like conventional demand response)
While utilities are likely to incentivize all of these strategies per a consumer (or facility’s) electricity requirements, the opportunity to shift demand is seen as the greatest contributor to future grid flexibility—and potentially one of the biggest opportunities for energy savings.
Energy management providers can help facilities, and among solutions are smart EMS software and controls platforms to help operators connect with utilities and automate energy. Related strategies are self-generation via thermal and battery storage and grid-interactive buildings.
Self-generation via Thermal and Battery Storage. In many regions, utility companies are also encouraging consumers to implement proven thermal and battery storage options to help shift demand from peak to off-peak hours. The concept of self-generation is relatively simple: thermal (ice) creation and battery charging take place during off-peak hours to store energy that can be used or discharged during peak hours to help utilities offset demand. Essentially, these options allow operators to augment their power portfolios and add flexibility to their energy consumption strategies.
States And Utility Companies Are Taking Notice
The California Public Utilities Commission (CPUC) created its Self-Generation Incentive Program (SGIP) to incentivize the use of existing, new and emerging distributed energy resources such as battery and thermal. The use of EMS energy dashboards helps operators demonstrate the effectiveness of their self-generation practices and qualify for available rebates. As battery and thermal storage technologies continue to evolve, self-generation is likely to become a much more commonplace energy management strategy in the coming years.
Another indication of how utilities are shifting their focus is the emerging trend known as non-wires alternatives (NWA). Instead of investing in traditional transmission and distribution (T&D) infrastructures, many utilities are utilizing non-traditional resources like battery storage, flow control devices and demand response. This flexible, economical approach to managing transmission is helping utilities defer the need for specific equipment upgrades by reducing load at a substation or circuit level.
Grid-interactive Buildings. As modern EMS and smart devices provide unprecedented IoT-enabled connectivity between consumers and utility companies, opportunities for greater cooperation and energy optimization are also on the rise. At the Department of Energy (DOE), the Building Technology Office (BTO) is conducting research through its Grid-interactive Efficient Building (GEB) initiative. Their stated goals are in alignment with many of the concepts presented in this article:
- Help bring connectedness — and the related energy savings — across the entire building sector.
- Allow American businesses and families to save energy and reduce their utility bills automatically, without impacting comfort or productivity.
- Enable buildings to be more responsive to electric grid conditions to reduce stress and build reliability.
Facility management leaders can simplify energy management challenges with smart EMS software and proven controls platforms designed to help supermarket and restaurant operators connect with utilities and automate energy-saving best practices. There are companies providing robust ecosystem building management, connecting devices and controllers to the cloud for comprehensive data management and analytics. These and other tools can help facilities improve energy efficiency and achieve operational success in a quickly evolving energy market.
Jackson is business development manager for Emerson Commercial and Residential Solutions, with his primary focus on the energy and utility markets. Previously, Jackson was a consultant with ICF, where he helped develop and manage commercial and residential energy programs for utilities across the United States.
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