Demand Response: The Key to a Competitive Facility


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Thirty states in the United States have renewable portfolio standards. The U.S. EPA is targeting many coal plants for shutdown. Electricity rates may rise 50% in five years. Electric vehicles could add significant strain to an aging infrastructure. Wind and solar could add significant instability to power quality and reliability. Demand response (DR) is the answer to remaining globally competitive in an uncertain energy future. Once a novel way to earn extra cash, DR is rapidly becoming a key competitive strategy as utilities realize they must encourage more interaction with customers. Explore the evolving world of DR and how to plan for it. Copyright AIST Reprinted with Permission

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  • Good afternoon. Demand Response, if you know it at all, is a controversial topic. “Let’s shut down our plant for money” seems to be the take away; and on that basis alone, managers decide whether to participate in programs or not. Until the last couple of years, this was a reasonable approach. Things are changing, and rapidly. If you’re not keeping up, you’re falling behind. Over the next 45 minutes, we will explore why.
  • These are disturbing statements, if you believe them…and you should. In most developed nations, the grid has been a stable, reliable - and ignored – part of life’s infrastructure. However, our political leadership and regulators also view the grid as a common element that impacts us all, and therefore must be part of the solution to many of the problems we face today. New laws requiring renewables integration are clashing with an aging infrastructure left to decline both to keep costs down and because no one wants new infrastructure in their back yard. Emerging Smart Grid technology can be very effective in resolving these conflicts, but this is not passive technology.
  • The traditional grid always has been “smart”. Backed by talented people and sophisticated models, our grid is the largest, most reliable machine ever conceived by man. Today, when we say “Smart Grid” we mean YOU. To solve tomorrow’s problems, we have to distribute grid intelligence further out the distribution system and even include some things going on behind the meter. “Behind the meter” is utility speak for customer – and again, that’s you. Some fun facts: electricity productions accounts for 40% of all our water consumption and fossil plants are can be major emitters. Clearly, smarter energy means better water and better air as well. The major consuming industries here in the US are water/waste water, IT (Date Centers), and collectively, all those gaming consoles your kids play with (and maybe you as well). Here in the US, those account for 1% of total energy consumption – 16gwh annually. Oh, and by the way, it’s very likely that your utility does not know when your power is out until someone calls it in. Only when outage levels rise significantly above the noise levels of normal demand fluctuations, do they suspect. But without a smart grid, they still may not know the problem area and can waster precious time looking for the fault. So when your power is out, call it in.
  • Let’s peak behind the curtain and the orderly and calm lives of utility managers: Wholesale energy costs are highly volatile Water shortage concerns causing conservation to become priority Sustainability is key to customers, shareholders, media and employees Integrating energy efficiency into your company’s culture GHG intensity increased 5 percent in 2011 And… Regulatory demands are escalating Sourcing options are getting more complex Political and public pressure is mounting More internal & external parties demanding access to your energy data Reporting requirements are becoming more rigorous
  • In light of this, it’s time to take a new look at Demand Response. It’s not what you think.
  • While you may not think of your utility often, it thinks od you, a lot. This is what you look like to the control room of your local utility. The reds, whites and purples are hot spots shown on various utility systems. If your location is in one of these areas, you have a problem. Your facility is much more vulnerable to disruption and quality issues than are your neighbors in the quiet zones. Traditionally, demand response has been used in extreme cases to relieve these stress points. In the future, it will prevent them from ever occurring.
  • This is our good old familiar grid. Calm, safe, reliable. Not much going on, and it just worked.
  • Since about 2000, all the trends we’ve discussed have been accelerated by new technology, government and regulator policy changes, and newly aware and active energy consumers who want more than just electricity. This leads us to a world accelerating much more quickly than the traditional 10-15 year horizon utilities need for new generation and transmission assets.
  • So now, our nice calm environment is broken apart. Where we once had integrated monopoly suppliers, now we have local distribution companies with independent generators and transmission on the supply side, and retail energy markets, demand response aggregators and a host of others on the demand side. This disrupts culture, business processes, customs, relationships, …literally everything about the way utilities operate. Managing in this environment requires more sophisticated systems and new links between them. It’s also added an historically unheard of element, Demand Management.
  • The problems to be solved vary in different regions. The solutions look to be similar, though tweaked for local needs.
  • Ultimately, Demand Response is synonymous with comprehensive energy strategy. It is the tool that unites many of the competing needs of your organizations, and brings coordination and true production efficiency to the process of satisfying all stakeholders.
  • No more is DR a “shut down” for money equation where managers often operated with fear, uncertainty and doubt. Today’s DR, called “DR 2.0” in some circles, is a mainstream part of daily operations. For example, tanks used in process storage as among the most effective “batteries” to store energy for later use. Sophisticated algorithms can use forward pricing curves and solve production scheduling equations to produce the least cost output for today, and may repeat the same process tomorrow with a different result. The ability to create and control your own energy profile then supports an energy procurement contract that charges discounted rates that acknowledges this ability, potentially saving $ millions annually.
  • The percentage
  • Source for this, Global Estimates from IEA, 2007 Opportunities to save include Improving Existing Production Processes Advanced Control and Optimization Improving the Yield of Raw Materials Reducing Gas Flaring Commercializing New Processes Recycling Waste Investing in Renewable Raw Materials Producing Epichlorohydrin from Glycerine Dow has announced plans for a world-scale glycerine-to-EPI unit in China, and a stand-alone pilot plant for this technology began operating in 2006 at Dow’s production site in Stade, Germany. Producing Polyols from Natural Oils The new chemistry for producing polyols fromnatural-oil feedstock is greenhouse-gas neutral. Refrigeration Water Purification Power Generation
  • Demand Response: The Key to a Competitive Facility

    1. 1. Demand Response: The KEY to a Competitive Facility Phil DavisSenior Manager, Demand Response Resource Center Schneider Electric
    2. 2. Energy costs will quadruple by 2030. Power Qualitywill degrade. Global competition for fuel, tightening emissions requirements, and laws demanding renewable integration will place unimaginable pressure on a grid that is decades old.Smart Grid can fix this, but no longer can we exist in isolation.
    3. 3. What makes the Smart Grid Smart? You DoSmart Grid is Communicationsbetween Utility and Customer
    4. 4. The Energy Dilemma Sustainability and Carbon ManagementGrowing pressure Rising consumptionon infrastructureVolatile Wholesale More ambitiousEnergy costs environmental goals Fiercer globalWater shortages competitionTighter economic Regulatorypressure Complex sourcing demands options We need to solve these challenges to make the difference!
    5. 5. Energy is a Management ChallengeDemand Response is a Management Solution
    6. 6. What Customers Look Like to Utilities
    7. 7. Pre 1990 Power GridPhysical & Generation Transmission Distribution Distribution ConsumersTransaction Flow Players Utility Systems Scada, Control Room (DMS), Outage Mgmt, Meter Data, Forecasting, CIS
    8. 8. The new Grid equation - detailed drivers acceleratorsGrowing electricity demand: New technology available-new economies: demography, -information technology, cyber-security industrialization & urbanization -energy storage, power electronics…-mature economies: peak management-new consumption modes (eg electrical vehicles) Active government & regulators: -deregulation & opening of markets,Need to reduce CO2 emissions: introduction of price transparency-development of Renewable Energy sources -need for security of supply & price stability-focus on energy efficiency -increasing economic cost of blackouts -stimulus packages, investment in electrical vehicles…Constraints on existing networks:-limited generation capacity Active end-users: -look for competitive prices-limits on network extension -want to contribute to CO2 emissions reduction (Not In My BackYard syndrome)-aging infrastructure and assets -ready to play active role (control consumption,-integration of intermittent & distributed generation produce energy, drive electrical cars…) making the smart grid happen
    9. 9. Post 2000 Smart Grid Physical Flow Generation Transmission Distribution Consumers Genco Transco Utility Marketer Players Renewco DR Aggregators ISO C&I Onsite Demand ManagementTransaction Flow Systems Scada, Control Room (DMS), Outage Mgmt, Meter Data, Forecasting, CIS Upgraded + Energy Mgmt, Trading/Risk, Settlement, Billing, Scheduling, Portfolio Mgmt. Upgraded + Demand Mgmt., Customer EMS, NOC, AMI, Communication, BAS/Energy Controls
    10. 10. Different Regions, Different Goals Smarter Grids Deregulation & Distributed Transmission overload Generation & aging infrastructure • Competition for supply • Blackouts • Integration of Renewable • Critical peak situations Energy sources • Price volatility • Increasingly constrained networks • Cyber-security issues Growing energy Growing energy demand • Growing consumption demand… and losses • Transmission congestion • Critical peak situations • Energy theft • CO2 emissionsDistribution infrastructuremodernization• Growing consumption• Energy theft & losses• Generation & Transmission modernization
    11. 11. Demand Response =Comprehensive Energy Strategy ● Environment ● Procurement ● Reporting (SOX) ● Efficiency ● Safety ● Reliability ● Stability
    12. 12. Integrated Demand Response Normal Process ProcurementShut downs Manual Coordination StrategicUnusual AutomatedDelayedpayments Mid Stream Sophisticated Little Feedback Storage Algorithms
    13. 13. Tools: ISO 50001
    14. 14. Case study - Global Pharmaceutical Tech Company Plan Strategy Situation:  Global pharmaceutical tech company wanted to cut energy costs in its facilities across 4 continents  Needed an efficient way to involve a number of global facility-level personnel in the process Solution:  Consumption Workshop, proprietary exercise to uncover strategies for reducing energy costs and usage  Forum for plant personnel to collaborate with corporate leaders about key projects and strategies  Employees from 16 facilities, including sites in France, Italy, Belgium, United Kingdom, Puerto Rico and the U.S., participated in the workshop. Results:  Identified $2.6 million in energy savings during the Consumption Workshop, most of which could be realized with little or no capital investment.  Savings represented 9% of the company’s total annual energy spend  Collaboration among the facility teams for the first time
    15. 15. Case Study - Global Manufacturing Company How Do I Buy? Situation:  Decentralized global manufacturer with 44 sites in 18 countries with each site handling energy management efforts independently Solution:  Identified countries in the portfolio that offered greatest opportunities  Reviewed risk management and tariff and sourcing options  Large site in Singapore was about to enter into a new contract that would lock in electricity price that Summit team anticipated would go lower  Recommended waiting to lock to take advantage of expected downward market movements that would save the company money Results:  The company centralized its approach  Corporate energy leader could make more informed hedging decisions across all 44 facilities.  Singapore site lowered its long-term electricity costs, eliminating potential volatility, saving 10%
    16. 16. Case Study - Automotive Company How Do I Control? Installed Enterprise Energy Management System (EEM)  Smart energy monitoring resulted in:  Cost savings  Faster access to reporting  Conservation initiatives Ongoing Measurement & Verification  Measurement and Verification continues the lifecycle focus and leads Ford through revisiting their energy strategy
    17. 17. Case Study - Veolia, Indianapolis LLC How Do I Optimize? Production process scheduling  Install WAGES monitoring & control to forecast filter loadings and initiate backwashes to avoid peak utility demand periods Pumping system optimization  Provide demand sub-metering and hydraulic modeling intelligence to optimize system for any given flow and pressure condition Install adjustable speed drives  Control inefficient discharge valve control to maintain Results system pressures and flows at desired levels $764,630 annually Diesel driven pumping 3.2 year payback  Install WAGES monitoring & control to monitor 6,818 kW critical parameters, remotely start/stop pumps during 12,458,300 kWh peak electrical periods to reduce utility charges -3,690 dT On-site generation  Fully monitor and automatically operate on-site diesel generators for peak efficiency
    18. 18. Case Study - Global Glass Manufacturer How Am I Performing? Situation:  One of the largest glass manufacturers in the world, producing 30 billion glass containers a year  Needed help tackling its sustainability challenge Solution:  With access to the company’s corporate-wide energy information, analyzed data to create GHG emissions baseline  Developed GHG inventory by defining boundary conditions, outlining scope definitions upon verifiable data and auditable processes Results:  The glass manufacturer could track and report on greenhouse gas emissions at both the site and enterprise levels.  The company began to leverage emissions data from multiple streams and scopes, benchmark performance against baseline data, and maintain a database of sustainability project initiatives  Gained an understanding of historical emissions data, used information for corporate sustainability benchmarks and initiatives
    19. 19. Strategic Improvement Roadmap Develop Energy Strategy •Determine corporate profile •Set goals & objectives Implement Reporting Program •Develop management plan •Establish measurement & reporting structure •Set baseline with third-party verification Evaluate Footprint & Prioritize Actions •Identify top demand sources •Commit to targets •Create performance metrics (KPIs) Implement Optimization Activities •Reduce (raw material, energy, water, waste) •Renew (renewable energy, recycle, treat & reuse) •Restore (offset impact, manage credits) Communicate Results & Performance •Voluntary / mandatory reporting •Internal communications •External communications
    20. 20. Demand Reduction Identification Schneider Electric Energy Solutions Provided a Demand Reduction Plan for a large Iron Manufacturer Estimated Thyssenkrupp/Waupaca Plant #5 Electric Load Breakdown (kW) 7/8 Furnace Inductor , 840 Lighting, 300 Motors Dust Collectors 5/6 Furnace Inductor , 840 Air Compressors Transformer Losses, 1,106 HVAC, 300 Air Separation Plant Task: Find demand reduction measures after Furnace #3 Inductors, Misc, 200 Motors, 11,969 Furnace #1 Inductors 1,440 a rate structure change increased monthly Furnace #2 Inductors, Furnace #2 Inductors Furnace #3 Inductors electric costs 1,440 Transformer Losses Furnace #1 Inductors, Five demand reduction projects were 1,440 5/6 Furnace Inductor 7/8 Furnace Inductor identified Air Separation Plant, 1,600 Lighting Dust Collectors, 3,758  Demand savings are 3,500 kW Air Compressors, 3,988 HVAC Misc  Electric savings are 15,141,360 kWh WF Elelctric Demand Profiles  Electric cost savings are $823,200 per year Stacked Line Chart - May 2009  Implementation cost is $710,700 with an estimated payback period of 0.9 years 30,000 Detailed reporting that describes 25,000  Existing demand profile, with analysis for the summer, winter, and shoulder months  20,000 Electric Demand (kW) Peak electric load breakdown  Current rate schedule  Estimate of demand curtailment hours 15,000  Demand reduction measures with conceptual implementation methods and estimated costs  10,000 Description of available rebates and incentives  Additional opportunities for energy savings 5,000 The detailed report utilized data from the enterprise metering system to complete the 0 analysis 5/9/09 5/11/09 5/14/09 5/16/09 5/19/09
    21. 21. Integration PotentialPower Value propositionProcess ONESite up capital for strategic investment by reducing Freeing Site Supervision your energy use up to 30% IT Manager  Safeguarding the assets that make your enterprise successfulFacility  Reduce your total cost of ownershipSecurity  Enhance facility market value (5 to 10%)
    22. 22. Energy MonitoringEnergy Modeling provides a means to normalize usage and factor out the influences of weather and production
    23. 23. By meeting the IEA estimate of 16% chemical industry energy efficiency improvement by 2020, a major chemical company could lower its annual energy bill by $4.3 Billion vs. its 2008 spend11 National Academy of Engineering, Potential of Energy Efficiency,
    24. 24. Information does change behavior: 6% just being availableAs much as 30% when informed action is taken
    25. 25. Thank You Phil DavisSenior Manager, Demand Response Resource Center Schneider Electric