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Active Energy Strategy Maximizes Competitive Advantage

March 3, 2014 By Cara Olmsted

Cara Olmsted

With more than 11.5 million square feet of office space currently under construction in New York City, the market remains highly competitive.  In such a competitive environment, buildings with high energy costs can be at a serious disadvantage.  Especially in New York City, energy efficiency improvements have cut energy costs noticeably – but greater opportunities for both savings and revenues remain largely untapped.

Building owners who have implemented energy efficiency strategies to manage their energy use can cut their energy spending further, and earn new revenues, by developing the capability to provide virtual power.  Virtual power is the active, automated capability to provide reductions in electric consumption on demand.  This capability, which we call Energy Optimization, can cuts costs and save money in three ways:

  • Reduce energy supply costs;
  • Reduce delivery charges on the electric utility bill; and
  • Receive payments from the local utility and regional electric grid operator for reducing consumption dynamically on demand.

Savings on Electricity Supply

Buildings that can actively and intelligently reduce their electric consumption, or shift consumption to lower priced hours, can negotiate a better supply price for their electricity.  By reducing overall electricity consumption, a building will also receive a smaller electric bill.

Of course, these dynamic shifts in the use of electricity to provide virtual power must avoid causing discomfort to tenants.  This savings strategy, therefore, relies on intelligent changes in consumption that are strategically developed to preserve tenant comfort.  For example, a building can receive forecasted high electricity prices at least a few hours in advance, and take automated steps such as adjusting the speeds of pumps and fans and pre-cooling the building to provide short-term curtailments of electricity use without compromising tenant comfort.  These strategies can complement existing energy efficiency investments, such as variable frequency drives and building automation systems.

The active, intelligent shifts in energy consumption must also be convenient.  Making these shifts must not impose substantial new workloads on building management staff.  Automating these shifts, in accordance with parameters set in advance by the building owners and chief engineers to protect tenant comfort, enables active management of electricity use without burdening staff with additional duties.

Revenues from Protecting the Grid

On July 19, 2013, total electricity use across New York State hit its all-time record.  Throughout the summer, the New York Independent System Operator (NYISO), which operates the electricity grid in New York State, called on electricity customers who had registered to reduce their consumption during emergencies a record 20+ total hours.  These customers made a major contribution to averting power outages in New York City (and in Long Island and the lower Hudson Valley as well).  These customers, which included office buildings in New York City, were paid for being available to provide assistance to the grid.  The Con Edison Company of New York (i.e., the utility) offered additional payments for similar types of assistance in maintaining the integrity of its New York City electric distribution network.

Now, customers can also earn payments by providing more dynamic services to the grid.  In the NYISO’s energy market, buildings that can shift their energy usage during price spikes on the wholesale electric grid can get paid at the same market price that a power plant receives for producing power.  Buildings can earn additional payments from reducing usage on short notice (10 or 30 minutes) from the NYISO.  Buildings with energy storage capability, such as batteries, may be able to sell additional services to the grid and receive a higher level of payments.

Savings from Reducing Monthly Utility Demand Charges

Although the wholesale cost of the electricity commodity is a significant part of an electricity bill, peak demand charges can account for a third or more of the bill.  Monthly peak demand charges address the cost to maintain and upgrade the utility’s distribution infrastructure.  These charges are based on a customer’s greatest demand for electricity during a 30 minute period every month.  Therefore, the ability to dynamically manage the demand for electricity within a short period of time is increasingly valuable.  In New York City, the ability to reduce monthly peak demand by just 250 kW can be worth over $60,000 per year.

Are you ready to transform your approach to energy and have a positive impact on your bottom line?  The key is to team with a partner who understands your energy goals and operational needs as well as both energy supply and demand-side markets. ConEdison Solutions offers an approach that goes beyond demand response by delivering Energy Optimization Services.  This smart energy strategy accounts for energy efficiency, load flexibility, and market opportunity to create a custom energy optimization approach that fits within the needs of your business.  This approach, combined with existing building infrastructure and complementing energy efficiency investments, enables savings and revenue through the active, intelligent, and convenient management of electricity usage.

Cara Olmsted is director of new business developments for ConEdison Solutions.



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