Demand Flexibility Offers Significant Savings for Commercial Customers

demand flexibility
(Photo: Coils inside an Ice Bear Battery. Credit: Ice Energy on Facebook)

Commercial and industrial utility customers used to have limited options in order to meet their electricity needs: buy it, make it, or eliminate it. Now they have another viable option: to shift it through demand flexibility, the Rocky Mountain Institute (RMI) points out.

Recently RMI published a report showing that demand flexibility is the key to enabling a low-cost, low-carbon grid.

“More than half of the electricity generation capacity added to the US grid in 2016 and 2017 came from renewable resources, largely driven by the precipitous price decline of wind and solar projects,” the report says. “A new generation of communication and control technologies can enable demand flexibility, allowing major loads to continuously respond to changing renewable supply levels and other market signals.”

In order to find out what this means for commercial customers and end-users, Energy Manager Today caught up with the report’s author, Mark Dyson, a principal at RMI who focuses on topics related to the changing nature of the electricity grid.

How are you defining demand flexibility?

“Demand flexibility” is the ability of certain end-use loads to shift the timing of their electricity consumption in response to renewable energy availability or other market signals, without affecting the quality of the energy service delivered.

In what ways does demand flexibility currently affect commercial customers and end-users?

Many commercial customers are signed up or could sign up for time-varying rates from their utilities. In these cases, the ability to shift the timing of major loads — air conditioning, space heating, water heating — from high- to low-price times can enable significant bill savings.

Are there examples of demand flexibility programs involving commercial customers?

Southern California Edison has entered into a contract with Ice Energy to deploy about 1,800 ice storage units to industrial and commercial customers across Orange County. Participating customers use the ice storage to shift electricity use for cooling from on-peak to off-peak hours, significantly reducing bills, and in aggregate, the devices provide a total of up to 25.6 MW of peak storage capacity to the utility.

What are the biggest challenges commercial customers face around demand flexibility?

While the core technology costs are low to enable savings from demand flexibility, there is not always enough savings from a dynamic pricing tariff to justify the “soft costs” of executing a project. It may also be difficult to balance differing internal priorities on how to manage building loads in response to new savings opportunities.

Are you seeing solutions emerge?

Vendors are increasingly offering turnkey services for commercial customers to take advantage of demand flexibility that minimize soft costs and apply streamlined approaches for integrating money-saving load control strategies with existing control systems.

In what ways could demand flexibility affect commercial customers and end users in the future, based on the trends you’re seeing?

Commercial rate design is expected to evolve in many jurisdictions to include more time-varying energy charges, and/or peak-coincident demand charges. Demand flexibility technologies allow commercial customers to manage their energy use, without sacrificing productivity or occupant comfort, and minimize energy bills under these evolving rate structures.

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