In the U.S., peak electricity demand is expected to increase 18 percent over the next decade, while generation capacity at peak times is expected to increase by only 8. 4 percent, according to a North American Electric Reliability Corp. forecast. In response to this trend, utilities and energy consumers have a common goal: identify ways to ireduce power consumption during peak times to avoid escalating costs and demand constraints that can lead to power interruptions.
The force driving our peak power demand is something that has become fundamental to both residential and commercial buildings—air conditioning. During peak summer hours, cooling can account for 50 percent to 70 percent of total electricity demand, making air conditioners the unquestionable culprits of the peaking problem. Throughout the majority of the year, utilities have plenty of electricity. In fact, nearly half of the nation’s generation assets sit fallow most of the time. During heat storms, however, this reserve capacity is tested when daytime demand surges. In July 2006, the California ISO experienced a heat wave that produced new record peaks and temperatures across the state. The all-time high peak reached 50,270 MW on July 24, 2006, with operating reserves dropping below 5 percent, according to CAISO data, and spot market prices rose to $400/MWh. Demand was not projected to reach this level until 2011, but peak demand grew 10. 7 percent from 2005 to 2006 alone.
As spikes in demand create immediate stress on the grid, reserve capacity must be there to call upon whenever demand spikes. The increasing imbalance between peak and baseline loads drives reductions in overall capacity utilization, as numerous peaking plants lie idle except for approximately 400 hours of summertime demand for which they are critical. In the New England area, annual capacity factors continue to drop from an average of 67 percent in the ’80s to just over 54 percent in 2007. If unchecked, asset utilization is expected to drop to about 52 percent.
As the imbalance between peak and off-peak demand continues to grow, peak generation capacity must outpace demand by as much as 12. 5 percent to maintain safe operating margins. The cost of adding increasing amounts of peak capacity puts strong upward pressure on prices year round although resources are only utilized for a tiny fraction of the year. Higher prices are not, however, slowing peak demand. Even with time-of use-rates, commercial cooling is highly price inelastic due to its core role in customer
Author
Greg Tropsa is the president of Ice Energy Inc. He more than 20 years of experience in domestic and international business.
Before Ice Energy,
he founded MegaEnergy Inc. and led strategic turnarounds at Honeywell’s Cincinnati industrial services branch and Fort Collins Asset management unit.
Tropsa also served on the board of directors at Cutler Hammer/ Eaton Corporation.
by Greg Tropsa
comfort and employee productivity.
Energy storage
As a result, the market for energy efficiency and demand response has grown significantly over the past few years. Demand response, or curtailment, is a useful form of insurance for a few ultra critical hours per year, but it doesn’t mitigate the underlying problem driving peak load growth. Energy efficiency has proven to be a persistent and cost-effective measure that reduces overall energy consumption, but most measures aren’t necessarily coincident with the problematic peak demand associated with heat waves.
Perhaps the simplest route is to solve the problem at its core with energy storage technologies that permanently shift the air conditioning load of buildings. One such storage technology, thermal energy storage (TES), simply generates chilled water or ice at night and the ice is used to cool the building during the day.
During peak summer hours, cooling can account
for 50 percent to 70 percent of total electricity
demand, making air conditioners the unquestion-
able culprits of the peaking problem.
While the market for TES is limited to about 2 percent of all buildings, these large city–center buildings and campuses consume a whopping 50 percent of all building cooling energy.
To address the cooling demand of the remaining 98 percent of all buildings, a number of utilities, including PG&E and Southern California Edison, have tapped into the technology for a solution that permanently shifts cooling loads of small- to mid-scale buildings, combining efficient energy storage with conventional rooftop air conditioning equipment.
The combined wide-scale deployment of thermal storage and hybrid cooling products has the potential to forever transform the peak electricity market by eliminating the problem at its source. It’s easy to see why cost–effective,
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