If the local utility asks you, as one of its many power customers, to reduce your power usage because demand is threatening to outstrip supply, would you be willing to? Your first reaction may be no, your building cannot afford to drop any load because it would impair business operations. But a second look at your facility's operations and the profitability of saying yes may warrant a different answer.

Indeed, identifying and regulating such temporarily nonessential loads may not be as difficult as you suspect. The challenge is finding the electric loads in commercial and institutional facilities that can be controlled on short notice if the proper steps are taken. Moreover, making certain loads responsive to demand represents a win-win situation because your business can bolster its bottom line and help out the local utility at the same time.

In areas where peak electric supply barely edges peak electric demand, local utilities and grid operators, including an Independent System Operator (ISO), may pay end-users to reduce demand and utilize customer-owned generators to briefly widen that supply-demand margin. Under such "demand-response" programs, end-users typically receive calls for demand cuts the day before or the morning of the period during which the local power grid anticipates problematic peak loads. End-users who participate in these options get paid in the form of power bill savings that are in proportion to their temporary load reduction.

These programs have been catching on in the aftermath of California's rolling blackouts and hefty wholesale prices in the Northeast. These options have two main purposes—to bolster system reliability and to ease wholesale peak power prices, which go through the roof when the supply-demand margin gets too tight. During these times, even a tiny demand drop can substantially lower wholesale prices—and this ultimately translates to reduced power bills for all end-users.

Such options differ from both demand-side management, which entails mostly long-term demand reductions through new building systems, and interruptible electric rates, which provide permanent rate reductions in exchange for allowing a utility to suspend service if you do not comply with reduction demands. In contrast, demand-response programs can provide attractive incentives at sporadic intervals with minimal or no financial risk.

Demand-response programs are available in many forms. For example, some agreements involve payments for demand cuts during brief, usually 3 to 8-hour periods, with no penalty incurred if facilities are unable to reduce power use. At the other extreme, some programs entail customer commitment to lower demand by a certain amount. In such cases, failure to cut demand can lead to sizeable penalties, but will not result in service interruptions, unlike interruptible rate arrangements.

So far the most active participants in demand-response programs have been industrial customers, with discretionary loads that can be rescheduled to non-peak periods. Because most programs pay a minimum of 35-50 cents per dropped kilowatt hour, any costs associated with the overtime resulting from shifting production are usually more than covered. Some—in particular, aluminum smelters in the Northwest—have even found it cost-effective to close down the entire plant during times of astronomical wholesale power pricing when the plant's output is exceeded by the cost of power.

Facility executives certainly can't afford to overlook these options because they are here to stay. Not only is the Federal Energy Regulatory Commission (FERC) urging their industry-wide adoption, but they also represent a viable solution in the face of increasingly tight supply-demand margins, which we may see in the coming years.

While some of their industrial counterparts have already made their loads demand-responsive, most facility executives running commercial and institutional loads have steered away from such options. They are afraid that any load cut could hamper their business or that of their tenants. But on the contrary, experience with such facilities has shown that a number of loads can be interrupted or cycled to produce an overall demand reduction of 5-20%.

Keep in mind that in some cases, just one summer of responding to demand might be able to take care of much of the installation cost of the technology required for demand-responsiveness. Here are 18 things you can do to reduce loads during demand-response periods:

1) Turn off or slow down fans in a sequenced manner so no fan is off or slowed down for longer than a 10 to 15-minute period.

2) Increase space temperatures by 2 to 4 degrees in building zones for 10 to 15-minute periods to make use of building thermal inertia.

3) Cut down outside air intake. Even short, hours-long reductions on only a few summer days can substantially lessen cooling demand.

4) Instead of running many small air-conditioning units at once, cycle the systems that keep people, not sensitive equipment, cool.

5) In cooling plants with both electric and steam-driven or gas-fired chillers, use the non-electric units during a demand-response period.

6) Shut off boiler auxiliaries such as electric-powered fans and pumps and use steam-powered options instead.

7) Run on-site backup and emergency generators during a demand-response period.

8) Reduce hallway lighting to minimally acceptable levels, while making sure that lighting levels still facilitate emergency evacuation.

9) Shut off or dim stairwell lighting, but make sure you do not produce dark spots or dangerous locations.

10) Cut outdoor lighting, signage and window display lighting. Make sure you reach an agreement with the tenant or sales departments running such loads before doing so.

11) Cut public space lighting and ventilation in spaces where such adjustments won't result in much discomfort.

12) Turn off public TV monitors, but make sure that in so doing, you are not violating a prior agreement with any vendors.

13) Turn off electric reheat coils.

14) Rather than simultaneously running electric-resistance humidifiers, which usually have a high wattage, cycle their usage.

15) Cycle elevator systems or shut down some elevator banks.

16) Shut off vending machines unless they hold ice cream or prepared foods such as sandwiches.

17) Cycle or turn off restroom hand dryers, exhaust fans, water heaters and domestic hot water circulation pumps.

18) Shut down large electric appliances such as clothes dryers, washers and dishwashers for brief periods.

Keep in mind that the cost-effectiveness of making such loads responsive to demand will depend on the level of incentives offered and the associated equipment and installation costs. Currently, several states will help you pay for the costs, which include design, equipment, programming, new meters and other retrofits needed. Most important of all is the communication link between the utility or ISO and the people in the facility who are in charge of responding. Remember that if your facility lacks a multilevel process—pager, phone call and fax—for receiving the demand call and promptly acting on it, then your investment could be a waste.

The least costly route to demand-responsiveness is incorporating this capability in new construction and major renovations. This entails planning for such features as dimmable ballasts in new lighting systems, hybrid chiller plant options and flexible on-site generators. In fact, even if you never sign on to a demand-response program, by installing such capabilities, your facility will be better able to manage peak demand and thus, keep your power bills in check.

Source: Win-Win Energy Tactics
Lindsay Audin
Building Operating Management, Mar. 2003
http://www.facilitiesnet.com/bom/Mar03/Mar03energy.shtml