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Demand Response Funds Energy Savings & Corporate Earnings

Terrill Laughton, Johnson Controls (Fall 2011)
Energy represents a significant corporate expenditure. In today's tight economy, facilities managers are exploring ways to save money by reducing energy consumption. Smart building technologies that efficiently control lighting, HVAC, and even plug loads save millions of dollars annually for mid- to large-sized electricity users.

So how do demand response (DR) programs contribute further energy savings and earnings to the bottom line? DR has clearly emerged as an early example of "smart grid" enabling technology, empowering electricity users to reduce consumption - and get paid - for responding to grid emergencies or market-price events. Many DR opportunities are available, including the more widely adopted capacity programs, voluntary price-based and ancillary services, to name a few.

DR provides energy users with the ability to drop electricity load when the electric grid is at or near its peak capacity. Facilities receive actual payments beyond electricity bill savings. Moreover, DR participation improves the efficiency and reliability of the grid, decreasing the chance of blackouts or power shortages from occurring, especially during high-demand events such as summer heat waves. Innovative integrated DR technologies now allow facilities managers to be proactive by adjusting energy consumption levels to meet specific building needs before required, leaving managers in control of their own campuses.

Buildings and campuses are ideally positioned to leverage existing assets and generate revenue from the full range of DR earnings and savings opportunities. Overall benefits vary depending on energy-use patterns, curtailable loads, zonal pricing, and participation levels. It is not unusual for facilities that actively participate via integrated web-based DR platforms to capture annual savings and earnings of over $100,000.

Success Stories
There are many success stories of facilities using active DR participation as a viable method to leverage existing building automation systems and create additional revenue streams, while complementing corporate sustainability/conservation efforts. Facilities using integrated DR platforms represent a diverse range of vertical markets, such as state and municipal governments, higher education, heavy industry, agriculture, commercial office buildings/campuses, hospitals, shopping centers, etc. Let's look at two examples:

  • A family-owned New Jersey vegetable grower, processor, and supplier uses high volumes of electricity to run the vegetable freezers and the associated compressors with peak energy use of 5.7 megawatts between the months of April and November. By using integrated DR technology to temporarily curtail or shift the load to off-peak hours, the company is expected to earn enough to save 7 percent of its annual electricity bill, with the earnings going directly to the bottom line.

  • In 2010, a major department of the federal government was able to save an additional $40,000 from event-based DR efforts alone. The department credits software-based DR technology that displays facility-specific parameters and load information with near real-time feedback to help it comply with load drop commitments.

These success stories demonstrate the robustness of an integrated DR approach and its ability to adapt to a variety of unique markets, applications, and operations. Looking ahead, it's clear that industry/regulatory developments and technology innovation will continue to increase DR adoption and benefits.

Johnson Controls is a global leader in delivering solutions that increase energy efficiency in buildings, including GridConnect™ software, the industry's first Integrated DR technology platform.
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