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Energy Demand Management for Businesses

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Businesses can make an immediate impact by better managing their energy costs. Demand, in terms of electricity, is the instantaneous consumption of electricity. Your usage is the sum of demands over a period of time. Demand management is the act of controlling, through various means, how and when you use your electricity.

Reduction in demand decreases need for investments in networks and/or power plants. The electricity infrastructure has to be built to serve the hypothetical peak demands of all customers plus a cushion. It’s like buying a car that holds four passengers because every year at Christmas you take your mom and dad to dinner. The remainder of the year it is just you and the dog. For 364 days a year a two-seater meets your needs. But because you need the extra seats that one day, you pay for a larger car, more insurance, and more gas. Now if the car were always full these costs on a per passenger basis might even be equal to the two-seat car on a per passenger basis. However since most of the time it is just one passenger, the cost per passenger is higher with the four-seat model.

Demand management does not typically result in reduction of total energy consumption, rather in load shifting to off peak times. Demand management is achieved through behavioral changes.

Users that can shed at least 1000kW (if a business can drop 15%, an average drop, the peak load would need to be at least 650Kw) can benefit by implementing demand management. 100kW is the requirement for a business to participate in demand response, per PJM requirements.

Understanding your load profile and load factor are the first steps in initiating a demand management program. To get your monthly load factor you divide your monthly usage (kwh) by your peak demand (kw) and the hours in the month (load factor=kwh/(kw x hours in the month). A load factor of less than 40% indicates an opportunity to employ demand management. Your load profile is a representative view of how you use electricity over time. To get this information you will have to contact your utility.

Market insights and knowledge are the foundation of capacity tag management programs. If you’re not doing it already, you need to make a commitment to learn and follow the electricity market. The best source of this information is the ISO website, which publishes just such market information.

Make sure you are continuously measuring your results against your plan. Sit down annually and revise your plan based on results, market conditions, and changes in operation.

Posted: April 03, 2013

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