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Leveraging Demand Response Without Impacting Critical Operations

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Keep operations running safely, efficiently and productively. That's a primary day-to-day objective for most facilities managers.

Buildings must be lit, powered, conditioned and secured – usually on a time-sensitive or around-the-clock schedule. For some organizations, even a few seconds of an outage, downtime, or interruption to power can have serious consequences, from threat to human life to lost product and decreased revenue. 

Take the pharmaceutical industry, for example, where researchers depend on thousands of tissue samples and cultures that all must be stored in temperature-controlled environments. Mere seconds of a power outage can mean millions of research dollars lost. A similar scenario is true in the food and beverage industry, which depends heavily on refrigerated and frozen storage.

In addition to the task of keeping an organization simply powered (not always a simple task after all), many energy and facilities managers know there are opportunities to leverage energy as more than just an overhead cost – and some are successfully turning energy into a net new revenue stream. By participating in a demand response program, organizations can receive payments from grid operators for curtailing their load on peak days during the winter or summer. And what’s more, they’re successfully curtailing energy without slowing or impacting critical operations within the facility. 

Avoiding peak energy costs, unlocking new revenue and keeping the organization’s power stable? It sounds almost too good to be true. 

Before diving into the specifics head first, let’s cover a few basics.  


What is demand response?

Demand response programs offer a solution to a problem faced by both large energy consumers and energy utility providers. Organizations need to manage their energy budgets by avoiding high costs that result from a handful of peak days, while still enjoying low market prices the rest of the year. Utility providers are obligated to serve energy to all customers, even on peak days when demand is at its maximum and regional grids may be at a risk for blackouts and brownouts. 

Demand response solves both problems.

In exchange for agreeing to curtail energy use during peak demand times, organizations receive payments from their curtailment service provider. Some providers offer payments for each curtailment event, in addition to payment for simply participating in the program, even if you aren’t called upon to curtail.

Demand response events may occur several times per year and usually last for no more than a few hours at a time. They are more common during the summer, when extreme heat and increased energy demand strain the power grid.  


Curtailing without Disrupting Operations

It sounds counterintuitive, but organizations that can’t afford downtime or a power outage are not only able to curtail electricity without disrupting their organization – they may actually be the perfect candidates. 

From healthcare to data warehousing to grocery, facilities managers in industries with critical power-dependencies are almost certainly already thinking about and solving for resiliency – their ability to ensure continuous energy supply and limit impact on the organization in the event of a grid interruption.

In fact, organizations such as hospitals, nursing homes and other long-term care facilities must maintain emergency preparedness plans that are government regulated. These facilities likely already have emergency power equipment on-site and may be comfortable with testing and using it.


Generators and Onsite Generation

Backup generators, which are already required in nearly all hospitals and other critical care centers, can take on the load of a facility in the event of a power outage. If carefully planned for, a seamless switching capability can be used to reduce reliance on the power grid during times of peak demand and demand response events – without a load disruption.

Similarly, other energy resiliency equipment, such as onsite generation and storage, can also be leveraged to shift facility loads off the grid and produce new revenue with demand response. 

Before forging confidently into the territory of switching load from grid to generator and back again, facilities managers know that they must be absolutely sure that their system is seamless. Even for organizations like data warehousing, there’s a risk of disrupting clients; that may not have the same life and death risks as a hospital system, but could represent significant revenue loss.

To manage reluctances and uncertainties with execution, energy managers are looking to technology.


New Technology

A range of new and superior technologies to assist with load shifting and curtailment can offer greater visibility into and control over processes in real time.

For example, some integrated technologies can partially or completely automate load shifting, minimizing the resources necessary to participate in a curtailment event. Other technologies can fill the gap by connecting facilities directly with grid operators; pre-programmed actions can kick-off the process based on the real-time escalations as wholesale prices climb on peak days. 

Such automations can create significantly faster response times, and in demand response scenarios, time literally equates to dollars. Technologies can also add a higher level of confidence in executing a curtailment event – an act that, for many facilities managers, represents a calculated risk.

But if the process can be automated and carefully monitored in real time, economic benefits of participating in demand response can certainly outweigh the liabilities. 


Storage and Redundancy

To get the benefits of demand response participation, or even independent curtailment on peak days, organizations may only need to curtail their load by a percentage – not shift all of their power usage off the grid. To meet this need, facilities managers may choose to turn high-consuming equipment down or off. Fortunately, planning to do so may be easier than it appears on the surface. 

Many organizations may already have redundancies built into key workflows or extra storage within the facilities. A manufacturer, for example, may be able to produce more products and materials at low-demand energy times and pull from extra stock during demand response events. Alternately, you may shut down equipment temporarily to cut your load if there’s another piece of equipment that can continue performing the same function during curtailment. 


The Bottom Line

Ultimately, facilities managers have to ask themselves whether they’re comfortable taking on the risk of moving part of their facility’s load for the economic benefits of demand response or peak load curtailment.

Do they have the right equipment, technology and know-how to manage the event? How considerable are the financial gains? Is the juice worth the squeeze?

More and more, managers in organizations with critical 24/7 operations say yes. A small disturbance may be more manageable than it initially seems, if the price is right.

Posted: January 27, 2020