Generac Grid Services Blog

DSM opportunity finally knocking for small and medium-sized C&I customers

Posted by Enbala on Nov 22, 2016 9:49:35 AM

 

CREATIVE FINANCING OPTIONS OPENS THE DER DOOR TO SMALLER BUSINESS CUSTOMERS

We all know the big guys – large commercial and industrial (C&I) customers – have been able to participate in wholesale markets thought demand-management programs for years. Now, small C&I customers are gaining this opportunity, too.

What gives? The financing.

Traditionally, two things have enabled large C&I electricity customers to cut their power bills and take advantage of energy efficiency or demand management programs. The first is know-how. In a big industrial site, there’s probably an energy manager or team that spends time finding and implementing such opportunities. The second enabler is money. In a big organization, there’s budget for energy efficiency and demand management.

That’s not the case with small C&I customers. Even if business people in this customer class have the time for market participation, they generally don’t have the funds for enabling technology, which can run into tens of thousands of dollars per site.

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But, that’s set to change due to an innovative project now being evaluated in the State of New York. Backed by the New York State Energy Research and Development Authority (NYSERDA), the project involves Symphony, Enbala’s demand-side management technology, and backing by Joule Assets, a company that provides funding for energy efficiency and demand-management initiatives, along with   a private equity fund.

Getting started

Initially, this pilot project will connect approximately 20 small commercial loads to the DSM platform, conduct engineering site audits to define customized operating parameters, and aggregate the portfolio of resources for participation in demand management programs run by New York’s Independent System Operator (NYISO) and Consolidated Edison (ConEd).

What kind of sites will be signed up? The pilot management team is looking at small office buildings, commercial and retail sites and even fast-food restaurants.

A typical installation at a small eatery might deliver annual savings in the range of $39,000 kWh and demand savings of 20 kW. A medium commercial site is generally good for around 150,000 kWh in energy savings and 40 kW in demand savings. These projections reflect the types of businesses that will be part of this pilot program.

The pilot itself reflects NYSERDA’s exploration of new compensation models for utilities through its Reforming the Energy Vision (REV) initiative. The current rate-base mechanisms in New York – and just about everywhere else – hamper adoption of such solutions by utilities because regulated utilities generally recover their revenue requirements through their electricity rates, earning a return on the infrastructure that they own and operate.

Demand-side management doesn’t support this model because it promotes reduced consumption of electricity. The REV initiative in New York is taking a very bold stance on trying to change this model so that utilities are incented in other ways to embrace DSM technologies, which can help utilities meet demand without investment in new plants and power lines.

Smaller customers, big DSM potential

Data from the U.S. Energy Information Administration (EIA) show that in New York during 2012, retail sales to commercial customers accounted for more than 60.3 million megawatt hours and an average demand of 6,888 megawatts. Energy used by commercial buildings accounts for two-thirds of New York’s power consumption, and 99 percent of the state’s commercial enterprises are small to mid-sized businesses.

That means the small-to-medium-sized C&I market has huge potential gain from demand-side management programs. But, as noted earlier, the market has largely remained untapped because such customers lack the time, know-how and funds to participate in such programs.

This NYSERDA program gives smaller businesses a turnkey distributed energy management solution with no upfront costs. What can such businesses gain by signing up for such a DSM program? Well, they can bid into NYISO and ConEd demand response programs while also reducing operating costs by optimizing electricity use and managing their sites for things like peak-demand reduction. That means these participating business will save money and acquire a new revenue stream.

Utilities offering the service gain demand-management benefits, reducing the need for firing up expensive peaker plants and further infrastructure investments. Joule, the financing arm of the project, enhances project value with energy market participation and then shares that value with both the facility owners and Joule fund investors.

NYSERDA projects that small and midsized business in this pilot project will reduce annual electricity consumption by 1,400,000 kilowatt-hours and produce 500 kW of distributed energy assets. Imagine what could be achieved with a full-scale implementation.



CONCLUSION:

In New York and around the world, small and medium C&I organizations offer an enormous opportunity waiting to be tapped, even if you look only at building-management applications. According to the EIA, there were 87 billion square feet of commercial space in the U.S. in 2012 made up of 5.6 million commercial buildings. By 2030, the agency expects the amount of commercial floor space will grow to 98.2 billion square feet. Extrapolate that to the rest of the world, and the numbers grow exponentially. That’s a lot of lighting, heating and cooling ready to come under control, bid into energy markets and start paying off for small to medium-sized C&I electricity consumers.



 

Topics: DERs, demand side management, distributed energy, Joule Assets, small and medium C&I customers, energy markets, DSM

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