By Michael Gordon, Guest Columnist
Published in the September 2006 issue of
Today’s Facility Manager
s New Yorkers suffered under a horrible heat wave in mid-July and again in early August, the electricity grid braced itself under record setting demand—a situation that eventually gave way to selective power outages and left thousands of Queens borough residents to cope without power for as many as 10 days.
While utility company Con Edison struggled to keep the lights on, the events of this past summer made it clear that the electricity grid is a lifeline for all of us—as long as there is enough “juice in the tank” to keep the system running.
What some citizens may not have realized is that one increasingly important resource called Emergency Demand Response was hard at work pumping power back into the grid. The existence of this program very likely prevented wider blackouts in Queens and throughout the city.
Emergency Demand Response is an electricity incentive program, currently offered in New York and elsewhere, through which large energy consumers—in exchange for small financial incentives—commit to reduce their non-essential electricity use when the threat of a power outage looms. These energy consumers become “virtual power plants,” able to supply a dose of sorely needed electricity to the grid. They get paid even if they are never called upon to reduce; their willingness to respond is like a valuable insurance policy.
This program lived up to its billing this summer, delivering electricity during a recent 2 1⁄2 week period, with red letter days of July 18-19 and August 1-3 when the heat and the demand were at their peaks.
The New York Independent System Operator (NYISO) reports that during the July 18-19 “electricity event,” demand response participants contributed 300 megawatts of electricity back to the system—enough to power more than 300,000 homes. During the August 1-3 event, participants offered up more than 400 megawatts, or enough to keep the electricity running in 400,000 homes.
One demand response participant that provided crucial power back to the grid was Third Housing Co., Inc. of Electchester. When the call to conserve went out, the apartment complex cut back on air conditioning, saving enough electricity to power 2,000 homes. Meanwhile, the complex suffered no loss of power itself, despite blackouts in nearby Astoria and other parts of Queens. These actions may well have prevented a domino-like tripping of the system that could have resulted in a more widespread problem.
Besides Electchester, end users including NYU Medical Center, New York Presbyterian Hospital, Starwood Hotels, CB Richard Ellis, and Morgan Stanley made a difference as demand response participants. Curtailment activities included turning off non-essential lighting, shutting down an elevator or two, and pre-cooling buildings in the early morning hours. Probably the most visible example was Morgan Stanley’s move to turn off its stock ticker in Times Square.
Reputable demand response aggregators who represent end users also provide the ability to monitor the impact made through a personalized, online “energy dashboard.”
While the effect of demand response participation was substantial during the summer of 2006, it can play an even bigger role in helping the city and state to overcome the potentially perilous consequences of combining brutal temperatures and an aging electric infrastructure. Increasing strategic demand response participation from the current 2% to about 10% would put the city in a much better position to avert selective power failures and full scale blackouts.
To do that, it would be beneficial to see demand response programs expanded to include smaller energy users, including single family homes, restaurants, and mid-sized apartment buildings. Then they could be reliably called upon when specific areas are in danger of losing power.
A recently released report by the Federal Energy Regulatory Commission (FERC) cites procedures that will prevent localized, as well as system wide, power failures. The Commission recommends that states work cooperatively in finding demand response solutions.
This report also analyzes demand response contributions throughout the nation and judges that as critical. A recent agreement with FERC has created a viable market throughout New England. Known as the ISO-NE area, 11 mid-Atlantic states are on the verge of getting into the act through market revisions scheduled for January 2007.
Other states have such programs in place as well. Texas electric markets work well for large industrial end users willing to engage in demand response, and this will soon cater more to all users. California is a notable trouble spot. While it has traditionally offered excellent demand response opportunities, the program there is in imminent danger. The structure of this program has not been confirmed for even the near-term critical summer of 2007.
Demand response can be a winning strategy. Large end users receive payment for committing to minimal energy cutbacks, and everyone benefits from a more reliable electrical system. It’s an option that organizations should look into for their own benefit and the grid as a whole.
Gordon is founder and president of Consumer Powerline, a strategic energy asset management firm based in New York City. He can be reached by e-mail at [email protected].