U.S. patent application number 11/107222 was filed with the patent office on 2005-10-20 for enterprise energy automation.
This patent application is currently assigned to ENERGYCONNECT, INC.. Invention is credited to Ameduri, Gene J., Boucher, Rodney M., Cushing, Vincent J. JR..
Application Number | 20050234600 11/107222 |
Document ID | / |
Family ID | 35097335 |
Filed Date | 2005-10-20 |
United States Patent
Application |
20050234600 |
Kind Code |
A1 |
Boucher, Rodney M. ; et
al. |
October 20, 2005 |
Enterprise energy automation
Abstract
The preferred embodiments described herein relate to enterprise
energy automation. In one preferred embodiment, a method for
enterprise energy automation is provided. In another preferred
embodiment, a method for delivering ancillary services to an energy
supply and delivery system by a group of buildings is provided. In
yet another preferred embodiment, a method for integrating an
energy automation system is provided. Other preferred embodiments
are also provided.
Inventors: |
Boucher, Rodney M.; (San
Jose, CA) ; Ameduri, Gene J.; (Poland, OH) ;
Cushing, Vincent J. JR.; (Chicago, IL) |
Correspondence
Address: |
BRINKS HOFER GILSON & LIONE
P.O. BOX 10395
CHICAGO
IL
60610
US
|
Assignee: |
ENERGYCONNECT, INC.
|
Family ID: |
35097335 |
Appl. No.: |
11/107222 |
Filed: |
April 15, 2005 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
60562691 |
Apr 16, 2004 |
|
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Current U.S.
Class: |
700/286 ;
700/295; 700/296 |
Current CPC
Class: |
G06Q 50/06 20130101;
G05B 15/02 20130101; G06Q 30/02 20130101 |
Class at
Publication: |
700/286 ;
700/295; 700/296 |
International
Class: |
G06F 019/00 |
Claims
What is claimed is:
1. A method for enterprise energy automation, the method
comprising: (a) monitoring data from an energy supply and delivery
system; (b) extracting data from one or more building automation
systems in a group of buildings designated for modifying coincident
peak load on the energy supply and delivery system if building
performance capability permits; (c) determining a building
operation strategy for one or more buildings in the group of
buildings based on the data from the energy supply and delivery
system and the data from the one or more building automation
systems; and (d) sending a bid to the energy supply and delivery
system for an energy supply and delivery system product, wherein
the bid is based on an availability of the one or more buildings to
modify load in a manner consistent with the building operating
strategy for a specific period of time.
2. The method of claim 1, wherein the data from the energy supply
and delivery system and the data from the one or more building
automation systems are received via the Internet.
3. The method of claim 1, wherein the data from the energy supply
and delivery system and the data from the one or more building
automation systems are received continuously.
4. The method of claim 1, wherein the data from the one or more
building automation systems includes meter data.
5. The method of claim 1, wherein the data from the one or more
building automation systems includes occupancy data.
6. The method of claim 1 further comprising receiving local weather
data for the group of buildings, and wherein the building operation
strategy is determined in (c) based on the data from the energy
supply and delivery system, the data from the one or more building
automation systems, and the local weather data.
7. The method of claim 1, wherein the building operations strategy
is determined using a model for each of the one or more buildings,
a model of a composite of operations of the group of buildings, a
current status of each of the one or more buildings, and data from
the energy supply and delivery system.
8. The method of claim 1, wherein the building operation strategy
preserves quality of service in the one or more buildings.
9. The method of claim 1, wherein the building operation strategy
comprises a commitment to day-ahead load shifting to an estimated
market price.
10. The method of claim 1, wherein the building operation strategy
comprises forward period load shifting to market price.
11. The method of claim 1, wherein the building operation strategy
comprises real-time load shifting.
12. The method of claim 1, wherein the building operation strategy
comprises actions to support a supply of spinning reserve to the
energy supply and delivery system.
13. The method of claim 1, wherein the building operation strategy
comprises actions to support demand limiting products for the
energy supply and delivery system.
14. The method of claim 1, wherein the building operation strategy
comprises curtailment.
15. The method of claim 1, wherein the building operation strategy
comprises two or more of the following: (i) a commitment to
day-ahead load shifting to an estimated market price, (ii) forward
period load shifting to market price, (iii) real-time load
shifting, (iv) actions to support a supply of spinning reserve to
the energy supply and delivery system, (v) actions to support
demand limiting products for the energy supply and delivery system,
(vi) and curtailment.
16. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
capture energy margins.
17. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
reduce system coincident peak load.
18. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
reduce local coincident peak load.
19. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
reduce shaping and imbalance energy expense.
20. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
reduce risk management expense.
21. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
reduce ancillary services expense.
22. The method of claim 1, wherein the energy supply and delivery
system product modifies operation of the one or more buildings to
arbitrage gas and electric prices.
23. The method of claim 1, wherein the energy supply and delivery
system product performs two or more of the following acts: (i)
modifies operation of the one or more buildings to capture energy
margins, (ii) modifies operation of the one or more buildings to
reduce system coincident peak load, (iii) modifies operation of the
one or more buildings to reduce local coincident peak load, (iv)
modifies operation of the one or more buildings to reduce shaping
and imbalance energy expense, (v) modifies operation of the one or
more buildings to reduce risk management expense, (vi) modifies
operation of the one or more buildings to reduce ancillary services
expense, and (vii) modifies operation of the one or more buildings
to arbitrage gas and electric prices.
24. The method of claim 1 further comprising: (e) computing energy
cost each of the one or more buildings saves under the building
operation strategy.
25. The method of claim I further comprising: (e) computing power
bill changes for each of the one or more buildings under the
building operation strategy and confirming the power bill
changes.
26. The method of claim 1 further comprising: (e) if the energy
supply and delivery system does not accept the bid, providing a
different building operation strategy to the one or more
buildings.
27. The method of claim 1 further comprising: (e) continuously
monitoring data from the energy supply and delivery system and
changing the building operation strategy according to the
continuously monitored data.
28. The method of claim 1, wherein the bid is based on an
availability of the one or more buildings to reduce load in a
manner consistent with the building operating strategy for a
specific period of time.
29. The method of claim 1, wherein the bid is based on an
availability of the one or more buildings to increase load in a
manner consistent with the building operating strategy for a
specific period of time.
30. The method of claim 1, wherein the data in (a) comprises price
of an energy supply and delivery system product.
31. The method of claim 1, wherein the data in (a) comprises cost
of an energy supply and delivery system product.
32. The method of claim 1, wherein the data in (a) comprises status
of one or more of the following: a transmission line, a generating
plant, and a distribution system.
33. The method of claim 1 further comprising: (e) receiving an
acceptance of the bid from the energy supply and delivery system;
and (f) executing the building operation strategy.
34. The method of claim 33 further comprising: (g) providing
compensation for the one or more buildings.
35. The method of claim 34, wherein the compensation comprises a
share of utility tariff demand savings.
36. The method of claim 34, wherein the compensation comprises a
share of ESP demand charge savings.
37. The method of claim 34, wherein the compensation comprises
utility interruptible program payments.
38. The method of claim 34, wherein the compensation comprises ISO
demand-response program payments.
39. The method of claim 34, wherein the compensation comprises
capacity sales within ISO-sponsored markets.
40. The method of claim 1, wherein (a)-(d) are performed by a
national control center.
41. A method comprising: (a) designating a portfolio of buildings
to be available for reducing energy cost by time shifting energy
usage; (b) monitoring building automation systems in each building
in the portfolio of buildings to determine each building's capacity
to modify electrical energy consumption on a time-varying basis;
and (c) automating operation of electrical energy consumption in
one or more buildings in the portfolio of buildings to modify
electrical energy cost.
42. The method of claim 41, wherein (c) comprises performing
curtailment.
43. The method of claim 41, wherein (c) comprises shifting peak
demand into off-peak windows based on signals from an energy supply
and delivery system.
44. The method of claim 41 further comprising: (d) providing
compensation for the one or more buildings in the portfolio of
buildings.
45. The method of claim 44, wherein the compensation comprises a
share of utility tariff demand savings.
46. The method of claim 44, wherein the compensation comprises a
share of ESP demand charge savings.
47. The method of claim 44, wherein the compensation comprises
utility interruptible program payments.
48. The method of claim 44, wherein the compensation comprises ISO
demand-response program payments.
49. The method of claim 44, wherein the compensation comprises
capacity sales within ISO-sponsored markets.
50. The method of claim 44, wherein the compensation comprises a
share of utility tariff energy savings.
51. The method of claim 44, wherein the compensation comprises a
share of ESP energy charge savings.
52. The method of claim 41, wherein (b) comprises monitoring
building automation systems in each building in the portfolio of
buildings to determine each building's capacity to reduce
electrical energy consumption on a time-varying basis.
53. The method of claim 41, wherein (b) comprises monitoring
building automation systems in each building in the portfolio of
buildings to determine each building's capacity to increase
electrical energy consumption on a time-varying basis.
54. The method of claim 41, wherein (c) comprises automating
operation of electrical energy consumption in one or more buildings
in the portfolio of buildings to reduce electrical energy cost.
55. The method of claim 41, wherein (c) comprises automating
operation of electrical energy consumption in one or more buildings
in the portfolio of buildings to increase electrical energy
cost.
56. A method for delivering ancillary services to an energy supply
and delivery system by a group of buildings, the method comprising:
(a) designating a portfolio of buildings to be available for
providing services to an energy supply and delivery system by
reducing energy consumption at times of high demand; (b) monitoring
building automation systems in each building in the portfolio of
buildings to determine each building's capacity to modify
electrical energy consumption on a time-varying basis; and (c)
automating operation of electrical energy consumption in one or
more buildings in the portfolio of buildings to deliver an
ancillary service to the energy supply and delivery system.
57. The method of claim 56, wherein the ancillary service comprises
a response reserve service.
58. The method of claim 56, wherein the ancillary service comprises
a non-spin reserve service.
59. The method of claim 56, wherein the ancillary service comprises
a regulation up and down service.
60. The method of claim 56, wherein the ancillary service comprises
a balancing energy up service.
61. The method of claim 56, wherein the ancillary service comprises
a replacement reserve service.
62. The method of claim 56, wherein (b) comprises monitoring
building automation systems in each building in the portfolio of
buildings to determine each building's capacity to reduce
electrical energy consumption on a time-varying basis.
63. The method of claim 56, wherein (b) comprises monitoring
building automation systems in each building in the portfolio of
buildings to determine each building's capacity to increase
electrical energy consumption on a time-varying basis.
64. A method for integrating an energy automation system, the
method comprising: (a) designating a portfolio of buildings to be
available for providing services to an energy supply and deliver
system, each building in the portfolio having a building automation
system; and (b) monitoring building automation systems in each
building in the portfolio of buildings via internet access.
65. The method of claim 64 further comprising: (c) monitoring an
energy supply and deliver system via internet access.
66. The method of claim 65, wherein the internet access to the
building automation systems and the energy supply and delivery
system is accessed through software that has one or more of the
following features: (a) analyzes cost avoidance and
revenue-enhancing strategies, (b) executes cost avoidance and
revenue-enhancing strategies, (c) collects data, (d) monitors data,
and (e) balances energy and comfort decisions.
67. The method of claim 64, wherein the energy supply and deliver
system is monitored in real-time.
68. The method of claim 64 further comprising: (c) automating
operation of electrical energy consumption in one or more buildings
in the portfolio of buildings to reduce electrical energy cost.
69. The method of claim 64 further comprising: (c) automating
operation of electrical energy consumption in one or more buildings
in the portfolio of buildings to deliver an ancillary service to
the energy supply and delivery system.
Description
CROSS-REFERENCE TO RELATED APPLICATION
[0001] This application claims the benefit of U.S. Provisional
Application No. 60/562,691, filed Apr. 16, 2004, which is hereby
incorporated by reference.
BACKGROUND
[0002] It would be desirable to provide a process for leveraging
the convergence of new technologies and market metrics to provide
major energy economies to commercial buildings.
SUMMARY
[0003] The present invention is defined by the following claims,
and nothing in this section should be taken as a limitation on
those claims.
[0004] By way of introduction, the preferred embodiments described
below relate to enterprise energy automation. In one preferred
embodiment, a method for enterprise energy automation is provided.
In another preferred embodiment, a method for delivering ancillary
services to an energy supply and delivery system by a group of
buildings is provided. In yet another preferred embodiment, a
method for integrating an energy automation system is provided.
Other preferred embodiments are also provided.
[0005] The preferred embodiments will now be described with
reference to the attached drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
[0006] FIG. 1 is a schematic of an energy automation process of a
preferred embodiment.
[0007] FIG. 2 is a diagram of an energy automation system of a
preferred embodiment.
[0008] FIG. 3 is a block diagram of an energy automation system of
a preferred embodiment.
[0009] FIG. 4 is a graph of building electrical load.
[0010] FIG. 5 is a graph of savings for a 1 MW commercial
customer.
[0011] FIG. 6 is a graph of hourly energy price distribution in New
York City Summer 2002 weekdays.
[0012] FIG. 7 is a graph of weekday load profile for New York City
Summer 2001.
[0013] FIG. 8 is a graph of degree days versus month for Chicago
Midway.
[0014] FIG. 9 is a graph of intra-day energy price volatility
distribution for New York City Summer 2002 weekdays.
[0015] FIG. 10 is a table of energy automation versus tariff-based
operations.
[0016] FIG. 11 is a graph of load profile versus hour for a NYC
commercial building.
[0017] FIG. 12 is a graph of load profile versus hour.
[0018] FIG. 13 is another graph of load profile versus hour.
[0019] FIG. 14 is a table showing metropolitan city cooling degree
day correlation.
[0020] FIG. 15 is a graph of load profile versus hour for a NYC
Comm building customer.
[0021] FIG. 16 is a graph showing governor response and contingency
reserves successfully restored then generation/load balance after
the loss of 2600 MW of generation.
[0022] FIG. 17 is a graph showing contingency reserves provide a
coordinated response to a sudden loss of supply.
[0023] FIG. 18 is a graph showing duration of spinning reserve
activation.
[0024] FIG. 19 is a graph of PJM 100% spinning reserve
activation.
[0025] FIG. 20 is a graph of 2001 PJM summer spinning reserve
activation.
[0026] FIG. 21 is a graph of NYISO day ahead east regulation prices
on summer weekdays.
[0027] FIG. 22 is a graph of 2001 PJM spinning reserve
activation.
[0028] FIG. 23 is a graph showing that transmission congestion into
New York City is significant and volatile.
[0029] FIG. 24 is a graph showing frequency of high prices
occurring in PJM.
[0030] FIG. 25 is a graph showing savings for a 1 MW commercial
customer.
DETAILED DESCRIPTION OF THE PRESENTLY PREFERRED EMBODIMENTS
[0031] Introduction
[0032] By way of introduction, the preferred embodiments described
below are directed to Enterprise Energy Automation, which is the
process for leveraging the convergence of new technologies and
market metrics to provide major energy economies to commercial
buildings. Enterprise Energy Automation provides the means by which
customers, suppliers, and deliverers include all components of
energy cost incurrence on both sides of the meter in their
investment and operating decisions. Weekly, daily, hourly, and
minute-to-minute, through Energy Automation, economies of 20 to 40%
can be continuously and relentlessly wrung out and distributed.
Enterprise Energy Automation enables the realization of previously
untapped economic and reliability benefits--benefits long concealed
by the utility-customer tariff relationship. Enterprise Energy
Automation is particularly advantageous in major metropolitan areas
with persistently high energy supply prices. Target customers are
commercial buildings--and their energy service providers, building
automation contractors, utilities, and regional operators.
[0033] This detailed description will first describe the components
and operation of a presently preferred system for implementing
Enterprise Energy Automation. The detailed description will then
describe the products, services, and long-term option values that
can be provided through Enterprise Energy Automation
[0034] Enterprise Energy Automation System
[0035] Turning now to the drawings, FIG. 1 is a schematic of an
energy automation process of a preferred embodiment. As shown in
this schematic, an energy automation process interacts with a
complex energy supply and delivery system 10 and complex commercial
building technology and operations 20. The term "EnergyConnect"
used in this figure and in this description refers to the name of
the assignee of the present patent application. Although
"EnergyConnect" (or "ECI") is used in these preferred embodiments
to refer to the entity providing the energy automation
system/process, it should be understood that other entities can
implement the disclosed embodiments, with the appropriate
licenses.
[0036] Referring again to the drawings, FIG. 2 is a more detailed
diagram of the energy automation system. As shown in FIG. 2, the
energy supply and delivery system 10 and a commercial building BAS
(building automation system) 20 communicates with a control center
30 via a network 40 (here, the Internet). The energy automation
system integrates an intelligent software solution, a network, a
gateway and graphical user interface, and a supply and delivery
system interface. The intelligent software solution analyzes and
executes various cost avoidance and revenue-enhancing strategies,
performs data collection and monitoring, and comprises benefit/risk
sharing protocols, all to balance energy and comfort decisions. The
network 40 allows each building to communicate over secure
high-speed internet or customer intranet with the national control
center 30. The gateway and graphical user interface is located at
each building, streamlining and easing the communication,
information, and control functions with BAS and building
management. The supply and delivery system interface is a direct,
reliable, and secure communication with utilities, distribution
service entities, regional transmission organizations, and other
supply entities.
[0037] The control center 30 comprises a platform with intelligent
adaptive software that electronically integrates the energy
production/delivery systems and customers' energy using equipment.
More specifically, the platform acquires and delivers reliable
real-time electronic data and control signals. Data transfer will
occur in near real-time and with reliability consistent with that
presently required for energy system and energy market operations.
Most of the necessary energy system and energy market data is
readily available, as it is already used for system operation. Some
energy system data, e.g. LMP, is becoming available with the advent
of independent system operators (ISO). The necessary customer data
is available from large buildings with BAS, and is gradually
becoming available from smaller buildings as BAS prices drop and
hourly metering is deployed by utilities. The platform also decides
the optimum operation of a portfolio of customers' equipment. The
platform dispatches the portfolio in a manner that (1) maximizes
profit from among several competing energy system and energy market
opportunities, (2) dependably performs all energy system
reliability functions, and (3) maintains building comfort.
Decisions are required in several time-frames. For example,
electric capacity may require annual or monthly commitment.
Electric system ancillary services may require day-ahead
commitment. Operating to economy energy prices requires daily,
hourly, and real-time decisions. The platform also performs
accounting and billing consistent with protocols and provides
feedback, monitoring, and reporting.
[0038] The platform enables powerful "products" that reduce supply
and delivery costs and increase commercial building, BAS, and
communications systems values by reducing current and expected
energy expense and by reducing pressure on suppliers and
distribution systems. These products will be discussed in more
detail below. Preparatory to providing initial Energy Automation
products and services, EnergyConnect provides services to assure
that customer facilities are doing the basic blocking and tackling
of energy management. They include "tuning" HVAC and BAS equipment
to meet design performance, installing "enterprise" energy
reporting software, upgrading to state-of-the-art BAS, as necessary
to execute Energy Automation strategies and including project
finance if preferred, and controlling energy use against utility
tariffs. These basic services provide several benefits, including
creating additional energy savings for many customers, as much as
10%.
[0039] Turning again to the drawings, FIG. 3 is a block diagram of
an energy automation system of a preferred embodiment. This system
comprises an electric system markets and operations interface 50
and a building interface 60. The electric system markets and
operations interface 50 comprises a weather database 51, an REP
database 52, an ECI REP/QSE interface 53, an ECI QSE interface 54,
a market database 55, and an APX market database 56. The building
interface 60 comprises a module that encodes building instructions
62, a module that provides a graphical view of building operations
and expected system/weather conditions 64, a building database 66,
and a customer building interface 68. The system also includes an
REP QSE module 70, an ISO 80, a QSE module 90, a module that
determines day ahead building performance capability 100, a module
that determines optimum day ahead building and portfolio operation
110, and a module that estimates value 130.
[0040] The building control and portfolio optimization software
will determine the portfolio building operation that maximizes
value against market, supplier, and utility prices. The diagram
depicts a "day-ahead" process. The "day-ahead" strategy will
anticipate and reflect (a) expected conditions for the next day and
(b) prior long-term or seasonal commitments to each building's
supplier or to the ISO 80. A similar "short-term" process will
continually update and communicate an optimum strategy for the next
few hours. The "short-term" strategy will anticipate and reflect
(a) actual conditions as they unfold during the day and (b) prior
long-term and short-term commitments to each building's supplier or
to the ISO 80. Both the "day-ahead" and "short-term" processes
entail two steps.
[0041] The first step is to determine day ahead building
performance capability. This determines load shifting and response
capability of each building based on, for example, (a) an ability
to execute pre-defined strategies that have been defined and tested
in advance consistent with (1) building and HVAC system character
and (2) BAS and communications capability, (b) expected weather
(temperature, humidity) and occupancy, (c) historical performance
under similar weather and occupancy conditions, and (d) as modified
by a building engineer, current status input. In this embodiment,
there are several pre-defined strategies in the building database
66. These include day-ahead shifting to market price (e.g., shift
load from afternoon (high prices) to morning (low prices) to early
morning (even lower prices) in order to minimize energy expense
with day-ahead notification), Chicago shaping and imbalance
(similar to "shifting" but in illiquid Chicago hourly market),
real-time shifting (a variation on "shifting," i.e. also be
prepared to shift the same day, within the afternoon, in response
to electric system events/prices), spinning reserve (be prepared to
drop significant load, 10.+-.minutes, randomly, approx.
10.times.during summer, between noon and 6 pm), demand limiting
(augment "shifting" strategy with peak demand control), and
curtailment (extended peak curtailment, approx. 5 hottest days,
commitment made from portfolio).
[0042] Step one determines a model for each building that is one
input to the optimization model. For example, to facilitate a
predefined day ahead load-shifting strategy, the model considers
magnitude and timing leeway for load shifting, inefficiency of
precooling in advance of need, efficiency of cooling during lower
ambient temperature hours, and delivery tariff constraints. The
building models are then combined to create a single model of the
building portfolio, also for input and analysis by the optimization
model.
[0043] The building model defines the current flexibility of a
building and of a building portfolio to (a) shift HVAC-related
electrical load and (b) curtail lighting and other loads--to
accommodate hourly energy prices--on both a day-ahead and real-time
basis. Similarly, the model defines the current ability of a
building and of a building portfolio to provide ancillary services
to an ISO.
[0044] FIG. 4 is a graph of building electrical load. In this
graph, kW is a function of outdoor dry bulb T, outdoor dew-point T,
solar load, wind speed, internal electrical equipment and lighting
load, hour, and season. The chillers have a slower response and
longer duration, i.e. primary basis for load-shifting and secondary
basis for ancillary services. The pumps/AHU have fast response and
are able to shift load around if integrates to (approx.) zero over
small time period, i.e. ancillary services.
[0045] ECI considers several building characteristics in mapping
building electrical equipment and loads to electric system markets
and operations. These characteristics include speed of response
(e.g., kW/minute or kW/second), advance notice required (e.g.,
seconds, minutes, hours, day), duration of response (e.g., ability
to accommodate 10 minute, 15 minute, hourly, or multi-hour
thermal-related load-shifts), time interval of response (e.g.,
ability to shift thermal-related load back 1 hour, 2 hours, etc.),
magnitude of response (e.g., add a second dimension to each of the
above parameters; how many kW does that speed, notice, etc. apply
to), inefficiency/efficiency of response (e.g., define efficiency
loss incurred by change from historical HVAC operation that tracks
building thermal load or efficiency gain obtained by operating HVAC
equipment in hours with more favorable ambient conditions), and
other thermal character (e.g., thermal inertia, recovery
ability).
[0046] Modeling of buildings for various purposes is well
developed. Modeling of a building in a manner that reveals the
characteristics listed above is not well developed. The ECI
building model will adapt existing building model technology to
this purpose. The ECI building model is also characterized by
inverse (the input and output variables are known and measured, and
the objective is to determine a mathematical description of the
system and to estimate the system parameters), dynamic (use
transfer functions where the thermal mass of a building is
sufficiently significant to delay the heat gains or losses), and
system level (a model of the entire building, not an assembly of
component models of the HVAC system. "Component" modeling may
reside in the building automation systems to more efficiently adapt
building loads to hourly and subhourly electric market prices and
operations control signals). (The descriptions of inverse and
dynamic stated above are from ASHRAE Handbook, Chapter 31, "Energy
Estimating and modeling Methods").
[0047] Step two determine optimum day ahead building and portfolio
operation by determining optimum operation of the building
portfolio and optimum operation of each stand-alone building.
Inputs to the optimization model include, for example, (a) a model
of each building and of the building portfolio and (b) market
prices for energy, capacity, and ancillary services (or alternative
supplier price/value indicators). Optimization criteria include ST
revenue maximization, LT revenue maximization (ISO program
enrollment in advance of year or season), LT margin maximization
(margin takes into consideration whether capital or opportunity
costs are incurred), option value (for example, putting thermal
energy in the bank in order to be able to take advantage of
short-notice price spikes), and minimum threshold (reflect minimum
value or margin of error, and diminishing returns).
[0048] The value in portfolio optimization includes the following:
map buildings to opportunity (e.g. revenue maximization), reserves
(portfolio reliability/diversity enables firm commitment), shared
portfolio reserves (probably using most versatile buildings), scale
(e.g. to meet ISO MW thresholds; to affect local price and utility
investment; to spread fixed costs over wider base; for bargaining
power or influence in developing market), internal market (avoids
external transaction costs and supports fractional or kW trades),
and support common interests of commercial building sector (market
rules and development; who keeps what share of benefits;
unfragmented market development; avoidance of supplier switching
costs).
[0049] Portfolio optimization enables mapping of sophisticated
buildings to sophisticated (not necessarily high margin or high
revenue) uses in order to maximize portfolio revenue. For example,
the most versatile buildings may provide spinning reserve services
while also providing "portfolio reserves" to backup multiple other
portfolio services being sold off of other buildings. Building
sophistication or versatility may be defined in terms of 1)
communications speed and reliability; 2) RT/ST intra-day
flexibility; 3) building thermal inertia or recovery ability; 4)
thermal storage; and 5) building engineer preferences. Such
criteria may be satisfied through staged optimization. First,
optimally shift each building's thermal load independently to
accommodate hourly prices, day ahead (DAH), while respecting demand
features of energy supplier contract and utility delivery tariff.
Second, modify DAH for LT commitments & associated reserves.
Third, modify DAH to anticipate ST products & associated
reserves (involving product bids to ISO, anticipating awards or not
resulting from such bids, and anticipating a fallback ST
load-shifting strategy in the event that a bid is not successful).
Fourth, modify DAH for 3-hour ahead events and price changes. This
model eventually anticipates and takes advantage of others'
independent, non-portfolio building actions.
[0050] Eventually, the basic precooling strategy becomes the
baseline--around market prices and processed directly by the
supplier and customer. EnergyConnect then determines the optimum
change to the scheduled load, as needed to provide portfolio
services, and pays the customer for the value of such portfolio
service. (Under this scheme, suppliers and their customers will
have a disincentive to falsify this new baseline because ECI may
well decide not to change the baseline schedule. Regarding
distributed analysis/decision-making, (a) ECI optimization software
estimates basic load shifting strategy to accommodate hourly
prices, (b) building BAS determines actual response to hourly
energy prices (that is, for those buildings assigned to a simple
price-based, load-shifting strategy, ECI provides a price profile
to each building BAS system and the precise load shifting strategy
is determined by a local algorithm that can more efficiently and
accurately adapt to real-time building conditions), and (c) the ECI
building model learns building capability over time, so that
estimates get better over time. Also, the BES/RRS bid generator 120
is an example of a market application that could be better
developed (and brought to market faster) if outsourced or
codeveloped by an ECI partner with hands-on commercial experience
in the ERCOT market.
[0051] The following paragraphs will describe other components of
the system shown in FIG. 3.
[0052] Estimate Value Module 130
[0053] A simple algorithm to indicate to building engineers in real
time the value of actions that they are being asked to take with
their building systems. For example, this can be a specific dollar
value or a "high", "moderate", "low" designation.
[0054] BES/RRS Bid Generator 120
[0055] This software performs two functions. First, as an input to
the optimization software 110, it estimates "winning" bid prices.
Second, for transmittal to the QSE 90, it executes a bid strategy.
In production mode, estimates of "winning" bid prices are based on
an analysis of awards, including recent history and under similar
seasonal, weather, and ISO operating conditions. In a presently
preferred embodiment, ECI will conduct weekly or daily trials by
simply adopting the actual winning bids as if they were ECI bids.
This objective is to demonstrate and test the ability of buildings
to participate in these markets and to qualify the building
portfolio to participate subsequently in other markets.
[0056] The database software will support all Energy Automation
functions: building control & portfolio optimization;
scorecard; accounting; and business/product development.
[0057] Building Database 66
[0058] The building database 66 has the following content: energy
profile (daily, seasonal, current; volatility; kWh, kW, therms,
Btu; main and submeter data; and billing data), monitored building
and building HVAC data (provided by a BAS system), mechanical and
BAS (type, size, vintage, available control and telemetry, design
capability, communications protocol), load flexibility (response
speed, duration, notice requirement, load shift magnitude, load
shift frequency, load shift cost (e.g. losses from precooling,
tenant discomfort, equipment wear/tear)), performance history
(accumulate a record of actual response to actual Energy Automation
control, to eventually provide a "learned" building capability
profile over a wide range of conditions), on-site generation (type,
available control, design capability, etc.), current building
equipment status (as updated by building engineers or continually
by monitoring through BAS system), and a library of commands to
commercial buildings. In one embodiment, EnergyConnect will work
with all participants (buildings owners, energy service providers,
scheduling coordinators, etc.) to define a collection of acceptable
load shifting commands, actions, and strategies that are available
to Energy Automation building control and optimization software.
Eventually, this collection will evolve, expand, and automate as
EnergyConnect builds and records experience for a wide range of
commercial building character under a wide range of conditions.
[0059] Weather Database 51
[0060] The weather database 51 stores hourly temperature, humidity,
wind speed, frontal passage, etc.--both forecast (48/168 hours) and
history. The weather database 51 also stores HDD, CDD history for
each market.
[0061] The following table shows database dimensions/scale.
1 Forecast 2004 2005 2006 2007 MW 30 180 360 1,620 MWh (1000) 105
683 1,577 6,307 # of properties 22 130 260 1200 # of major metro
areas 2 6 8 10 # of ISO's or regions 2 5 6 7 Building spec averages
# of buildings per property 2 Sq ft per property 325,000 Annual MWh
per property 6,000 Annual kWh/sq ft 19 MW per property 1.4
Portfolio participation (%) Demand response program 100 100 80 80
Distribution system capital 5 10 conservation Price-response load
shifting 10 20 30 40 (DAH or BES) Spinning reserve (RRS) 10 20
50
[0062] Market Database 55
[0063] The market database 55 stores prior portfolio and building
commitments (current and historical bids and awards for BES and
RRS, plus longer term commitments), market price and volatility
(LMP and energy supplier price signals (electric and gas)),
transmission congestion prices (DA, HA, RT (hourly), and RT (6
minute) prices; electric system conditions), yesterday's conditions
(yesterday predicts today, at least as a start), ancillary services
data (DA and RT prices, opportunity cost, control signals), and
utility tariffs (delivery and supply tariffs, especially as a key
driver of demand limiting strategies and as they constrain the
flexibility of buildings to shift load from high to low-priced
hours).
[0064] REP Database 52
[0065] The REP Database 52 stores the price or value signals
provided by a building's supplier in lieu of, or to augment, market
prices, baseline building load schedules, as determined by the
supplier for its building customers (these schedules will be
modified to reflect Energy Automation strategies), and adjusted
building load schedules, as determined by ECI and transmitted to
REP.
[0066] Operations Support Software
[0067] The Energy Automation administration database stores Energy
Automation commands sent and verification of receipt, Energy
Automation receipts and disbursements and the parameters behind
them, and customer/supplier admin information. The scorecard
software serves three functions (1) operational measurement &
verification of performance (as a basis for distribution of
revenues and against expected performance, to improve building
database accuracy), (2) off-line analysis and development of
alternative building control strategies (to test and continually
improve the optimization software vs. independent, non-portfolio
building operation), and (3) internal and external reporting. In
regard to the development database, in order to continue
development of the building model and the optimization model, ECI
will need off-line access to some subset of the building, weather,
and market databases.
[0068] Customer Building Interface 68
[0069] The customer building interface 68 encompasses several
component. First, the customer building interface 68 comprises the
hardware/software/communications interface between the ECI system
and each building's BAS. The customer building interface 68 also
comprises a graphical user interface that (a) indicates current
status of assigned Energy Automation strategies and commands to a
property's BAS, (b) displays current electric system operations and
market conditions, weather, building, or other information (as
necessary to inform building engineers as to how their buildings
are creating value under today's conditions), and (c) displays and
allows updating of ECI's building database content regarding their
properties. The customer building interface 68 also automates
retrieval and capture of BAS data in the Building Database and
encodes building instructions--software that translates ECI
building instructions (from the optimization model) into commands
recognizable by each building's BAS. Inputs include, for example,
standard commands (from building database), optimum portfolio
operation (from optimization model), and optimum building operation
(from optimization model). The customer building interface 68 also
receives and interprets deployment signal--ECI will pass some ISO
operating signals directly through to a building's BAS. For
example, an ISO signal to deploy spinning reserve will require a
real-time building response. In anticipation of such a deployment
signal, ECI will have already transmitted instructions regarding
the required building response.
[0070] In one implementation, for a few buildings, this interface
is fully integrated with an existing BAS. This will enable
evaluation of screen shots and other features. For other buildings,
a less intrusive GUI, e.g. web access to an ECI screen, can be
provided. In this implementation, ECI systems will not directly
control BAS. One objective of such an implementation is to
determine, with the building engineers, whether and to what extent
ECI systems need to directly control BAS in a full production
system. This means that, for this implementation, building
engineers will have to take actions to implement assigned Energy
Automation strategies. The interface design in this implementation
can facilitate the building engineer's execution of such
strategies. An exception to this is, to test the ability of
buildings to participate in ERCOT ancillary services markets, those
buildings will receive ISO deployment signals. For all buildings in
this implementation, the system will automatically obtain and store
key building information via the BAS.
[0071] The following table shows the initial definition of building
data for retrieval through BAS system. Standard commands can either
be universally interpreted by each building's BAS and/or custom to
each building's BAS.
2 Description Retrieval frequency (minutes) IDR kWh 1 min for
Houston buildings participating in BES and RRS real-time ISO
markets 15 minute for Chicago and Houston load shifting strategies
Temperature, return air, 15 minute every 3.sup.rd floor, EWNS
Humidity, sampled 15 minute or less frequently? Chiller trend (amp,
load) 5-15 minute (shorter interval required only during periods
that buildings are participating in ISO programs requiring
real-time response) AHU trend (amp, load, 5-15 minute (as above)
SAT) Pump trend (amp, load) 5-15 minute (as above) Occupancy
schedule Daily Major equipment status Event driven Confirmation
that ECI Event driven communications have been received, that ISO
deployment signals have been acted on.
[0072] Electric System Markets and Operations Interface 50
[0073] The electric system markets and operations interface 50
comprises the REP/QSE interface 53, the market database 55 (which
derives ISO market and operations data, both current and
historical, from the APX market database 56), the REP Database 52,
and the weather database 51.
[0074] In regard to the REP/QSE Interface 53, ECI has two
alternatives: a standard ECI-specified interface or several
REP-specified interfaces. The interface will transfer expected
day-ahead building/portfolio load schedule to ECI and then transfer
ECI-modified schedule back to REP, transfer REP price signals, if
any, to ECI, and provide acknowledgments. In one implementation,
this interface will be a simple, custom-designed interface designed
to accommodate participation of a specific office.
[0075] The QSE Interface 54 will be used for ancillary service
market participation. This interface 54 will send ancillary service
bids to a QSE to be forwarded to the ISO 80, receive ancillary
service awards, and receive ISO deployment signals. In one
implementation, ECI will test the ability of a commercial building
portfolio to reliably provide ancillary services to ERCOT. This
means that ECI need not send/receive actual BES and RRS
bids/awards. For example, ECI may adopt others' actual winning
bids, and then deploy as if ECI bids/awards. Such operation will
far simplify this QSE interface 54, putting the emphasis on
deployment of the building portfolio. Because of the relatively
small magnitude of kW deployed from a 15-20 building portfolio, the
resulting effect on kWh schedules will probably be too small to
show up in ERCOT/QSE/REP settlement accounting.
[0076] The market database 55 contains historical ISO market and
operations data, from the APX Market Database 56, current BES and
RRS bid and award information (in one implementation, to be adopted
from others' actual winning bids), and a record of ancillary
service bids, awards, and deployments and their associated
parameters. With regard to historical ISO market and operations
data, this data would contain day-ahead and RT hourly energy prices
(e.g., last 30 days, current season, same season from a year
earlier), and BES and RRS market price history (same periods as
above). The latter data is needed to develop bids in the BES/RRS
Bid Generator 120. In one implementation, the Bid Generator 120
will simply adopt others' actual winning bids, so this historical
data will not be needed.
[0077] The REP database 52 contains historical and current
building/portfolio baseline load schedules, as provided by the REP,
and historical and current building/portfolio adjusted load
schedules, as sent to the REP.
[0078] The weather database 51 contains historical weather data
(available from National Climatology Center), such as hourly
temperature and humidity (to match the same periods for which
hourly interval meter data is available and stored in the building
database 66) and daily HDD and CDD data (same periods as above), as
well as a 48 hour forecast of temperature and humidity, by hour
(available by internet feed from NWS).
[0079] In one implementation, an integrated design of ECI and APX
systems is performed to minimize development expense until better
specification is available and to better explore mutual, long-term
development benefits including shared resources (programming, NOC,
etc.), development of APX scheduling software, to accommodate
customer participation in ISO markets development, setting the
standard for QSE and building interface, facilitating QSE
value-added services, etc., national roll-out of Energy Automation
using APX systems (for example, anticipate and accommodate PJM
programs similar to ERCOT by end of year), and a role for Fulcrum.
Additional issues can be addressed in the implementation. For
example, if an REP is its own QSE, will confidential ECI bid/award
data be available to the affiliated REP or a potential ECI
competitor? If a QSE is not an REP but otherwise performs
commercial services in the market, will confidential ECI bid/award
data be compromised? For example, if the QSE affiliate is bidding
into the same market as ECI, will it view ECI bids and routinely
undercut ECI by 1%? Another issue that can be addressed is to
decide whether modified schedules provided directly to a scheduling
entity or instead provided to the supplier for submission to its
scheduling entity? In Texas, this may be a mute point since many
REP's are their own QSE.
[0080] Protocols
[0081] EnergyConnect's building control and portfolio optimization
software strives to maximize portfolio benefits (revenue increases,
expense reductions, risk management) while maintaining building
comfort. Protocols, in turn, provide the basis for allocating
benefits and risks within a building portfolio (according to
participation in EnergyConnect products and services) and among
market participants (ISO, utility, BAS, ESP, power marketer, and
EnergyConnect). Protocols serve several purposes. First, they must
produce prices that incent customer, ESP, and utility
participation. EnergyConnect programs will develop significant
dollar margins, so both attractive pricing and attractive
EnergyConnect profit margins are achievable. Second, protocols will
influence whether and how competitors enter and share the expense
of market development. Third, protocols will seek recognition and
capture of the indirect benefits of EnergyConnect programs. As
EnergyConnect achieves scale in each market, customers, utilities,
and ESPs will realize significant indirect benefits. For example,
when energy price volatility is mitigated by EnergyConnect
programs, risk and risk management expense will diminish for all
market participants. Fourth, protocols will codify direction and
timing of the flow of funds among parties. This will dictate
EnergyConnect's credit risk exposure and working capital
requirements. The protocols will also codify the financial risks
borne by each party.
[0082] One can confirm designs and test alternative prototype
protocols for allocating program benefits and risks. Allocation of
benefits and risks takes into consideration: commercial building
availability, building performance capability, actual performance
(all as recorded by the scorecard software), and incremental
contribution to portfolio benefits (as determined by the portfolio
optimization software). Protocols tasks include: specifying
protocols (and in form that can be translated into accounting) and
defining associated information requirements, especially as they
affect hardware/software/communications development (for example,
commercial building energy bill monitoring and savings analysis,
commercial building performance measurement and verification, and
revenue disbursement and netting of payments).
[0083] Communications, Signal Management, and Building/BAS
Interface 68
[0084] The communications, signal management, and building/BAS
Interface 68 is software/hardware that handles data transfer among
EnergyConnect, building owners and their BAS systems, scheduling
coordinators, energy service providers and collects data from ISOs,
the National Weather Service, and utilities.
[0085] Products and Services
[0086] The EnergyConnect platform enables powerful products and
services. The following "initial" products are targeted to benefit
commercial buildings by reducing energy expense and by reducing the
burden on energy suppliers and energy delivery systems. All of
these products and more can be provided today under already
established rules in Texas. Many of these products can be provided
today in the New England, New York, Mid-Atlantic, and Midwest
markets. As these markets continue to develop, so will
EnergyConnect products and services. EnergyConnect products include
capturing energy margins, reduce system or local coincident peak
load, reduce shaping and imbalance energy expense, reduce risk
management expense, reduce ancillary services expense, arbitrage
gas/electric prices, and basic blocking and tackling. Reduced
energy expenses shows up immediately in property market values. The
value to the building owner of improved operating profit is
typically ten to one, e.g., adding $10,000 to net operating profit
increases the value of a property by $100,000. The value of this
incentive to building owners depends on widely varying tenant
arrangements. These products will now be described in more
detail.
[0087] Capturing Energy Margins
[0088] Capturing energy margins continuously and optimally shifts
use to shoulder and off-peak periods based on day ahead prices,
continuously and optimally shifts use to lower-priced hours
dynamically during each day, or, if market prices are not
available, continuously and optimally shifts use to minimize costs
under utility tariff. In other words, capturing energy margins
continuously, optimally, and automatically shifts time-of-use to
lower-priced hours. There are two ways to be paid for this product:
responding to utility tariff (provides direct savings on the
customer power bill) and responding to the ISO provides payment for
service. If the utility bill is reduced, then a customer fee or
share of savings is paid to EnergyConnect. In the case of payments
from the ISO, EnergyConnect receives the entire amount and shares
the appropriate portion with the building customer.
[0089] As the PJM analysis in FIG. 5 indicates, a market program
that clips just the highest prices (that is, that shifts individual
customer's energy use away from a few high-priced hours) can
significantly reduce customers' energy bills. The top line in the
figure reflects actual wholesale energy expense to serve a 1 MW
customer at each of the .about.3,000 PJM LMP points (sorted in
descending order). Each succeeding line reflects the effect of
clipping prices at $300, $150, $100, and $50. EnergyConnect's
target markets and customers will benefit especially, because
higher and more volatile prices are characteristic of large
metropolitan areas. Shifting an individual customer's energy use
away from high-priced or high value hours is not the onerous task
implied by most utility tariffs. In contrast to the static pricing
historically used in such tariffs, power supply and delivery
economics produce high and volatile energy costs and prices.
Nonetheless, a price clipping strategy would involve relatively few
hours (see FIG. 6).
[0090] Likewise, demand control has disproportionate value on just
a few peak days. As FIG. 7 indicates, customer loads vary across a
wide range, and so electric supply and delivery systems are
burdened on relatively few peak summer days.
[0091] Weather-driven load and market price variability differs
from city to city. For example, Chicago and Dallas experience
widely varying summer weather (see FIG. 8 with respect to Chicago);
San Diego and San Francisco do not.
[0092] As an important corollary, if permitted the freedom to shift
hour-to-hour energy use every day, absent the strictures of an
every day demand charge, a commercial building can create
significant economies for the supply and delivery system. Allowing
flexible energy use on other than the few peak days would not tax
either the generation or delivery systems. FIG. 9 shows that
volatile energy costs and prices occur intra-day, that is, from
hour-to-hour within an on-peak window. This means that commercial
buildings need only shift cooling loads hour-to-hour in order to
create significant economies.
[0093] The table in FIG. 10 and graph in FIG. 11 summarize a
simulation performed on a 1 MW commercial office building over
three summer months. The building has a state-of-the-art BAS system
and is rigorously controlled to minimize the electric tariff bill
each month. Tariff-based operation produced a summer bill of
$154,000. Under the simulation, the BAS system instead rigorously
controlled the building to minimize the economic cost of supply and
delivery. Relative to the tariff-based operation, economic
operation reduced the cost of supply and delivery by 20-40% over a
wide range of assumptions. In one simulation, cost was reduced
$50,000--roughly 1/3.sup.rd of the tariff bill. This same
simulation increased the tariff bill by over $15,000. The increase
is largely attributable to increased demand and demand charges on
non-peak days and hours, i.e. days and hours that did not tax
either the generation or delivery systems. The table in FIG. 10
shows the cost reductions that produced the $50,000 savings. The
graph in FIG. 11 provides an example of summer weekday electric
prices and a building pre-cooling strategy carried out in
anticipation of such prices.
[0094] This product can be described as continuously and optimally
shifting building load to lower-priced hours. Initially,
EnergyConnect will target very large cities that have (1)
locational marginal prices (LMP) and deregulated retail markets for
electricity or (2) existing time-of-use or real-time-pricing
utility tariffs. EnergyConnect will then migrate this product to
other large cities. Compensation for providing this service may
come from a share of customers' energy savings, as reflected
monthly in their utility or energy service provider (ESP) bill.
There are several market development issues. First, there is a need
to amend utility tariffs so that demand charges discriminate
between coincident and non-coincident peak use. That is, demand
charges need not constrain hourly price-response actions except
during peak hours. Second, ISO's need to extend operation of
real-time demand-response programs into a lower range of prices.
EnergyConnect customers will capture their most significant savings
through volume in the frequent $50-100/MWh hours, not in the
increasingly rare $100-1000/MWh hours. Third, EC needs to gain
recognition of real and reactive loss profiles by hour, day-type,
and season. I.sup.2r means that distribution losses are much
greater weekday afternoons in the summer when prices are highest.
Reactive power losses also typically peak in those same hours.
[0095] Reducing System or Local Coincident Peak Load
[0096] To reduce system or local coincident peak load, individual
building actions in real time reduce system or local loads at times
when increasing coincident load would cause additional costs to be
incurred by energy supply or delivery entities. Certainty and
permanence of reductions are created through portfolios of
customers that can more effectively assure reductions on year ahead
or day ahead basis and dynamically during each day. Reducing system
coincident peak load involves responding as a portfolio to utility
and ISO demand reduction programs. This is significantly more
valuable to suppliers than programs targeted at individual customer
demand reductions. Payment for service varies by program and has
maximum value in EnergyConnect target markets. EnergyConnect
receives payment for service and distributes a portion of the
proceeds to the building customer.
[0097] This product can be described as curtailing demand in
coincident peak load periods; in its most basic form, control and
shift demand to mitigate utility tariff charges. With some
aggregation of commercial building load, curtail or shift peak
demand into off-peak windows based on signals from ISO's and
utilities. Examples of practical early applications include the CA
Demand Reserve Partnership Program and ISO demand response programs
such as the NYISO's ICAP Special Case Resources (SCR), Emergency
Demand Response Program (EDRP) or Day-Ahead Demand Response Program
(DADRP). Emerging programs, like the CA Demand Reserve Partnership
Program, include many features conducive to commercial load
participation. These features include, for example, aggregation of
building loads (contrasts with historical utility programs
requiring commitment from individual building accounts. The
diversity of an aggregated portfolio enables commitment that an
individual building cannot make.), variable and changeable month by
month commitment level (allows commitment to vary seasonally to
reflect changing building energy uses and use levels), and ad hoc
participation (for lesser compensation, building loads can offer
curtailment on an ad hoc voluntary basis without the burden of an
every day obligation).
[0098] NYISO's SCR pays retail electricity customers to provide
their load reduction capability for a specified contract period.
Program participants receive payments in advance for an agreement
to curtail usage during times when the electric grid could be in
jeopardy. Based upon system condition forecasts, participants are
notified to curtail this claimed "capacity", either through the use
of on-site generation and/or reducing electricity consumption to a
firm power level. EDRP allows participants to be paid for reducing
their energy consumption upon notice from the NYISO that an
operating reserves deficiency or major emergency exists. The
program is open to interruptible loads or local "behind-the-fence"
generation greater than or equal to 100 kW per zone. Loads register
for the program through Curtailment Service Providers (CSPs); when
called upon, CSPs will be paid for verified load reduction at the
rate of $500/MWhr or real-time zonal locational-based marginal
price (LBMP), whichever is greater. DADRP allows loads, through
their load serving entity, to bid load reduction into the day-ahead
energy market. Load reduction bids are evaluated along with
generation supplier bids as part of the NYISO's Security
Constrained Unit Commitment (SCUC) program. If scheduled through
SCUC, loads are paid day-ahead LBMP for the scheduled demand
reduction, and are also paid an incentive (at the day-ahead LBMP)
for any additional load reduction provided in real time.
[0099] With aggregation and some greater sophistication,
EnergyConnect can sell capacity, e.g. as part of the NYISO ICAP
Special Case Resource Program. Participation in utility and ISO
programs depends on commercial load aggregation. These programs are
designed for customers able to shed significant MW for the duration
of the super peak period, e.g. 1-5 MW for 3-6 consecutive hours,
typically weekday afternoons in the summer. Such performance is
typically not possible out of a single commercial building, but
could be extracted from a 25 MW portfolio of buildings acting in
coordination.
[0100] Compensation for reducing peak load may come from i) share
of customers' utility tariff demand savings or ESP demand charge
savings, ii) utility interruptible program payments, iii) ISO
demand-response program payments, and iv) capacity sales within
ISO-sponsored markets. One market development issue is that utility
interruptible programs provide only a small share of benefits to
participating customers.
[0101] Reducing Shaping and Imbalance Energy Expense
[0102] Reducing shaping and imbalance energy expense shapes
customer load to approximate more liquid wholesale energy blocks
and self-mitigates weather-driven volume volatility. Less reliance
on illiquid hourly energy markets will reduce energy suppliers'
energy and risk management expense.
[0103] This product can be described as follows. EnergyConnect will
immediately provide a building portfolio with the ability 1) to
reduce the utility or energy service provider (ESP) expense and
risk of buying shaped products from the market and 2) to
self-manage volume risk and imbalance price risk. This product
complements (does not preclude) other EC products and services. For
example, EC would initially commit its portfolio to a shape that
more closely approximates standard market products. The energy
supplier would then contract on a forward basis, relying more so on
these less expensive standard products. Second, in actual
operation, EnergyConnect would then shift load in response to
hourly prices, creating additional value with no downside risk. See
FIG. 12 and 13 for graphs of load profile versus hour. FIG. 12
shows that it is expensive to shape energy supply to customer
loads. Less liquid hourly products are pricey and risky. FIG. 13
shows that it is even more expensive to adjust "shape" purchases
weekly, daily, and hourly to fit dynamic customer loads. Default
imbalance energy is especially pricey and risky. Compensation for
providing this service may come from a share of customers' energy
and risk management savings. ESPs will facilitate this product and
so will also share in the savings.
[0104] Regarding market development issues, utilities with large,
incumbent customer portfolios can shape supply and manage imbalance
more easily because of the diversity of customers because regional
resources are more or less matched to the utility's load shape and
because they typically own or control significant regional
resources. As a corollary, ESP customer portfolios have less
diversity (more volatility) and are odder-shaped. Moreover, ESPs
typically have to buy shaped products at the margin from
generation-controlling utilities. This means there will likely be
strong initial interest in this product from ESPs, especially those
without their own regional generation portfolios and without large
regional customer portfolios. Even a modest EnergyConnect building
portfolio can provide smaller ESP's with the benefit of diversity.
A larger portfolio may have the flexibility to sell
shaping/imbalance products to the energy market.
[0105] Reducing Risk Management Expense
[0106] Regarding reducing risk management expense, the revenues
derived from Energy Automation products and services are positively
correlated with customers' volatile energy expenses (both gas and
electric), and thus hedge customers' energy expense risk. Moreover,
expectation of damped energy prices and associated volatility will
reduce long-term risk management expense. Reducing short-term risk
management expense shapes customer load around more liquid
wholesale energy blocks and self-manage weather-driven volume
volatility. Less reliance on illiquid hourly energy markets and
less exposure to volatile imbalance energy will reduce short-term
risk premiums. This service to suppliers and ISOs competes directly
with the price currently paid. The cost to supply this service is a
small fraction of current price. In most applications EnergyConnect
is paid directly by the supplier, but in some cases with large
building owners and managers the contract between supplier and
building may reflect the service, and the building customer will
pay EnergyConnect. Regarding reducing long-term risk management
expense, expectation of damped energy prices and associated
volatility will reduce long-term risk management expense. This
product differs from short-term risk not only in time frame, but
the cost to supply is an even smaller fraction of current
price.
[0107] Risk management is a significant byproduct of Energy
Automation products and services. In high price/high load months or
seasons, more frequent and more valuable opportunities exist for
price-responsive load shifting, peak demand reduction, and shaping
and imbalance energy savings. This means that the associated Energy
Automation revenue (or savings) is positively correlated with a
customer's monthly or seasonal energy expense, and so provides a
natural hedge. This natural hedge is also intrinsic to other Energy
Automation products and services. Eventually, the more liquid
energy markets created by Energy Automation will damp expected
prices and price volatility and thereby reduce the associated risk
premiums incurred by suppliers (and passed on to customers).
[0108] To the extent energy price volatility is driven by natural
gas prices, Energy Automation provides an additional tool for
building owners and energy service providers to hedge their natural
gas exposure. To the extent energy price volatility is
weather-driven, Energy Automation provides national building owners
and national energy service providers an additional tool for
managing energy price risk on a regional portfolio basis. This
results from the weather correlation among cities within broad
regions of the country. FIG. 14 is a table showing metropolitan
city cooling degree day correlation.
[0109] This product can be described as follows. As a byproduct,
customers and suppliers will derive significant financial risk
management benefits from Energy Automation products and services.
To the extent not needed by any one customer, these benefits are
transferable to other building customers within the portfolio.
[0110] Reducing Ancillary Services Expense
[0111] Reducing ancillary services expense reduces load regulation
burden and spinning-reserve burden on the electric system. These
products will initially be sold to ISOs at prices established for
delivery of similar services by generators. EnergyConnect will be
paid directly by the ISO.
[0112] Reducing load regulation expense product description: This
involves reducing or eliminating load regulation burden on the
electric system. Control area operators balance generation with
ever changing electric loads. For example, NYISO sends dispatch
"basepoint" signals to generators every 5 minutes. Such signals
cause generation to follow the daily/hourly load profile. NYISO
also sends regulation or AGC signals to "regulating" generators
every 6 seconds. Such signals cause generation to follow
minute/second load volatility. This finer control is needed to meet
NERC/NYISO control area performance standards for load/generation
balance and for frequency control. To perform this finer control,
NYISO typically requires flexible regulating capacity equal to 1%
of the customer load. If a customer load is not volatile, then it
imposes no regulation burden on the control area. If customer load
volatility can be controlled to vary opposite the control area
load, then that customer is providing a regulation benefit to the
control area. In advance of ISO recognition of customer-provided
regulation service, EnergyConnect will at least seek relief from
regulation charges. This will provide some savings while
demonstrating that customer loads can reliably and profitably
participate in control area regulation services markets.
Compensation for providing this service may come from sharing in
avoided regulation charge.
[0113] One market development issue is gaining ISO recognition of
reduced burden on ISO operation. This is a simple, first step
toward setting up commercial customers as suppliers of regulation
services.
[0114] Arbitraging Gas/Electric Prices
[0115] By arbitraging gas/electric prices, current very high gas
prices overcome electric inefficiencies in markets and in hours
that coal-based generation is at the margin. This product can be
described as follows: switch HVAC systems between electric and gas
supply in order to arbitrage gas/electric prices. At night, the
gas/electric price spread may overcome the inherent inefficiency of
electric supply and merit switching to electric heating. Switching
night-time heating load will make sense when coal or nuclear
generation is at the margin setting electric market prices. There
is a corresponding opportunity to switch electric heating customers
to natural gas during on-peak periods when electric prices are
high. For example, electric prices typically spike during the early
morning load pickup when all the residential set-back thermostats
trigger. Compensation for providing this service may come from
sharing of arbitrage savings. Regarding market development issues,
electric heating at night, when performed on a market scale, would
take significant pressure off the price of natural gas, a premium
fuel. The reduced coal plant cycling would mitigate added
environmental emissions. To implement this service, commercial
buildings will typically have to add an electric heat exchanger to
their existing heating systems, and ESPs will have to augment their
gas scheduling operations to accommodate short-term switching. In
the current climate of historically high and volatile gas prices,
ESPs will appreciate the financial risk management value of this
option.
[0116] Basic Blocking and Tackling
[0117] Basic blocking and tackling involves rigorous application of
state-of-the-art building automation systems to create additional
energy savings for many customers, as much as 10%, and sets the
stage for Enterprise Energy Automation. Preparatory to providing
initial Energy Automation products and services, EnergyConnect
provides services to assure that customer facilities are doing the
basic blocking and tackling of energy management. They include
"tuning" HVAC and BAS equipment to meet design performance,
installing "enterprise" energy reporting software, upgrading to
state-of-the-art BAS, as necessary to execute Energy Automation
strategies and including project finance if preferred, and
controlling energy use against utility tariffs.
[0118] These basic services provide several benefits. First, they
create additional energy savings for many customers, as much as
10%--alone usually sufficient to justify BAS upgrade. Second, they
enable an enterprise energy solution for national customers, whose
facilities exist in a variety of regulated/deregulated markets.
Finally, they provide with insight into customers' energy equipment
and use that is invaluable to executing Energy Automation. All of
these products and services increase building value--by reducing
energy expenses. Value to the building owner is typically ten to
one, e.g. adding a sustainable $10,000 to net operating profit
increases the value of the building by $100,000.
[0119] Compensation for this service may come from a share of the
energy cost savings (from enhanced energy management system
performance) as reflected in the customers' monthly utility or
energy service provider (ESP) bills. This will be a monthly fee or
percentage of savings. In addition, a fee will be charged to the
customers for engineering, project management and program interface
if the BAS is upgraded. Fee based relationships will be developed
between EnergyConnect and the various suppliers of these upgrade
services (BAS manufacturers and installing contractors).
[0120] Regarding market development issues, these services are more
applicable to high cost energy markets (electricity and gas) and to
markets where tariffs support and reward buildings able to control
load hourly (time-of-use rates, peak, super-peak, etc.).
[0121] Additional Products and Services
[0122] Additional products and services can be used to provide
expansion and greater profit margins. EnergyConnect can deliver
joint products and services extracted from the building portfolio.
Such products and services include reducing locational marginal
price, reducing capacity reserve margin requirements and expense,
selling ancillary services to the market, reducing capital
investment for distribution system growth, reducing distribution
system operating expense, selling shaping and imbalance services,
and controlling distributed generation.
[0123] Reducing Locational Marginal Price (LMP)
[0124] The reducing locational marginal price (LMP) product can be
described as shifting energy use to lower-priced hours in local,
transmission constrained market, typically a large metropolitan
city, e.g. New York, Chicago, San Francisco. Additional opportunity
during less frequent, system-wide price spikes. See FIG. 15, which
is a graph of load profile versus hour for a NYC Comm building
customer. Compensation for providing this service may come from
negotiated share of estimated savings, e.g. a fee from BOMA members
that recognizes value created by operation of the Energy Automation
System.
[0125] There are several market development issues. These include:
i) customer volume needed for material effect and ii) eventually,
this program will damp prices and price volatility for all
customers, so high prices will lose visibility and customers
therefore will no longer see a benchmark against which to measure
savings.
[0126] Reducing Capacity Reserve Margin Requirements and
Expense
[0127] The product description for reducing capacity reserve margin
requirements and expense is that building groups can internally
provide many of the services and manage many of the risks that
capacity reserve margins are intended to cover. Examples include
weather-related load volatility, load forecast error, and
spinning/regulating reserves.
[0128] Reduced operating reserves provide an intriguing example.
Operating reserves include capacity to provide regulation,
spinning, and non-synchronous operating reserves. As an example,
for discussion, assume spinning reserve equal to 3% of load are
required on a peak day (i.e. 1,000 MW for largest contingency
divided by a 33,000 MW peak load). This means that at least 3% of a
15% installed capacity reserve margin is dictated by the need to
provide spinning reserves from generating resources during peak
load conditions. One possibility is that a commercial load
portfolio would provide spinning reserve MW's on summer weekdays
equal to 3% of its load and have its reserve margin requirement
dropped to 12%. The second possibility is that the same portfolio
would provide spinning reserve MW's disproportionate to its size,
e.g.>3%. In this case, the portfolio's reserve margin
requirement could drop even further, MW for MW. This is an example,
and technical adjustments both up and down can be made.
[0129] Providing Ancillary Services to Market
[0130] In Texas, commercial buildings are now allowed to
participate in ancillary service markets. The specific technical
requirements have been articulated and leeway has been given to
scheduling entities regarding the nature of contractual
arrangements. This provides the opportunity to prove out the
ability of commercial building loads to participate profitably in
such markets. Other parts of the country will follow.
[0131] In Texas, "Loads acting as resources" can provide ancillary
services based on the load's available technology, as follows. (1)
Responsive Reserve: requires that an Under Frequency Relay (UFR) be
installed that opens the load feeder breaker on automatic detection
of an under frequency condition. These loads are also required to
be manually interrupted within a 10 minute notice. The load,
breaker status, and relay status must have real-time telemetry to
ERCOT (through the QSE) installed. Loads qualified for the
Responsive Reserve market are also automatically qualified for the
Non-Spin market, Replacement and Balancing Energy Market. (2)
Non-Spin Reserve: requires that interruptible loads be manually
interrupted (e.g., opening a circuit breaker) within 30 minutes
notice. The load must also have real-time telemetry installed. (3)
Regulation Up and Down Service: requires that interruptible loads
through automatic controls respond to signals provided by ERCOT to
increase and decrease load while meeting rigorous performance
monitoring criteria. The load must also have real-time telemetry
installed. Loads qualified for Regulation Up and Down service are
also qualified to provide Non-Spinning Reserve, Balancing Energy
Services, and Replacement Reserves. (ERCOT systems do not yet
accommodate loads of this type). (4) Balancing Energy Up: requires
that loads be able to respond through manual or automatic
operations to interrupt load within 10 minutes. The load must also
have real-time telemetry installed. Loads qualifying for Balancing
Energy Service are also qualified to provide Replacement service.
If an interruptible load has been awarded an ancillary service
capacity payment, that load may not be bid into the balancing
energy market. (5) Replacement Reserve Service: loads that were
planning to be on-line but not providing any other Ancillary
Service.
[0132] In terms of a product description, providing ancillary
services to market provides spinning reserves and load and
frequency regulation. Such services can be reliably provided out of
a large, diverse building portfolio. Such a portfolio will provide
1) size, e.g. NYISO requires that regulating resources provide at
least 5 MW; 2) regulation-capable or variable speed motor loads;
and 3) performance reliability. Nimble variable speed motors are
much better suited to these services than are cumbersome power
plants.
[0133] FIG. 16 is a graph showing governor response and contingency
reserves successfully restored then generation/load balance after
the loss of 2600 MW of generation, and FIG. 17 is a graph showing
contingency reserves provide a coordinated response to a sudden
loss of supply. The source for these graphs is "Technical Issues
Related To Retail-Load Provision Of Ancillary Services, Background
Issues Discussion," Brendan Kirby and Eric Hirst, Feb. 10,
2003.
[0134] Regulation reserves are called on continuously, e.g. in
NYISO to respond to AGC signals transmitted every 6 seconds. A
regulating resource is deemed to have performed if it responds
within a bandwidth established by the min/max AGC signals sent out
over the subsequent 30 seconds. Operation outside this bandwidth
results in decreased payments for service.
[0135] By contrast, spinning reserves are called infrequently due
to random generator outages and other significant ACE excursions.
When called on for a generator outage, they fill the breech, e.g.
until more permanent operating reserves can be brought on-line,
e.g. in 10-30 minutes.
[0136] FIG. 18 is a graph showing duration of spinning reserve
activation, FIG. 19 is a graph of PJM 100% spinning reserve
activation, and FIG. 20 is a graph of 2001 PJM summer spinning
reserve activation. In FIG. 20, the circle size is equal to the
duration of spinning reserve call. The solid circles are weekdays,
and the patterned circles are weekend. "ACE" means spinning reserve
called on to restore ACE, and "unit" means spinning reserve called
for generating unit failure.
[0137] Relatively few spinning reserve calls occur during the
priciest summer hours, e.g. 11 am to 8 pm weekdays. During these
periods, generating units are typically fully loaded and incur a
high opportunity cost to provide spinning reserve service.
Commercial building loads would aim to compete to provide such
services in these hours. Instead, most summer spinning reserve
calls occur as generation and load are ramping up early in the day
or ramping down in the evening. During these periods, many
generating units are backed off and readily available to provide
spinning reserve service. Prices are at their lowest. Commercial
building loads, e.g. air conditioning, would typically not be
available to compete in these periods. These same conclusions
generally hold year-round, as shown in the graph of FIGS. 21 and
22.
[0138] EnergyConnect revenues come from service revenues, based on
spinning reserve market prices and opportunity cost payments
currently provided to generators, capacity revenues (i.e. installed
capacity is no longer needed in the peak hours of the year to
provide spinning reserves that are customer supplied, thus reducing
the required installed capacity reserve margins), and energy market
price reduction (i.e. the marginal unit setting market prices will
now be a lower priced generating unit).
[0139] Reducing Capital Investment for Distribution System
Growth
[0140] The "reducing capital investment for distribution system
growth" product can be described as eliminating or deferring
capital improvements to distribution system by controlling
coincident peak load growth, by reducing load uncertainty, and by
responding to distribution system contingencies. A commercial
building portfolio--by responding to contingencies or restoring
contingency margin--may be able to reduce the number of
contingencies that distribution system planners currently consider
in order to maintain delivery reliability. This translates into
reduced or deferred capital expenditures.
[0141] The following table relates to a Consolidated Edison Case
Study and is discussed below.
3 Distribution Plant Expenditures Energy Year Expenditures Peak MW
$/kW-year (1000 MWh) 2002 $422M 10,215 $41 33,972 2001 $438M 10,293
$43 34,190 2000 $385M 9,379 $41 35,410 1999 $422M 10,038 $42
35,114
[0142] Con Ed has distribution assets of $8.5 billion and spends
over $400 million (5%) each year for growth/reliability and
replacement. The peak growth rate, 1994-2002, has been 2%, although
it appears to have flattened in recent years. The energy growth
rate, 1994-2002, has been a negative 2%. Revenue has also declined
slightly over the same period. Commercial revenue comprises 60% of
Con Ed revenue and has declined approximately 3% per year.
[0143] As announced on Jun. 3, 2003, Consolidated Edison Company of
New York, Inc.--(Con Edison) is investing $522 million this year in
upgrades to its electric delivery system for the summer. These
upgrades and improvements reflect Con Edison's commitment to
continuing to provide the most reliable electric delivery service
in the country," said Lou Rana, senior vice president of electric
operations for Con Edison. Industry analysts have rated Con Edison
as the leading electric utility for reliability, and the company is
ranked 10 times more reliable than the national average. With
energy supplies continuing to be tight, however, company officials
encouraged customers to use energy wisely. The company said the
more than a half-billion dollars in improvements this year would
help maintain reliable service delivery to the company's 3.1
million business and residential customers in its service area of
New York City and Westchester County. The upgrades and improvements
include $328 million on the distribution system, including $65
million for upgrades to cables and transformers, $20 million on
transmission upgrades, $174 million on substation installation and
circuit breakers, 158 miles of underground and aerial feeder cables
replaced, 345 thermally sensitive cable joints replaced, 211 new
transformers installed, and 20 electrical (4 kV) unit substations
enhanced and upgraded.
[0144] For discussion of the Con Ed analysis, it is assumed that
(1) 80% or $325 million of annual capital expenditures are driven
by growth/reliability; and 60% of that $325 million is driven by
commercial customer growth, (2) a commercial building EEA portfolio
of 1000 MW would allow Con Ed to remove one level of design
contingency on related distribution facilities and thereby reduce
capital spending, and (3) a commercial building portfolio of 1000
MW could drop its coincident peak load by 20% (achieved in stages
over 3 years) and thereby offset 1-2 years growth on the rest of
the Con Ed system. 20%.times.1,000 MW of commercial load=200 MW.
1-2% growth.times.[10,000 total load-1,000 of commercial
load]=90-180 MW. 200/90=2.2 years, 200/180=1.1 years. This
translates into $325-650 million, spread over three years or
$100-$200,000 per 1 MW customer per year.
[0145] One market development issues is aggregating local loads
sufficient to affect the magnitude and timing of specific local
substation and distribution system replacement and/or expansion.
Con Ed lent credence to this Energy Automation product in July 2003
when it announced it was soliciting bids to reduce peak loads on
specifically identified, local distribution busses.
[0146] As reported, "Consolidated Edison Company of New York, Inc.
(Con Edison) announced today that it has issued a Request For
Proposals (RFP) seeking qualified respondents to administer a
program aimed at reducing electricity use during peak periods by
125 megawatts over five years beginning May 1, 2004. A reduction in
peak energy use of 125 megawatts would represent saving the energy
required to power 125,000 homes. The company is seeking to achieve
these energy-use reductions in selected neighborhoods throughout
its service area. Over the past several years, we have seen power
use throughout our service area growing. Supply, however, has
remained relatively unchanged. At the same time, energy use in
certain neighborhoods has increased at a faster pace than in
others. That growth has necessitated electric delivery improvements
in those communities sooner than planned,` said Stephen F. Wood,
vice president of engineering services for Con Edison."
[0147] In this first-of-a-kind program, Con Ed is recognizing the
value of peak load reduction to reduce 1) generating capacity
expense, 2) transmission capital expenditures, and 3) distribution
capital expenditures. The initial program is looking for
"permanent" reductions" and so favors technologies such as on-site
generation or storage over BAS.
[0148] Reducing Distribution System Operating Expense
[0149] The "reducing distribution system operating expense" product
can be described as follows. Gas and electric distribution systems
in large cities are complex to build and complex to operate. For
example, the underground transmission systems into city centers
provide significant capacitance--a benefit during the day, a cause
of high voltage at night. Night-time commercial building motor
loads would greatly benefit electric system operators, even more so
if it could be "dispatched" by distribution system operators. As
another example, distribution system operators--both gas and
electric--could take advantage of the ability to switch commercial
heating load between electric and gas supply in order to i) control
short-term electric or gas distribution loading; ii) clip system
load spikes or slow ramping requirements; or iii) provide gas
storage.
[0150] Regarding market development issues, these services require
commercial building portfolio scale and sophisticated operating
coordination with utilities and ISO's (which becomes affordable
with scale).
[0151] Selling Shaping and Imbalance Services
[0152] The "selling shaping and imbalance services" product can be
described as selling imbalance and shaping services to other
building customers and to other energy service providers out of a
large commercial building portfolio. This service follows from a
building portfolio's ability to modify its own load shape (as
discussed earlier under initial products and services).
EnergyConnect will immediately provide a building portfolio with
the ability 1) to reduce the utility or energy service provider
(ESP) expense and risk of buying shaped products from the market
and 2) to self-manage volume risk and imbalance price risk. As the
portfolio develops, some buildings will be able to
overcompensate--that is, shift energy use sufficiently to also
provide shaping and imbalance to other buildings with less
flexibility. In terms of market development issues, efficient
development calls for adding these "other buildings" to the
EnergyConnect portfolio in order to forecast need and value with
greater certainty and to reduce transaction costs.
[0153] Controlling Distributed Generation
[0154] The "controlling distributed generation" product can be
described as follows. It is a natural extension for EnergyConnect
systems to integrate commercial building and others' on-site
generation with electric system markets and operations. Such
on-site generation is more valuable as part of an EnergyConnect
building portfolio than if considered as a stand-alone resource.
For example, on-site generation (1) provides additional benefit to
the commercial building portfolio (For example, with on-site
generation acting in reserve, a building portfolio can commit more
of its capability to ISO markets. That is, the building portfolio
will hold fewer buildings in reserve to cover possible, but
improbable significant day-ahead or real-time non-performance.
On-site generation can also serve to cap a building portfolio's
exposure to the market in the event of non-performance) and (2)
derives additional benefit from the commercial building portfolio
(For example, on-site generators, augmented by the commercial
building portfolio, can function like more sophisticated
generators. This creates opportunities to participate more often
and in more lucrative markets). Regarding market development
issues, over time, EnergyConnect programs will mitigate or even
eliminate energy price spikes. Such spikes are a significant part
of on-site generation profit expectations. Instead, EnergyConnect
will provide alternative revenue sources for this generation.
[0155] Long Term Option Value
[0156] There are several long-term option values that can be
provided with Enterprise Energy Automation. These long-term option
values include expansion into world markets (see Jones Lang LaSalle
map of megacities); provide testing ground for extension of these
capabilities to smaller commercial and industrial customers
(technology improvements, understanding of cost/benefit, and other
meaningful intelligence); technology introduced for these purposes
has other uses, none of which could support the cost on its own;
provides customers with understanding of supply side competitive
issues--further enhancing negotiating position; capturing "free
riders" through enhanced capabilities in market structuring,
regulatory management, and legislative management; platform for
integration of distributed resources with electric/gas system
planning and operations; platform for fuel cell entry (natural
additions to support additional market power, access to Federal
support funds associated with developing hydrogen as a permanent
energy source, solution to new Chicago back-up rules--solves space,
noise, and pollution problems).
[0157] Other long-term option values include a platform for
economic energy storage (flow batteries, flywheels, compressed air,
and pumped hydro; services (e.g., building envelope evaluation;
control equipment mark-up and installation; maintenance of control
equipment; central operation of others' building control systems;
HVAC equipment maintenance contracts); intra-portfolio markets for
service reliability; increase viability, liquidity, and
competitiveness of local wholesale market--low cost virtual
generation, low cost services, and increased number of "suppliers"
in market mitigates market power; better use, efficiency, and
environmental performance from baseload generation--reduced use of
coal plants for regulation, ramping, and spinning reserve allows
much better tuning and performance of environmental control
systems; running at optimal turbine and boiler efficiency points
reduces average cost; relegate dirty and inefficient local
generation to back-up status; transmission--sufficient peak
management will delay need for transmission enhancements and reduce
bottlenecks; and tenant satisfaction value and, associated improved
lease terms and improved occupancy
[0158] Backdrop for Initial Markets and Services
[0159] Because transmission bottlenecks impede access to regional
generation, high and volatile energy prices persist in very large
cities. For example, in New York City, transmission congestion
imposes a significant premium on top of energy prices available
elsewhere in the state. FIG. 23 is a graph showing that
transmission congestion into New York City is significant and
volatile.
[0160] Another example is in high-priced locations in PJM, the
frequency of high prices has grown steadily, despite the
construction of new generation. The chart in FIG. 24 captures five
years of summer period history. There is no indication of price
mitigation in these locations. Moreover, as the PJM analysis in
FIG. 25 indicates, clipping prices and reducing volatility through
Energy Automation appreciably reduces energy bills. In FIG. 25, the
top line reflects actual wholesale energy expense to serve a 1 MW
customer at each of the .about.3,000 PJM LMP points (sorted in
descending order). Each succeeding line reflects the effect of
clipping prices at $300, $150, $100, and $50.
[0161] Additional Products Provide Greater Profit Margins
[0162] A significant number of additional products have been
developed and other are under development. All leverage the base
investment. In each market, a different sequence of introduction
will be appropriate. EnergyConnect extracts and sells many of these
products as a composite of contributions of the entire building
portfolio in each market. Some of these products are selling
ancillary services to the market, selling peaking capacity
equivalent to the market, reducing distribution system capital and
operating expenses, arbitraging gas/electric prices, providing
electric/gas distribution system control, selling imbalance
services, selling load-shedding services, selling frequency control
services, and controlling distributed generation.
[0163] There can also be extension within existing metropolitan
areas. As a large and flexible building portfolio, EnergyConnect
will have the ability to address emerging market issues such as
providing intra-portfolio markets for service reliability,
improving efficiency and environmental performance of baseload
generation, relegating old, inefficient local generation to back-up
status, reducing need for expensive transmission upgrades into
congested metropolitan areas, improving tenant satisfaction and
building rentability, integrating distributed resources with
electric/gas system planning and operations, and providing platform
for fuel cell entry into large metropolitan areas.
[0164] Scale Provides Far More than Bargaining Power
[0165] Scale benefits EnergyConnect in four ways. First, services
are more flexibly carved out of a portfolio--a building portfolio
with diverse designs, operating requirements, and capabilities can
better match up to one or several of EnergyConnect's profit sources
than can a single building. Second, performance reliability meets
ISO and utility operating standards--again, an advantage of a
portfolio over an individual building, e.g. in meeting strict
performance requirements related to ISO ancillary services. Third,
learning curve advantages in a rapidly developing market--a large
market share means EnergyConnect will learn more quickly than the
competition. Fourth, bargaining power, especially to affect the
scope and pace of market development--a portfolio provides the ISO
or utilities with 1) a critical mass around which they are willing
to invest their own resources and 2) greater long-term assurance of
availability and stability of customer participation which are
critical for long-term resource adequacy decisions.
[0166] Building diversity comes in many forms: user sensitivities,
specific location, scope and time of energy use, motor load,
vintage construction, design and efficiency of heating and cooling
systems, control sophistication, owner and manager business
philosophies, etc. This means that buildings are not equally suited
to participate in any one program or market on any given day. Also,
a building's suitability for a particular service can differ by
season or evolve over time.
[0167] EnergyConnect Markets Enhanced by Regulatory Expectations
and Actions
[0168] As stated by William L. Massey, FERC Commissioner, on Sep.
26, 2002, ". . . a robust demand response is largely absent from
electricity markets, yet it is an important means of moderating
prices. Fortunately, getting a level of demand response sufficient
to counteract price run ups is not insurmountable. Studies indicate
that we need only about 5 to 10% of demand to be effective. I
believe that good market operation will require this. Demand
responsiveness, when developed, can also be an important factor in
determining generation and transmission adequacy and in congestion
management."
[0169] FERC and state regulatory bodies encourage demand response
through a variety of market and institutional measures. Accelerated
application of LMP will create price signals for the value of
energy and services at different locations and times. Biddable
demand reductions, interruptible load, real-time pricing, and other
load management programs will be instrumental in achieving resource
adequacy. Customer participation in ancillary service markets will
free generation resources for other purposes. Customer
participation will mitigate generation market power for which there
is otherwise no easy solution.
[0170] Demand participation in power markets provides greatest
value in transmission constrained metropolitan
areas--EnergyConnect's target market. Large metropolitan areas have
not benefited from the recent generation construction boom.
Generation construction is incredibly difficult and costly in
metropolitan areas, and transmission bottlenecks impede access to
remote generation. Customer participation and other distributed
resources are the long-term solution in such metropolitan
areas.
[0171] The forgoing detailed description has described only a few
of the many possible implementations of the present invention. For
this reason, this detailed description is intended by way of
illustration, and not by way of limitation. It is only the
following claims, including all equivalents, that are intended to
define the scope of this invention.
* * * * *