1 utility deregulation and energy management george r owens pe cem, president energy and engineering...
TRANSCRIPT
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Utility Deregulation and Energy Management
George R Owens PE CEM, PresidentEnergy and Engineering Solutions, Inc.
[email protected] 410-964-3513
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Energy Management Roadmap
• Utility Deregulation
• Energy Management
• Renewable/Future Energy Resources
• New Construction
• Energy Security
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Alternative Titles Considered
• “The Good, the Bad and the Ugly of Utility Deregulation”
• “You Need to Be Careful What You Wish For”
• “Opportunities Still Exist for Building Owners”
• “Utility Deregulation - What’s Next?”
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Utilities – a Building’s Second Greatest Expense
26.6% UTILITIES
19.9%REAL ESTATETAX
27.7% LABOR
25.9% INSURANCE,CONTRACTSERVICES, MISC.
Typical Master Metered Building Expenses
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Utility Deregulation
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The Utility Deregulation Roadmap
• Deregulation Background
• State Activities – each one is different
• The Process of Taking Advantage of Deregulation
• Risk Management
• Utility Deregulation for Landlords
• Development Issues
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Energy Management in Changing Times – The Current Energy Crisis
• Rolling blackouts in California• PGE and Enron declares bankruptcy• Rates are up over 50% in California• Deregulated power available for less in
some states• Texas and Ohio start in 2002• Energy rebates and incentives are back for
existing operations and new construction
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What is Electric Deregulation
• 1&2 Generation– Being Deregulated
• 3 Transmission– Regulated by FERC
• 4&5 Distribution– Regulated by State Public Service Comm.
– Responsible for getting power to the customer, reliability, billing (may be partial) and restoring power
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Electricity State Status
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What’s Happening in California that has Everyone Running for Cover?
• California was the first state to implement full deregulation.
• This past few years saw:– Wholesale power prices skyrocketed
– Outages and rolling blackouts
– Customer rates increasing by 50%
– SoCalEd & PGE amassing over $11 billion in debt and PGE declares bankruptcy
• California rescinds deregulation
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What went wrong in California?
• California has a shortage of generation due to limited new sources amidst a growing demand.
• It was a dry, hot summer.• During that time period, many generators
were down for maintenance.• The utilities bought most if not all on the
spot market.
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California – Can it happen here?
• The short answer is yes, however there are some differences in the Mid Atlantic region (PJM):– We now have a wakeup call and can try to forestall the
same thing from happening.
– The CA power exchange is operated differently than most others, especially the PJM.
– CA has a larger shortfall of generation than this area.
– New Generation is scheduled to be built in this area
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Choosing Your Supplier
• Track Record
• Knowledge of your business, priorities and risk tolerance
• Size
• Financial backing
• Access to cheap and reliable power
• Customer service and reporting
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What Are the Risks?
• What if the supplier goes out of business?
• What if the supplier cannot get power?
• What happens if you sell the property?
• What is the impact of your load changing? Schedule changes, expansions, closings, etc.
• What happens if you do nothing and prices go up?
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Utility Deregulation - The Tough Questions for Landlords
• What is the impact of deregulation decisions on the Tenants?
• Is your utility lease language up-to-date?• How do you answer?
– Why haven’t you participated?– I can get power cheaper than you.– Who will benefit from cheaper rates?
• How should new buildings be built for deregulation?– To master meter or not.
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The Ten Step Program to
Successful Utility Deregulation • Step #1-Know Thyself• Step #2-Keep Informed• Step #3-Talk to Your
Utilities (all energy types)• Step #4-Talk to Your
Future Utility(s)• Step #5-Explore Energy
Services Now (Why Wait for Deregulation)
• Step #6-Understand the Risks
• Step #7-Solicit Proposals• Step #8-Evaluate Options• Step #9-Negotiate
Contracts• Step #10-Sit Back and
Reap the Rewards– See www.eesienergy.com
for the full paper
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Energy Management
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Develop an Energy Management Program
• Always need a champion
• Become educated
• Pay attention to the details
• Enlist resources, In-house vs. Outhouse
• Develop Energy Master Plan – Goals and Objectives– Operating Procedures
• Measure and report results
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Energy Information – The Starting Point
• Before starting any energy or deregulation program:– Understand your load profile
• Annually
• Monthly
• Daily
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Data Examples
Typical Daily usage profiles
1000
1100
1200
1300
1400
1500
1600
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
HOUR
Typical Monthly Demand
0
1000
2000
3000
4000
5000
6000
7000
1 2 3 4 5 6 7 8 9 10 11 12
Month
KW
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Sources of Energy Information
• Internal Accounting Department• Electric Utility
– Monthly– Interval
• Energy Management Systems• New Utility Metering Hardware/Software
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Energy Reduction Measures that Work:Management Programs
• “Energy Task Force” employee awareness program
• Preventive maintenance
• Operator Training
• Metering
• Commissioning
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Energy Reduction Measures that Work:Lighting
• t8 lamps
• Electronic ballasts
• LED exit signs
• Reflectors
• Occupancy sensors
• Daylighting control
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Energy Reduction Measures that Work:HVAC
• Economizers
• HVAC controls
• start/stop
• optimum start
• temperature reset
• night setback
• HVAC unit changeouts
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Energy Reduction Measures that Work:Controls
• Energy Management Systems
• Time clocks
• Direct digital controls
• Demand controls
• Electric deregulation monitoring and control
• HVAC and lighting controls
• Management information tool
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Energy Deregulation and Energy Efficiency - A Winning Team
• Expected savings due to electric deregulation - 10% to +5-8%
• Achievable savings due to energy efficiency projects - 10% to over 50%
• The best results are when you do both
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Should Utility Purchasing be Combined with Energy Services?
• First of all, you should do both
• However, unless they are separated, you never know the value of either
• Could be by the same supplier but with separate descriptions and prices for the two components
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Outsourcing Vs. In-house
• When do the economics make sense
• Core competencies and concerns
• Consultants
• Gas brokers and marketers
• Energy service contracts
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Renewable/Future Energy Resources
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Electricity Generation
• By Source
• Renewables– Hydro– Solar– Wind– Biomass
• Fuel Cells
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Distributed Generation
• Peak Shaving – Get Paid By the Utility to Run Your Generator/Reduce Load
• Technologies– Emergency Generators
– Microturbines
– Fuel Cells
– Solar
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Solar Photovoltaic
• Stand alone utility connected• Supplemental building systems• Integrated building technologies
– roofs• Very expensive• Prices expected to come down
with more production• Incentives are available• Can be attractive if far from the
utility grid
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Wind Energy
• Large Scale Wind Energy Projects
• Small Scale Projects– Similar constraints as
solar
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Renewable Incentive Programs
• Financial Incentives – Corporate Tax Credit
– Clean Energy Incentive Act • Income Tax Credit for Green Buildings
• Personal Tax Credit • Clean Energy Incentive Act • Income Tax Credit for Green Buildings
– Property Tax Exemption • Local Option Property Tax Exclusion for Renewable
– Sales Tax Exemption • Clean Energy Incentive Act - EV and Hybrid Exemption • Clean Energy Incentive Act - Fuel Cell Exemption • Wood Heating Fuel Exemption • State Loan Program • Community Energy Loan Assistance Program • State Energy Loan Program
• http://www.ies.ncsu.edu/dsire/library/includes/map2.cfm?CurrentPageID=1&State=MD
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New Construction
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Development Taking Advantage of Deregulation
• Utilities are more interested in negotiating to keep the new load.
• On the other hand, utilities are more interested in laying off costs to developers to be able to report a cheaper rate.
• Innovative rates are available from both deregulated and regulated utilities
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Innovative Rate Options –
• Long term contracts at a discount
• Economic development rates
• Interruptible rates
• Financial hedges against rising prices
• Primary vs. Secondary
• Master metered vs. Individual tenant bills
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The Development ProcessEnergy Management Review
• Charge the design team with developing properties with high energy efficiency as a goal
• Use life cycle costing for determining options
• Make energy decisions early in the project
• Commission energy systems prior to opening
• Consider energy plan review
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Energy Security
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Ten Items You Can Do to Improve Energy Security
• Recognize that Energy Security is an issue and develop a plan
• Identify a command center and insure that critical components have emergency power
• Identify all sources of energy and the location of shut off devices
• Develop communications plans for customers, tenants and employees
• Identify the source of off-site energy sources and a list of utility contacts
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Ten Items You Can Do to Improve Energy Security
• Identify who will be responsible for turning off energy sources during an emergency
• Maintain and routinely test any onsite emergency generator(s).
• Identify a source of temporary emergency generators in case the power will be out for an extended amount of time
• Identify all sources of outside air and develop protection measures
• For cold weather centers, develop contingency plans for an extended loss of heating.
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Conclusion
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Energy Management Conclusions
• Utilities are a controllable expense• Energy management pays off• Develop a program and take care of the details first• Deregulation is here, now• Understand and manage risks• Landlords have unique issues• Get involved in the process or get left behind
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The Best Energy Management Program Will Have:
– An Energy Master Plan– Well trained and motivated owners, staff and
contractors– A dedication to preventive maintenance– An energy procurement strategy– Optimized equipment based upon life cycle
costing. I.e. Lighting, HVAC and Building – Up-to-date, functional Controls and Information
Systems
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Internet Resources for Utility Deregulation
• 10 Step paper - www.eesienergy.com• State activities -
http://www.eia.doe.gov/cneaf/electricity/page/restructure.html
• State regulatory commissions www.naruc.org• Utilities - www.utilityconnection.com/• Maillist - AESP‑[email protected]• Energy Futures Pricing -
http://quotes.ino.com/exchanges/?e=NYMEX