April 2011


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EMAIL INTERVIEW – Kevin R Evans & Ken Sinclair

Kevin R. Evans, President and CEO, EnergyConnect

EnergyConnect A
cquisition by Johnson Controls
We need to give customers forward-looking and real-time awareness of load management opportunities, provide quick and easy “what if” analyses, and most importantly, present the information in the customer’s context, making sure that our strategies are calibrated to customers’ needs and baselines.

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Sinclair:  First of all, congratulations on the announcement of your acquisition by Johnson Controls. Please tell me a little about what this means for EnergyConnect.

Evans:  Thanks, Ken. As you can imagine, we are thrilled with this news and are confident that great things lie ahead for EnergyConnect. This deal positions Johnson Controls’ Building Efficiency business as a demand response leader in large commercial, industrial and institutional markets. As well, the combination of energy efficiency, smart building technologies and demand response services creates an additional growth platform in a rapidly expanding segment of the energy market. In addition to the natural synergies in our businesses, Johnson Controls’ global footprint and distribution channels will enable us to accelerate the transformation of electricity use in response to market prices while enhancing the efficiency and reliability of the grid. We are looking forward to becoming part of the Johnson Controls family.

Sinclair:  An overall positive outlook seems on the horizon for demand response. Can you share some insights into where the industry is going?   

Evans:  We have observed a number of transformations in the marketplace over the past few years, and the landscape of demand response is undoubtedly changing. Going forward, it is clear that resources will extend beyond simple capacity programs. The DR space is no longer solely about emergency curtailments. It is about smarter energy management. And the fact that the value of capacity in some regions is being minimized implies further motivation for customers to participate in programs that provide ongoing economic incentives.

To address these changing priorities, a higher value will be placed on “quick response” resources and innovative systems that make it easier for customers to engage. We also anticipate tighter coupling between DR transactions and control systems with more cash flows available to offset costs. Partnering with the right energy services company will mean much more than picking the lowest “split”. Technology and ease of integration across multiple markets will be critical. We believe that EnergyConnect, along with Johnson Controls, is ideally suited to provide practical, effective solutions in this evolving market.

Sinclair:  Very interesting insights, Kevin. As they navigate this new world, what are the important factors you think customers are looking for from an energy services company?

Evans:  Customer engagement and satisfaction is obviously a top priority for us at EnergyConnect. We recognize three elements that are critical to success for many of our customers:

1.    Customers need effective load management strategies. A structured and easy to implement plan -- or series of plans -- helps customers make quick decisions depending on the curtailment or load-shifting opportunities at hand. We help customers map out load management strategies and allow them to adjust and fine-tune their plans online.  Our systems capture these plans and correlate them to actual performance. Moving forward, more automated control for quicker response is another area where customers will see immediate value.

2.    Customers need price signals to respond to, presented within the context of their specific constraints. This empowers customers to augment their payments from traditional capacity programs via proactive participation in economic opportunities year round. To that end, we developed and launched our award-winning GridConnect™ integrated technology platform in July 2010. Easier access to energy markets and real-time locational marginal prices gives customers the visibility, flexibility and control to make educated decisions and manage energy consumption.

3.    Customers need to know the value of their energy management decisions. We believe in transparency around payments, and have built into our technology the ability to demonstrate a shadow settlement so that customers have next day feedback on the success of their efforts. Allowing customers to see and share the immediate benefits reinforces continued engagement. By presenting customers with forecasts and future opportunities in clear, easy to understand terms, we take the complexity out of demand response participation. Moreover, it’s important to present detailed reports that allow customers to analyze past performance activity so they can test -- and fine-tune as needed -- the effectiveness of their curtailment strategies. This in turn drives changes in user behavior to motivate future participation.

[an error occurred while processing this directive]Sinclair:  FERC’s recent Order 745 ruling seems like a positive game changer for demand response. Tell me a bit about what this means.

Evans:  The FERC’s landmark ruling puts into place a new approach for demand response participation that provides compensation comparable to traditional generation sources and removes barriers to participation in organized energy markets. Essentially, this move opens the market for more active participation in price-responsive demand strategies. Now, all customers will benefit as they qualify for significantly increased demand response participation and earnings opportunities.

Once the ruling takes effect, customers gain greater flexibility and control to shift or curtail load when it makes the most sense within the context of their business or operational constraints. This translates into greater earnings opportunities for demand response participants, while enabling more efficient use of electricity, lower prices, and a more reliable grid.

Sinclair:  That sounds like a great advancement for the DR industry. What are your plans for continued success in this evolving market?

Evans:  I think the most important thing for companies like EnergyConnect to recognize at this point in time is that in order for demand response to be successful, we must be completely dedicated to providing clear and obvious value for customers. Demand response is no longer about rarely used standby capacity reserves. We need to give customers forward-looking and real-time awareness of load management opportunities, provide quick and easy “what if” analyses, and most importantly, present the information in the customer’s context, making sure that our strategies are calibrated to customers’ needs and baselines. Our platforms are geared towards this philosophy and because of that, we believe we’ll continue to see customer success and continue to grow our business as this industry evolves.



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