Article - March 2002
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The Dawn of a New Age in Energy Management


Solution to the energy crisis ... a true supply/demand-driven market via Internet-Enabled Enterprise Energy Management Systems

Ralf H Edler
Power Measurement

We're at the dawn of a new age in energy management with more automated, Internet-enabled interaction between suppliers and users of electricity. In effect, this is the beginning of a true supply/demand-driven market with, for the first time, full participation of energy users.

Since electricity cannot be stored but is a real-time commodity -- simultaneously delivered and consumed -- accurate and timely information of its availability and price must be shared immediately among all players "24x7" at lightning-fast speeds. This continual, "right-now," real-time information and control is available through enterprise energy management ("EEM") systems, rapidly emerging as a catalyst for change in the electricity industry.

This new technology consists of intelligent meters, dispersed throughout power distribution networks, that communicate with remote command-and-control software. Collectively known as EEM, this hardware and software helps energy providers adjust their supply of electricity in reaction to prices or demand. And energy consumers to adjust their demand in reaction to prices or supply. This controls the quantity, quality and cost of power.

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One Solution: demand response programs

In the short term, EEM helps alleviate the shortage of available electricity by enabling the real-time exchange of information in "demand response" programs. These programs give users monetary incentives to reduce consumption during peak periods. Users can shed loads or switch to their on-site generators in response to immediate market prices or whenever utilities notify them of impending load curtailment sessions.

In turn, these actions lower spot market prices at peak periods to benefit all buyers of power (and avoid situations such as the summers of '98 and '99 where electricity in some U.S. regions was priced up to 200 times higher than normal).

An information interchange innovator, Atlanta-based RETX offers Load Management Dispatcher™ (LMD), a full-featured website as the means for fast interaction between all retail energy players. Founded in 1998, the company's first operational transaction "Negawatt Hub" ("negawatt" = a megawatt saved from the grid) empowers ISO New England, independent system operator of the six-state northeastern power grid, to offer both emergency response and price response programs.

In the mandatory curtailment emergency response program, RETX's system notifies all participants of opportunities to participate in the capacity, transmission and energy markets via e-mail, pager or cell phone. End users respond by reducing consumption such as shedding loads or starting generators. And the RETX server then collects metered data from end-user sites to confirm load reduction and timing.

In the voluntary price response program, users are presented with opportunities to sell negawatts back to the grid when the electricity price is high. For example, when forecasted prices exceed $100 per MWh (MegaWatt per hour), the ISO opens the doors to the "negawatt store" and users can decide how much energy to sell to the ISO at spot market prices for that 24-hour period.

According to Ross Malme, RETX president and CEO, "We created the means to push wholesale electricity prices down to end-user customers." Studies show that reducing demand by 5 percent can reap as much as a 50 percent drop in market prices. However, to make the program work, real-time communications are needed so all market participants can access the same information and react immediately. Malme emphasizes that, "Grid conditions can change dramatically in minutes and once-a-day dial-up links to a meter are of little use."

Reliable Controls The necessary communications and metering came in the form of intelligent "IONâ" devices from Victoria, British Columbia-based Power Measurement, that were installed at all participating customer sites. These continuously connected meters - actually powerful, cost-effective computers in their own right - e-mail energy usage data directly to Negawatt Hub's LMD software which processes the business transactions.

With this real-time information network - price signals, notification, generation and consumption measurements, plus historical load profiles and usage - settlements can be done the day after the event. Using the public Internet also meant customers could participate without having to expand their own computer networks.

Any of New England's 192 energy suppliers can subscribe to the Negawatt Hub and participate in the load response opportunities. This allows ISO NE to count load response assets as available resources and dispatch them as needed. In the near future, Malme plans even more automation at end user sites by taking advantage of the control functions in the vendor's meters to automate load shedding and generator startup.

Long-Term Solution: "microgeneration" -- small "distributed" power plants controlled by EEM systems

But the ever-escalating demand for more and much better quality electricity (the Internet, now consuming about 10 percent of US electricity, may draw as much as 50 percent in the next decade) is defining a totally new set of power supply requirements. Our current power grid was developed to deliver only "three nines" ... a constant flow of energy 99.9 percent of the time (about 8 hours of downtime per year), adequate for lighting systems, air conditioners and motor loads.

Yet the explosive proliferation of enormous Internet data centers, digital assets and processes and computer-controlled, mission-critical businesses require very precise streams of electrons at highly regulated voltages to a quality of "six nines" (99.9999% - less than 30 seconds downtime per year) or even more, in other words, near 100 percent uptime.

The traditional electricity grid, vulnerable to any number of interruptions, such as storms, falling trees and wildlife, can never supply either the quality or quantity of power these businesses need. According to the Electric Power Research Institute (EPRI), power outages and disturbances cost the US economy $188 billion annually. To Oracle Corporation, a reliable supply of power is worth millions of dollars an hour. In fact, a one-hour power outage cost heavily-computerized First National Bank of Omaha $6 million.

Even if additional centralized power plants are constructed, the energy they produce will be trapped within inadequate transmission networks. The long-term solution calls for small "distributed" power plants that can be quickly configured and, since they're connected to end users directly or through much shorter transmission lines, also ensure higher power reliability.

Studies indicate that, depending on transmission distance, up to two-thirds of the energy used to produce power, in a centralized facility is dissipated by the time it reaches the consumer. Currently, distributed generation - in the form of standby generators - accounts for 10 percent of US generation capacity, a figure expected to climb to more than 30 percent of capacity within 10 years.

Combined with intelligent EEM systems - automatically monitoring and controlling generator operation - distributed generation reduces both the cost and environmental impact of the electricity supply. For example, a combined cycle unit can now be installed for about $35,000 and an EEM system for around $30,000.

According to Gary L. Neale, chairman, president and CEO of NiSource, a Merrilville, Ind.-based multibillion dollar electric and natural gas company, "This is a small price for a giant drugstore chain such as Walgreen's where one store could potentially lose up to $200,000 if closed for only a day." NiSource is already testing the first continuously-running microturbine supplying a Walgreen's drugstore's baseload requirements.

Neale agrees that we must build generation near demand. "Nobody will allow you to build a 250 MW combined cycle gas-fired power plant in downtown Chicago, New York or any other place. Distributed generation is the answer with generation on rooftops and in basements," says Neale, long one of the most ambitious supporters of distributed generation, which includes microturbines and fuel cells.

Distributed generation's success hinges on real-time data gathering and communications. Every distributed generator needs an intelligent power meter continuously reporting conditions to end users and, if the generator is interconnected with the grid, the utility and ISO as well. The meter should also be able to receive remote control signals for rapid generator start-up or shutdown. In addition, EEM software is required at command-and-tracking workstations for system-wide or local situation analysis and to support automatic start/stop operations.

Ideally, these intelligent meters are industrial-grade platforms, able to operate and store data during power disturbances or communication interruptions. Each device should also automatically transmit data directly to public Internet, wireless, satellite and paging networks so that ISOs, Load Serving Entities and end users have identical information.

contemporary In California, independent power producer RealEnergy owns and manages generators that supply 40 to 50 percent of large commercial facilities' peak load; their electricity sold at discount below the local utility's prices. Projects include fourteen 200 kW generator sites, one 60 kW microturbine site and a 200 kW solar facility in Fountain Valley, Calif., the largest in the western hemisphere.

RealEnergy also installed a solar panel for a 320,000 square feet industrial building near San Diego. The building's owners have sold the solar panels' excess electricity to San Diego Gas & Electric. According to RREEF, LLC, co-owner of the building, "Tenants will favor landlords who can assure them of a secure, cost-effective source of uninterruptible power."

All this input from a growing number of independent sources raises the question of grid stability. If the generators are interconnected with regional electricity grids, voltages must be maintained within a reasonable range, usually within ±5% of nominal. Historically, utilities and ISOs were responsible for grid stability but with hundreds of independent producers now pumping power onto the grid, they too need to bear part of the burden.

Power Measurement's president and CEO Brad Forth points out, "This is where EEM technology comes into play. An EEM system can stabilize the grid all the way down the power delivery chain by controlling voltage and frequency, managing congestion, coordinating protection and fault clearing, and automatically activating reserve capacity."

"Bottom line," adds Forth, "EEM is helping create a new, more interactive energy marketplace."

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