Smart buildings allows for many opportunities to capture energy savings in our industrial, commercial, and residential buildings. Some are as basic as installing programmable thermostats or automated lighting systems to improve the way we operate the HVAC and lighting systems.  Other options include actual modifications to the building itself or installing new or upgraded equipment.

The demand response opportunity

Electric grids provide power to a town or city.  The cost of that power includes generation costs, transmission, and distribution costs.  One way a smart city can reduce these costs is to better manage peak loads through demand response strategies.

Basically, a town or city must pay for the size of the grid wires that feed electricity to the city utility from a transmission system.  The size of that wire and the generation resources needed are typically determined by the peak transmission load for a one-hour period when electricity demand is highest.  The peak hour may be from 5:00 pm to 6:00 pm on a hot summer day, and charges would apply for the whole year.  The city utility will pay transmission charges related to the size of the wire and capacity charges related to the amount of generating capacity that is needed to service the peak load.  By reducing the amount of power consumed during these peak times, the city would save on its peak transmission load costs.  The power generation side would also be able to avoid having to build peaking power plants, which may only run 5 percent of the time, but must be ready to run for the next heat wave.  Smart buildings could help better manage these peak loads, and thus help reduce a municipality’s overall electricity costs, by as much as 20 percent.

Smart city-enabled demand response strategies offer the potential to reduce power costs and improve grid reliability.  It’s difficult to coordinate energy-consuming machinery in the buildings throughout a town.  To do so effectively, requires a high level of interaction between the utility and the consumer.  To achieve a significant reduction in peak load through demand response, the utility could operate high-consumption resources inside many buildings remotely, or the building owner could respond to price signals.  This would require a financial agreement between the utility and the customers about when each resource could be deployed and how to structure dynamic pricing signals.

Smart meters with AMI (advanced metering infrastructure) can help implement control strategies using pricing signals.  Measurement information from smart meters should be made available to customers with a web interface, which would improve customer involvement and understanding of usage patterns.  But smart meters are only part of the demand response solution.  Appropriate control strategies are also needed to remotely manipulate devices using load centers and communications links to building equipment, like EV chargers, water heating, HVAC systems, or lighting systems.

For example, with code-approved Wi-Fi circuit breakers in a building’s load panel, IoT gateways could enable the utility or building owner to adjust the building’s loads, such as HVAC control systems, as needed to manage peak loads.  Grid operators faced with upcoming load control issues routinely use telephone calls to large industrial users to prepare for load shedding.  Automatic utility load shedding for most industrial processes has so far been too complex to automate.  Electric customers need to be involved with certain load shedding activities, because they may have situations where load shedding could be costly.  It could be the industry has a critical project shipment scheduled and curtailing power would impact that.  It could be a resident needs the EV, the HVAC, or hot water for unusual circumstances.  Industrial power customers respond to “LMP” of power currently updated every hour here in New England.  Residential customers have at most a discounted night rate for power.

What is emerging is a more transactional electric grid where all customers, regardless of size, will see prices for power change through the day and at different locations.  The LMP price includes costs for energy, congestion, and losses and during peak loads, it can increase sharply rewarding curtailment and penalising peak load consumption.  With real-time variations and markets for looking ahead, energy consumers will increasingly be involved with grid operation via demand response.  The emerging transactional electric grid will rely on smart metering and smart load centers.  Smart phone applications developed by utilities and aggregators are evolving to allow the smaller power customers to participate in the wholesale power and ancillary services markets that were previously restricted to large generators and industrial customers.

Not every control strategy needs to be closed loop.  A utility or aggregator could text participating residential consumers for voluntary actions, such as adjusting thermostats or shutting off other large loads.  With advanced notice of a peak load event a customer could pre-cool/heat a living space to coast through a peak load event.  It will be a change for residential and small commercial customers to respond to grid pricing signals.

Cost and Benefits

As residential homes and other buildings shift to more distributed energy resources (DER), photovoltaic (PV) systems with batteries will increasingly be part of the building infrastructure.  Suddenly, buildings have a two-way flow of power, providing additional opportunities to participate in a demand response control strategy.  Microgrids with batteries could push power into the grid during the peak load times, enabling peak shaving services.  And, as the price of battery storage drops over time, it’s realistic to expect to see these microgrids and nanogrids proliferate.  Utilities are developing new smart grid-enabled business models to provide stakeholders with the needed financial motivation.


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