Is your organization one of the thousands of commercial/industrial energy customers that use back-up generators (BUGs)? Are they used as emergency generators (a.k.a., EGs or gensets) in demand response (DR) programs? If so, 2016 may have felt like an episode of the “Survivor” reality show, except instead of the usual cast of GenX characters and challenges you were unfortunately tasked with surviving a maze of ever-changing genset regulations.
Bad News, Good News: The past year saw important changes regarding the use of stationary reciprocating internal combustion engines (RICE) that continue to evolve at the federal level as administered by the U.S. Environmental Protection Agency (EPA), which itself is in now in the midst of changes with newly-confirmed administrator Scott Pruitt at the helm. EPA rules provide that BUGs that are intended for emergency use when blackouts occur are exempt from reporting requirements and most emissions regulations. The bad news is that EPA changes significantly restricted the circumstances where such generators can be compensated for operations while the grid is still up. The good news is many such generators can achieve “non-emergency” status without equipment upgrades by meeting specific permitting and reporting requirements.
Bit of History – 50-hour Rule No Longer Applies: In early 2016, it was determined that EGs could potentially participate in DR programs under a different rule (referred to as the “50-hour rule”). A coalition of DR providers including CPower took specific steps to clarify the applicability of the 50-hour rule with EPA as well as explore avenues to address concerns with the prior 100-hour rule as related to EG use for DR:
- We funded an extensive legal review on the 50-hour rule which outlined the case for allowing EGs to continue DR participation with this rule as a basis.
- We shared our well-documented analysis with EPA, who responded that they were not in agreement.
- While we believe the EPA’s interpretation is not aligned with the actual language in the regulation nor the structure of the electricity market, federal agencies such as EPA enjoy the latitude to interpret their regulations in any manner they deem appropriate.
- While CPower will continue to try to convince EPA that our well-documented position bears merit, all DR service providers clearly need to comply with EPA’s current interpretation.
Further confounding the situation is that a generator classified as “nonemergency” under federal regulations could be deemed “emergency” under state and/or local regulations. Recent examples include the Rule 222 that applies to permitting in New York; while California is moving from the traditional environmental permitting approach towards utility-based restrictions.
What This Means to You: As a DR participant with EGs, you should always be aware of the nuances defining EG assets that do not meet EPA’s interpretations of local requirements as well as the Federal Non-Emergency standard for DR curtailments. This applies even if your current DR service provider may advise you otherwise (especially regarding the use of EGs via the 50-hour rule). Any reputable vendor certainly should not expose you to any potential EPA violations or penalties. And if you indeed find out that EGs are not permitted for use in DR programs, make sure your service provider has an experienced engineering team who is willing to work with you to achieve the best possible alternative curtailment strategies.
On the Positive Side: Again, the good news is that in many instances, you can still use EGs to participate in DR programs and support grid reliability. A good curtailment service provider or DR aggregator should be able to assist clients with specific steps for permitting and retrofits so their engines can still participate wherever possible. At CPower, we have helped several clients with permitting so their engines can now effectively participate in emergency DR events to support the grid. Some of these services include:
- Helping clients evaluate generation assets for permitting compliance at both the federal and state/local levels
- Upgrading engines with aftermarket controls and/or automated DR (ADR) controls
- Developing recommendations for adding load to optimize use of generators
- Facilitating engine and generator upgrades (either working with a carefully vetted partner or customer-preferred vendor)
Bottom Line: As capacity costs increase, active DR participation becomes even more compelling and relevant. Changes in EPA regulations have impacted the ability of DR customers like you to use stationary emergency generators as part of your load reduction strategies. Luckily, you can look to DR service providers to offer valuable “survival tips” that can bring this episode to a stable ending.
“Thanks to accurate guidance from CPower’s engineering team, our engines were successfully permitted for use in demand response by the state’s Department of Environment. Their in-depth knowledge and tenacity throughout the process clearly contributed to enabling our facilities’ continued participation in the 2017 DR performance season.” – Facilities Director at a large New England based manufacturing firm.
CPower takes a leadership role and shaping market transformation while advocating for our customers to help you navigate the regulatory maze and maximize DR program benefits. The result? Increased energy savings and earnings not just from optimized participation in Emergency DR, but also in non-emergency voluntary programs (like price based Economic DR). In some cases, you can also use your engines for peak-shaving to reduce capacity costs while maintaining compliance with environmental regulations.
Do you have a generator? Does it meet State and EPA guidelines? Are you leveraging it as a demand response revenue resource? Check out our Emergency Generator Decision Tree today to ensure you make the right EG permitting and compliance choices moving forward.
When electricity prices in New England were on the rise in 2014/2015, Rhode Island Hospital braced for an energy spend they thought would lead a $1 million budget deficit.
With demand response and CPower’s energy management team in their corner, the hospital’s actual energy spend was much more favorable.
By participating in the ISO New England’s three demand response programs (Transitional Price Responsive Demand (TRPD), Real Time Demand Response and Real Time Emergency Generation) Rhode Island Hospital managed to offset their energy spend with the kind of efficiency that should make other New England hospitals take notice.
“We ended up breaking even,” said Marc Leduc, the Chief Engineer at the hospital’s on-site power plant. “A lot of it was due to those [demand response] programs.”
Founded in 1863, The Rhode Island Hospital is the principal teaching hospital of The Warren Alpert Medical School of Brown University. It is also a major trauma center for southeastern New England, and home to Hasbro Children’s Hospital, the state’s only facility dedicated to pediatric care.
In the mid-1970’s, Rhode Island Hospital constructed a cogeneration power plant on its grounds to provide electricity for the hospital’s day to day needs. Today, that power plant produces roughly 50% of the energy the hospital uses. Cost, particularly the cost of natural gas which the plant uses to create electricity, is a crucial factor in determining how the hospital manages its energy.
“Every dollar the hospital can save on electricity is a dollar that can be spent providing better medical care for the patients,” said Mr. Leduc. “Demand response helps keep us on budget by offsetting the cost of energy, especially during years when the price of gas is high.”
Bill Cratty, CPower’s Senior Technical Sales Associate for the New England region, initially enrolled Rhode Island Hospital in the ISO-NE’s demand response programs in 2007. Since then, he has worked closely with the Providence-based health care facility to help fine tune its demand response participation. Today he believes Rhode Island Hospital is a model to which other New England hospitals should look when considering how to offset their own energy costs.
“Rhode Island Hospital is a shining example of what a hospital can do to optimize their energy management,” Mr. Cratty said. “By participating in the TPRD program, they not only avoided purchasing electricity from the utility, but also got paid by ISO-NE for the amount of electricity they generated and bid into the day ahead market. The hospital consumed all of the electricity it generated. The payment it received from its demand response participation more than offset the cost to generate, so the hospital essentially received a significant portion of its energy usage at a negative cost.”
A commendable effort to reduce energy load and lesson carbon impact.
In 2006, the State of Maryland passed legislation which required that energy consumption for all state buildings must be reduced by 5% in 2009 and 10% in 2010. The University of Maryland, Baltimore (UMB) was already ahead of the game; examining efficiency programs to find cost-effective measures to save energy and expenses on its campus.
Working with PJM Interconnection, the regional transmission organization (RTO), and Comverge, Inc., [CPower] a leading provider of clean energy solutions through Demand Response, Michael Krone, PE, CEM utility operations manager for UMB, found:
“By serving as our curtailment service provider (CSP), or broker, in the PJM DR programs, Converge [CPower] facilitated the reduction of our peak demand and overall consumption, which ultimately helped reduce our carbon footprint and emission levels. Comverge provided the resources to monitor real-time market pricing, develop load profiles, and create customer baselines. Comverge’s graphical tools have been invaluable to our success in the PJM DR programs.”
UMB enrolled in Comverge’s Real-Time Economic Load Response and its Reliability Pricing Model (RPM) programs. These programs offered assistance from energy analysts and delivered load profiling and IT support, consumption analytics and graphics, and other conservation initiatives.
With the help of Comverge [CPower], UMB implemented strategies that reduced its energy load and helped meet the new legislative requirements:
- Using an existing 20,000 ton-hour/2,000- ton output thermal storage system to shift air conditioning loads from daytime on-peak operation to nighttime off-peak operation.
- Remotely controlling lighting in public areas and turning off all non-essential lighting during periods of high demand.
- Switching lighting and HVAC loads in real time via remote control from occupancy sensors local building automation systems.
- Temporarily raising HVAC return-air set points for 30 minutes or less to reduce cooling demand. Since the level of thermal inertia for a building is typically 45 minutes or more, this effort is transparent.
- Placing a portion of chilled water production on a current limiting mode for 30-minute periods. To ensure this activity remains transparent to the building occupants, only a fraction of overall production is in conservation mode at any given time, and the operation shifts between facilities.
- Deploying a Building Automation Network that monitors and controls the individual automation system(s) in each building from a central location.
UMB reduced its load by more than 20,000,000 kWh in just two years. That’s the equivalent of two months of the school’s electrical consumption, or powering 10,000 homes for the same period.
“University of Maryland, Baltimore is a great example of what just one campus can do to reduce its energy load and lessen its carbon impact. The university should be commended for its innovation and forward thinking.”
─ George Hunt, Comverge senior vice president, Commercial Sales
AMP Member passes ordinance, increases revenues through energy reduction
Hardworking businesses form the backbone of the City of Danville, Virginia. When it comes to overseeing the energy needed to run the city’s economic engine, Danville Utilities—the City of Danville’s electrical department—understands the need to maintain balance between consumption and conservation.
“As a municipal utility, we are always encouraging our customers to find ways to save energy,” says Meagan Baker, Danville Utilities’ Key Accounts Manager. The City of Danville — an AMP member municipality — perpetually seeks ways that not only allow their customers to conserve energy, but also allow the utility to save on congestion and transmission charges during the most critical peak times of the year.
Enter demand response and, what the City of Danville calls, “a win-win situation for the utility and the customer.”
In early 2014, the City of Danville adopted a resolution authoring their participation in the PJM demand response program for retail customers. The resolution allowed Danville’s city manager to execute an agreement with American Municipal Power approving the city’s participation in PJM’s demand response programs, which pay businesses for reducing their energy use during the few times each year when the PJM grid is stressed.
The agreement also named CPower as the City of Danville’s exclusive PJM curtailment service provider in charge of implementing and facilitating the city’s demand response. Danville Utilities believes their customers couldn’t be in more capable hands.
“CPower has been a great source for implementing our demand response program. Bill Oosterom, our account manager, has been our go-to person from start to finish. From educating customers about the program, getting them enrolled and assisting with any questions and/or concerns they have along the way, the process has been very transparent and straightforward. This streamlined approach makes it easier on our customers as well.” – Meagan Baker Key Accounts Manager, City of Danville
The City of Danville Finds Success with Demand Response and CPower
CPower’s hands-on style of energy management includes the kind of customer-focused touch the business owners of Danville appreciate. CPower’s Bill Oosterom believes that being personally involved in his customers’ demand response participation is a key reason the City of Danville has enjoyed energy management success.
“No two businesses are alike,” says Mr. Oosterom, who has more than 33 years of experience as an energy consultant. “Demand response shouldn’t be a set-it-and-forget-it process. At CPower, we work closely with all our customers to fine tune their demand response participation over time and ensure they get the maximized results and revenue they deserve.”
So far, the results from the City of Danville’s demand response participation have proven to be substantial. Participating customers have earned significant revenue through demand response (more than $97,000 in aggregate for the 2015-2016 program years), with many businesses choosing to put their earnings toward energy efficient upgrades or other capital improvement projects.
Even the City of Danville, itself, has participated in demand response with great success. Facing a need to offset operational costs, the City of Danville enrolled its municipal owned water and wastewater treatment plants in the program and have now earned valuable revenue (more than $30,000 for the 2015/2016 program) to help budgets of future projects. Civic leaders feel the City of Danville’s involvement in demand response provides a lead-by-example model of energy management. “We are always asking our customers to conserve,” says Meagan Baker, “so we must practice what we preach.”
For the City of Danville, the future looks bright as the number of businesses in their municipality participating in demand response is on the rise. With CPower and demand response on their side, the City of Danville is poised to do their part to keep the grid in balance, the environment in good health, and their hardworking customers in expert hands when it comes to energy management.
“The program has been very beneficial in educating our customer base on the importance of energy efficiency and demand response. As our customers continue to succeed, I believe the word will spread, positively influencing other customers to also become involved. We are excited to grow the program.” — Meagan Baker
AMP urges you to pass your local demand response ordinance as quickly as possible, to ensure that there is ample time for program participants to be registered for the 2017-2018 program year.