When a new EPA law threatened demand-side energy management at the largest hospital in The Ocean State, CPower answered the call.
The moment he learned what the EPA’s law meant for diesel generators participating in demand-side energy management, Marc Leduc figured he and Rhode Island Hospital had a problem.
The largest hospital in its state, Rhode Island Hospital is the only Level I trauma center for southeastern New England and provides expert staff and equipment in emergency situations 24 hours a day. Round-the-clock electricity consumption is both an operational necessity and a huge expense for the hospital.
For Mr. Leduc, the hospital’s Chief Engineer since 2011, executing an optimized demand-side management strategy has proven the best way to offset what would otherwise be a hefty energy spend.
Rhode Island Hospital generates half of the electricity it consumes with its onsite generation plant, consisting of four steam generators and three diesel generators. Even with such self-sufficiency, the hospital still purchases half its electricity from the grid–as much as 5 MW on a hot summer day–which comes with capacity charges that have been on the rise throughout New England for the last several years.
Enter CPower and demand-side energy management.
Since 2007, Rhode Island Hospital and CPower’s Bill Cratty, a veteran of the energy industry since 1964, have collaborated on a demand-side energy management strategy that allows the hospital to save on electricity costs with peak demand management and earn revenue with demand response.
The hospital’s three diesel generators have played a starring role in its demand-side success.
The Challenge: Upgrading to Compliance
Until the Spring of 2017, Rhode Island Hospital used its diesel generator set to power its facilities when the hospital curtailed its load from the grid as part of a peak demand management program, which lowers the hospital’s capacity tag and results in reduced capacity charges the following year. The hospital also routinely fired up its generators during demand response events, which pay participants for using less energy when the grid is stressed or electricity prices are high.
For Rhode Island Hospital, an optimized demand-side energy management strategy utilizing its diesel generators was essential in offsetting its energy spend.
In 2013, the Environmental Protection Agency enacted the National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines (NESHAP/RICE) to regulate pollutants emitted from stationary diesel engines. Part of those standards allowed for the limited use of backup generators for demand response.
In 2015, the U.S. Court of Appeals for the District of Columbia Circuit overturned the specific rules that allowed backup generators to participate in demand response.
Implemented in May 2016, the Court’s ruling mandates that only backup generators that meet the NESHAP/RICE standards are permitted to be used during emergency demand response dispatches. Two of Rhode Island Hospitals three diesel generators, each supplying 2 MW, were non-compliant and could no longer be used during demand response events.
“It [the law] was a big hit for us,” says Mr. Leduc. “Not only [did we lose] the money we generate from the [demand response] program, but the reduction of the peak load for capacity was probably the biggest hit for us, budget-wise. Capacity charges are right now about 25% of our budget.”
Mr. Leduc looked for answers on how to get back into the market and found them when he talked to CPower and Bill Cratty. Mr. Cratty, already intimately familiar with the hospital’s demand-side strategy, stepped in and immediately set a course by which the hospital could upgrade its emissions controls so their diesel generators could return to participating in demand response.
Having worked with Mr. Cratty since 2007, Mr. Leduc knew he could trust CPower’s ideas and suggestions, believing they would lead to the hospital successfully returning to the market. CPower recommended a company that could handle the upgrading and permitting of Rhode Island Hospital’s diesel generators, which are scheduled to return to full demand response participation by Spring 2019.
Selling up with a Little Help from Friends
According to Mr. Leduc, convincing the hospital’s upper management of the positives related to upgrading their diesel generators was “easy.” CPower’s Bill Cratty armed Mr. Leduc with figures that showed a clear return on investment (ROI), with future earnings from demand response covering the cost of the upgrades with a payback period of six months.
“The money we’re putting in to [the generator upgrade project],” says Mr. Leduc, “is ridiculously small compared to what the payback is.”
Advocacy and Guidance
CPower’s additional role as energy market advocates proved instrumental in helping facilitate Rhode Island Hospital’s generator upgrade project. Ray Berkebile, CPower’s Senior Director of Engineering, has led CPower’s approach to helping customers deal with EPA regulations concerning diesel generators, personally reviewing over 3000 generators from 2015-2017.
Mr. Berkebile met with Rhode Island’s Department of Environmental Protection (DEP) to educate the agency on the benefits up upgrading diesel generators so they may participate in demand-side energy management and help alleviate both grid stress and high electricity prices. Mr. Berkebile was able to demonstrate that properly-permitted diesel generators can have an impact on the grid’s overall balance and health without running for an excessive amount of time.
Toward The Future, Bright with Distributed Energy Resources
Rhode Island hospital’s demand-side energy future is poised to include more than successful peak load management and demand response. With CPower by its side, the hospital is exploring ideas to achieve greater sustainability through distributed energy resources (DERs).
CPower’s Bill Cratty believes hospitals, with their need to be operational 24/7/365, are suited to take advantage of emerging DER technologies. Rhode Island Hospital is currently exploring options for the installation of solar canopies on the hospital’s parking lots, which would add another source of on-site energy generation to the hospital’s current fuel mix. Adding such DER sources contributes to improved sustainability for hospitals that consume power round-the-clock to care for patients and must continue to consume electricity even when the grid is unavailable to deliver it.
With CPower by its side, Rhode Island hospital is set to continue leading the healthcare industry as a shining example of how optimized demand-side energy management offsets energy spend and contributes to increased sustainability.
In this white paper, we’ll explore the various forms that demand-side energy management takes. We’ll look at how one university seized the opportunity to generate significant revenue from demand response participation and succeeded spectacularly. Finally, we’ll examine distributed energy resources and how another university found an innovative way to both optimize their energy program and maximize their revenue with intelligent storage.
The following is an excerpt from “Monetizing Energy Assets in the Commercial Real Estate Industry: A Complete Guide for Earning Revenue with demand-side energy management” by CPower:
For the past several years, the economic and policy climate of North America has created an impetus for green and sustainable energy-efficient buildings. The commercial real estate (CRE) industry has contributed to this momentum.
Keeping the supreme goal of providing a great tenant experience at the forefront of their operations, commercial real estate facility managers and executives are increasing their focus on energy management plans rooted in a sustainable building philosophy based on cost-effectiveness and energy-optimization.
The CRE industry’s current push toward a more efficient and sustainable future comes at a serendipitous time when energy markets around the country are working to integrate distributed energy resources (DERs) onto their energy grids in an attempt to diversify their fuel mixes.
Right now and for the foreseeable future, grid operators and electric utilities in each of the nation’s six deregulated energy markets have created a wealth of incentive programs to encourage commercial and industrial organizations to help integrate their grids with distributed energy.
CRE organizations with distributed resources at their facilities like backup generators, solar photovoltaic cells, fuel cells, energy storage and more are therefore in a position to reap significant financial benefits by working with a properly licensed company that can help them monetize their existing energy assets.
The Importance of Tenant Experience
No two commercial buildings are alike and every commercial real estate organization is unique. One trait CRE organization’s share, however, is the unwavering desire to provide a great experience for their tenants.
More and more commercial real estate companies are realizing that sound demand-side energy management–the practice of modifying consumer demand for energy–can play an integral part in providing a great tenant experience.
Without satisfied tenants, of course, the CRE industry wouldn’t exist. That’s why every measure a CRE organization explores concerning energy management should be examined through the tenant-experience lens.
Demand for Green Buildings
Utility costs related to energy, water, and waste have a significant impact on a CRE organization’s profits. For decades, CRE organizations have sought to reduce these impacts by making their buildings more efficient and (if at all possible) environmentally friendly.
Green buildings–those which are environmentally responsible and resource-efficient–are estimated to consume 30-50% less energy than non-green buildings. Green buildings also use an average of 40% less water, emit 30-40% less carbon-dioxide, and produce 70% less solid waste.
Green Buildings, Happy Tenants
In the last several years, CRE organizations across North America have recognized the direct correlation between green buildings and tenant attraction.
The increasing popularity of green leases, which include an up-front establishment of sustainability goals and allocation of implementation responsibilities between the owner and the tenant, is proof that the notion of sustainability is a value shared between CRE organizations and the tenants they serve.
Since the Great Recession, many tenants’ business performance has been and continues to be evaluated by customers and investors looking at aspects beyond the strictly-financial. Tenants want to tell the story of their operating in a green building that actively pursues sustainability efforts with a positive effect on the community and the environment.
CRE organizations who oblige will not only provide a superior tenant experience, they’ll also be in a position to monetize their efforts through demand-side energy management.
Energy Assets in the CRE Industry
CRE Organizations that have made their buildings more energy efficient–whether by lighting upgrades, HVAC improvement, or any other measure, may be eligible to earn money for the permanent reduction of their electric demand.
They may already possess energy assets like back-up generators, energy storage, solar generation, and more that can also earn revenue through demand-side energy management.
When selecting a company to guide your demand-side energy management, it’s important to consider the company’s scope of demand-side expertise. Do they serve the markets where your properties reside? Does the company specialize in one type of demand-side energy management, or is it equally skilled in a wide range of energy asset monetization practices?
Most importantly, a demand-side energy management partner should earn your trust in every aspect of the relationship your organizations share.
Demand-side energy management is not a one-size-fits-all exercise. No two buildings are alike and every CRE organization is unique in its complexities.
Like your business, your demand-side energy management strategy should evolve and refine over time, forever in pursuit of perfection as energy markets continue to change and your needs as an organization evolve.
Visit https://cpowerenergymanagement.com/commercial-reit-lp to learn more about CPower’s extensive experience in the commercial real estate industry, including how Tishman Speyer Commercial Real Estate earned more than $1.4 million through demand-side management with CPower as their guide.
To read the entirety of “Monetizing Energy Assets in the Commercial Real Estate Industry: A Complete Guide for Earning Revenue with demand-side energy management” click HERE.
In the New England electric power market, sharply rising capacity costs and energy volatility in the New England power market will increase your electricity costs despite relatively low fuel prices and flat usage trends. This white paper explores the underlying reasons, and goes on to explain specific actions commercial and industrial customers can take to mitigate these cost increases.
ISO New England (ISO-NE) is responsible for keeping electricity flowing across the six-state New England region: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. In so doing, ISO-NE’s core mission is system reliability.
To ensure reliability ISO-NE oversees the day-to-day operation of New England’s electric power generation and transmission system to keep the energy that generators supply to the grid in near-perfect balance with consumers’ energy demand. To ensure the system maintains adequate generating and transmission capacity to serve current and future needs ISO-NE manages a comprehensive regional pwoer system planning process and the region’s competitive wholesale electricity markets.