by Gregg Dixon
Water utilities today are all facing similar challenges, including strict regulatory requirements, preserving service standards amidst aging infrastructures, and preparing facilities for emergencies and security problems. On top of that, water utilities now have to contend with rising energy costs, and since energy is not a resource that water utilities can stop using or easily cut back on, rethinking the status quo is a necessity.
Today, approximately 4 percent, or about 75 billion kilowatt hours (kWh), of energy consumed in the U.S. is used by water agencies (U.S. Environmental Protection Agency, "Ensuring a Sustainable Future: An Energy Management Guidebook for Wastewater and Water Utilities," January 2008, page 4). To put this into perspective, that is the same amount of electricity consumed in about 6.3 million U.S. households. With this much electricity being consumed, it is no surprise that water utility facility managers are seeing increasing electric bills every month.
Water utilities across the country are realizing that this challenge will not disappear in the near future. Therefore, many are adopting energy efficiency practices to help cut back on operating costs and eliminate energy waste. For example, more and more water agencies are participating in demand response (DR) programs. DR is a technology-based concept that is clean, efficient and offers an immediate, cost-free opportunity to generate revenue while improving operational reliability.
What is demand response?
Supply and demand of electricity must remain in a delicate balance, since it cannot be stored like other resources. The traditional model of sustaining this balance has been to rely on designated peaking power plants during times of peak demand. As a result, approximately 10 to 12 percent of North America's power plants are only used less than 1 percent of the time in order to meet instances of peak demand — with significant economic and environmental impacts associated with their construction and operation. Typical 100 megawatt peaking power plants take about three years and $60-100 million to construct, a cost that has increased about 30 percent since 2006 alone, and they emit roughly 5,100 metric tons of CO2 in 100 hours of operation (Morgan Stanley Research, "Electric Utilities- Attractive View", March 2008, slide 14). Until recently, these plants have been a necessity in order to avoid brownouts and blackouts and to mitigate dramatic spikes in prices. Demand response tackles the problem from the other side of the equation — instead of generating more electricity on peak, it focuses on reducing the amount of demand for electricity on peak.
Demand response works by giving electricity users incentives, typically cash or rate reductions, to reduce energy consumption when called into action, typically less than 80 hours per year. Reductions are customized for each facility and can include turning off lighting, air conditioning, pumps and non-essential equipment.
How can water utilities benefit from demand response?
When a demand response event is called, water utilities can take certain measures to reduce electricity consumption, like shutting off or slowing down certain lift pumps and aeration equipment, turning off or reducing usage of lights and HVAC, or switching to back up generation for the duration of the event, which typically lasts anywhere from two to six hours. Using back up generation during demand response events plays a double role: it answers the demand response challenge, and also provides an ideal opportunity to conduct the necessary periodic testing of the generators to ensure that, during a real emergency or blackout, the system has been properly exercised under loaded, real-world conditions.
Some demand response providers take the legwork out of participating by remotely managing a site's energy assets at the push of a button. This eliminates the need for facility managers to manually shut off or turn down equipment across the site. Of course, customers that prefer to maintain control can also work hand in hand with their DR provider to effect a manual demand response strategy.
The benefits of participating in demand response extend far beyond the financial benefits. By participating, water agencies are improving their own operational reliability. First, participation provides an advance warning of grid stress, which affords the participant the ability to prepare — unexpected change in operating state is the bane of rotating equipment longevity. By reducing load or running on-site generation during a demand response event, the agency is relieving strain on the grid that would otherwise put operation at risk. This also directly helps to prevent brownouts and blackouts community-wide, keeping the lights and air-conditioning on at homes, and giving the participant a feather in the community goodwill cap.
Demand response in action: Eastern Municipal Water District
Eastern Municipal Water District (EMWD) is one of the largest water providers in southern California, serving a population of more than 630,000 in a 555 square mile area. The agency is also a major consumer of electricity, which costs the agency approximately $12 million a year. In 2007, the district chose to enroll in a demand response program with EnerNOC Inc., a leading demand response provider based in Boston, MA. Under its contract with EnerNOC, EMWD committed to curtailing approximately 2 MW of demand.
By participating in the program, EMWD receives payments of about $100,000 a year from EnerNOC. Its participation also helps bring new stability to the electrical grid during peak periods, providing much-needed peak demand reduction for Southern California Edison, its electrical provider.
During a DR event, EMWD receives 30-minute advanced notification from EnerNOC, and then manually shuts down pumps at its wastewater treatment plants in Hemet and Perris, California.
"Demand response is a key strategy that helps us curtail energy use — without any impact on service. It makes real sense for us."
"Our resources and reserves let us run at reduced capacity temporarily," said Dan Howell, EMWD's director of purchasing and contracts. "So we can shut down these two facilities during a DR event for a couple of hours without any effect at all on service."
Howell cites a recent statistic that attributes from 10 to 18 percent of peak demand in California to water pumping and other water-related electrical use — which makes water plants among the largest users of electricity in the state.
An outspoken believer in the potential of curtailment by the water industry, Howell advocates incentives by utilities — as well as participation in demand response programs. "It's very expensive to build new electrical generation facilities," he said. "And it's definitely not as expensive to curtail energy and avoid problems that affect the broader community. Demand response is a key strategy that helps us curtail energy use — without any impact on service. It makes real sense for us."
Since enrolling, EMWD has experienced two events and regular testing — which all proceeded smoothly. During the events, EMWD was able to curtail more than 2 MW of demand — exceeding its original nominated capacity. The agency uses its annual payments from EnerNOC of $80,000 to $100,000 to help offset the considerable cost of electricity at its facilities.
Key benefits to EMWD
The most important benefit of demand response is that it can be easily implemented by EMWD, without requiring major changes or affecting its core mission of providing clean water to its constituents. Under the program terms, EMWD can participate in an event at varying levels by choosing to run its equipment at lower percentages or shutting them down completely, and it always has the option of manually restarting as service commitments dictate.
• Curtailment without BUGs. The agency's water treatment facilities have on-site electrical generation capabilities with state-of-the-art, gas-powered backup generators (BUGs) capable of generating 6 MW. However, during DR events, the agency does not use back-up generators, which can only be used in emergencies. Its reduction of 2 MW is achieved completely via curtailment, not back-up generation.
• No penalties. During a demand response event, if EMWD can't curtail its nominated capacity, it isn't penalized — a flexible approach that makes the program much more attractive. "We need to reserve the right not to participate if the timing isn't right for us," Howell said.
• Part of a comprehensive portfolio. EMWD actively pursues and participates in a wide range of programs offered by Southern California Edison. "We've always taken a position where we try to be flexible about our energy use," Howell said. "And over the years we've developed a comprehensive energy portfolio and programs."
For example, its wastewater treatment plants participate in the utility's interruptible program, which offers lower rates. Demand response fills a clear role in its portfolio of efforts aimed at reducing energy use, lowering costs and maximizing the efficiency of electricity use throughout EMWD.
EMWD's future
Now that initial testing of demand response at two of EMWD's facilities has proven successful, the district is evaluating other likely DR candidates among its 50+ additional facilities.
"We'll be looking at possible facilities that can be enrolled and that can reduce demand via curtailment," Howell says. "As long as we can manage the program centrally, we can continue to add other facilities. I anticipate that approximately 10 of our facilities may participate eventually."
About the Author:
Gregg Dixon leads EnerNOC's sales and business development efforts, including market assessment, market positioning and penetration, and overall revenue generation nationwide and internationally.
