Demand response strengthens sustainability, grid reliability, and profitability


DemandThe cement industry is an example of a large electricity consumer that is exploring the benefits of integrated demand response technology that augments payments from traditional capacity with voluntary price-based demand services.

By Bhaskar Dusi & David Emery

Electricity represents a sizable percentage of total operational costs in most industries. Over the past several years, the cement industry has made significant strides in terms of overall energy efficiency. The cement industry continues to explore innovative solutions to manage energy consumption and costs more efficiently.

One of the early methods to prove itself as a viable solution is demand-side management or demand response, now increasingly adopted as standard practice. In simplest terms, participants in the various demand response programs available (see Figure 1) earn payments to be on standby or curtail power consumption during various peak demand situations when grid emergencies are imminent or when wholesale electricity prices soar. Third-party curtailment service providers (CSPs), along with utilities and grid operators, coordinate effective load management efforts with large commercial, industrial and institutional customers.

The most common type of demand response in standard practice is traditional capacity or emergency programs, where participants get paid for reducing or shifting loads when a grid-dispatched event is called during periods of extreme power demand. In 2009, hundreds of customers enrolled in emergency programs across the Mid-Atlantic and PJM Interconnection service area committed to reduce over 7000 MW and received more than $300 million for their combined participation. In 2010, participation increased significantly as customers committed to reduce approximately 9000 MW with total compensation exceeding $500 million.

CEMEX is one such example of a forward-thinking company, whose curtailment efforts effectively contributed to grid reliability, helping to avert chances of a rolling brownout or blackout.

Actionable information brings CEMEX results
CEMEX is a global leader in the building materials industry, providing high-quality products and reliable service to customers and communities worldwide for more than 100 years in over 50 countries. The company manufactures 96 million mt of portland cement at plants throughout the world. Its Fairborn Plant (above) near Dayton, Ohio is one of 11 cement plants being operated at present in the USA.

CEMEX has significant electricity needs and, consequently, it has significant energy expenditures. This innovative company explored avenues to manage its rising energy costs and gain more control of its energy usage, while furthering its commitment to conserve energy and reduce its carbon footprint.

First introduced to demand response by EnergyConnect in 2008, the CEMEX Fairborn Plant has since then considerably offset its rising energy costs and gained more control over volatile electricity prices. By participating in Interruptible Load for Reliability (ILR) programs using EventConnect, CEMEX was able to reduce pressure on the electricity grid during times of peak demand. The company quickly came to realize how EnergyConnect’s integrated demand response services would non-disruptively fit into its existing comprehensive energy management strategy.

“CEMEX strives to be an industry leader in energy efficiency and sustainable manufacturing,” said Kevin Kelley, CEMEX’s Director of Process Technology and Sustainability. “Our partnership with EnergyConnect allows CEMEX to meet its overall strategic goals of providing our customers with the best products and services while maintaining a high level of stewardship by reducing our energy consumption and carbon footprint.”

Now, using EnergyConnect’s secure, web-based GridConnect platform, CEMEX has access to up-to-the-minute data on the energy marketplace. Armed with this information, plant management is able to proactively evaluate the plant’s production needs on a day when a grid emergency is likely to be called. 

EnergyConnect’s approach allows CEMEX to proactively leverage demand response opportunities without interrupting the company’s core business. When the electricity grid is experiencing reliability issues in an emergency, the control room receives a request to shed load, and CEMEX can respond by shutting down large load contributors to their operations including the finish mill and kiln, reducing load by around 8 MW. Using near real-time market intelligence streamed to the facility via GridConnect, the CEMEX Fairborn plant is now empowered to respond more rapidly and make electricity available to the grid during times of peak demand, earning a valuable source of revenue in the process. Based on 2010 power expenditure, this amounted as much as 12% of the facility’s annual electricity expenditure.

Integrated demand response
Demand response has been singled out as the “killer application” for the smart grid. Companies like CEMEX are exploring new technologies that take traditional demand response efforts further. The rollout of renewable sources such as solar and wind have increased the relevance of demand response as an important grid resource. While initial programs have been successful, there is still plenty of room to bring new resources into the mix or expand the reach of existing resources. It is unlikely we will realize the full potential of demand response in terms of economic and environmental benefits if it is too cumbersome for easy participation.

Wide-scale adoption of smart meters and information access is enabling effective energy management for almost all electricity users today. Regardless of whether customers are incentivized by dynamic pricing, peak rate programs or demand response incentives based on wholesale market conditions, price signals—if translated into actionable information—will significantly extend energy consumers’ participation in the smart grid.

For example, adoption rates still remain low because price signals tend to be too simplistic. It’s not easy for a typical energy consumer to understand the exact implications of what earning or saving $0.50 per kWh within a certain time period really means (and its impact on the bottom line). This lack of clarity invariably leads to inaction. Presenting information in specific terms a customer can relate to and act upon has greater impact. Instead of simply telling customers that energy prices are going up for a few hours, it’s important to present that information within the context of their operational constraints. Quantifying the value against specific action provides much more motivation for customers to take measurable action.

The GridConnect software takes the complexity out of demand response by clearly quantifying the value of the energy users’ behavioral changes in their terms. For example, various “what if” analyses and scheduling options can help a plant operations manager to quickly evaluate the impact of different energy-use scenarios.

The key is to understand the level of operational flexibility, ask the right questions up front, and plan accordingly. What happens during a power outage? What’s the back-up plan? What’s the total capacity of back-up generators? What load can be shifted to those generators? Curtailment strategies should definitely take into account critical operational constraints for a specific business. For example, kilns, mills and crushers are critical components and major load contributors in cement manufacturing operations. What other possibilities are available for dropping load? Can an entire facility be shut down or only partially? Is back-up generation available to carry load?

All things considered, when a facility decides to participate, signals to automatically initiate load shifts can be sent directly to the control systems to schedule automated demand response. This represents a fundamental shift from purely reactive demand response to a more proactive energy management approach with the added benefits of increased savings and earnings.

As a plethora of energy information becomes easily available, it is important for users to be able to distill it down to a few easy to understand pieces of information. A well-designed dashboard takes the complexity out of multiple data streams and delivers visual metrics that allow users at all levels to quickly evaluate the result of certain actions. Executives will want to hone in on high-level performance indicators and quickly evaluate their impact on the bottom line. Managers responsible for day-to-day functions will want to understand exactly what they need to do—and when—to meet budget goals without impacting operations. As an example, the dashboard (see Figure 2) graphically displays several key components:

  • Current price response earnings opportunity including forecasted energy prices and baseline;
  • Real-time load information allowing users to foresee when they are about to exceed a monthly or annual peak load maximum—a tool that can be invaluable to help minimize demand charges;
  • A virtual “energy orb” that changes colors and visually alerts users to act on real-time price changes;
  • A three-day local weather forecast to help facilitate decision making over the next few days;
  • Snapshot of benefits achieved through reductions, reinforcing continued participation;
  • Net summary of year-to-date earnings and savings; and
  • Carbon emissions over the previous 30 days, overlaid with the amount by which a facility has reduced its carbon footprint due to demand response or other energy reduction measures

This level of insight gives the entire operations team the visibility, flexibility, and control to better manage energy efficiency and conservation initiatives while maximizing demand response earnings across multiple facilities.

Looking ahead
Today’s economic and environmental climate calls for efficient energy consumption and management. As with many manufacturing operations, energy can easily be one of the top ranking expenses, and demand response can mitigate significant costs.

It is easy to see how customers that have traditionally engaged in only low-touch capacity programs will expand their role in the smart grid. They will become integrated demand response resources combining “command and control” type services with additional motivation to act on information based on price signals. For the customers unwilling to subject themselves to command and control, or who want to augment their payments from capacity programs, there now several viable options to contribute with a less binding “inform and motivate” approach.

An integrated approach to demand response provides energy users not only with real-time performance data against target curtailment levels, but also management insights to daily electricity consumption and “situational awareness” of the grid, specific to wholesale prices and general grid status. This facilitates increased levels of active on-demand participation all year round, not just when an emergency event is called. In addition to enhanced energy management and cost savings, participation delivers many side benefits. It reduces overall carbon footprint, prevents rolling blackouts and brownouts, makes the goal of environmental stewardship more attainable, improves the reliability and efficiency of the electrical grid, and ultimately decreases the need to build for new power plants to meet peak demand.

Bhaskar Dusi, P. Eng, C.E.M, C.E.A, is the Corporate Energy Manager for CEMEX USA and has initiated the corporate Energy Management Program for CEMEX US Operations and is responsible for implementation of the Energy Star Energy Management guidelines across the company. He is an active member of the Energy Star Cement Focus industrial group and the Energy & Environmental Subcommittee of the Portland Cement Association (PCA). Email: [email protected]

Dave Emery is the Director of Business Development for EnergyConnect in Ohio. He holds a degree in International Business Administration from Ohio State University and has delivered global customer solutions in the energy and telecommunications industries for more than 20 years. Email: [email protected]

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