Demand-side management must become a significant element of the European energy market if the EU’s ambition to build a low-carbon economy is to be realized.  The latest survey of European smart grid projects by the European Commission’s Joint Research Centre (JRC) points out the importance of this requirement.  Smart Grid Projects in Europe: Lessons Learned and Current Developments (2012 update), a follow-up to a similar study carried out in 2011, notes that a majority of the 281 projects covered focus on “distributed ICT architectures for coordinating distributed resources and providing demand and supply flexibility.”

One of the latest projects to join the roster of demand-side management pilots is the Danish city of Kalundborg.  The fact that Denmark already obtains 30% of its electricity from wind power – and targets 50% by 2020 – is making such projects an increasingly urgent requirement for the country.

Symbiotic System

Kalundborg has a population of around 16,000 within a local kommune (or municipality) of the same name extending to 50,000 people.  Its relatively small size belies the fact that it is the second-largest industrial region in Denmark after Copenhagen.  It is also notable for its long established cross-industry program, Kalundborg Symbiosis.  This program has evolved over several decades as an integrated system for waste recycling within the local industrial system.  Residual products from one industry, such as steam, dust, gases, heat, slurry, or any other waste products, are physically exchanged between enterprises, thereby reducing energy consumption, production costs, and environmental damage.

Smart City Kalundborg is a 3-year smart grid pilot with a budget of $18 million.  Launched in November 2012, the project is led by Danish utility SEAS-NVE, Dansk Energi (Danish Energy Association), Spirae, and the municipality of Kalundborg.  Other participants in the project include ABB, CleanCharge, Clever, Danfoss, Gaia Solar, DONG Energy, Gridmanager, and Schneider Electric.  Smart City Kalundborg will look at the integration of energy management across power, water, heating, transport, and building systems.  This entire system will be based on an open, intelligent platform called the Energy Services Hub.  The Hub will enable diverse participants to make specific energy resources available to the system via a publish-and-subscribe model.  An individual enterprise, water utility, or demand aggregator, for example, could use the platform to offer a specified demand response capacity to grid operators looking to manage fluctuations in power supply or reduce the need for network reinforcement.

The technical and market challenges to delivering such a system at a city scale are significant, of course.  However, the biggest question may be who is in the best position to operate such an Energy Services Hub.  One solution would be a joint venture between a municipality, one or more utilities, and a platform operator, but other models are possible.

Smart City Kalundborg is an innovative approach to deepening the connection between smart grids and smart cities.  While Kalundborg has much in common with other market-focused demand management projects in Europe, it differs in its attempt to include a wider range of city operations, including water management, transportation, and district heating.  Kalundborg Symbiosis has provided a synergistic network for the industrial system; Smart City Kalundborg project could provide a similar network for the local energy system.

The Japanese market for building energy efficiency technologies has been strong for decades, thanks in large part to the 1979 Act Concerning the Rational Use of Energy, the foundation of Japan’s stringent building energy codes.  In the 2 years since the Fukushima earthquake and the ensuing energy crisis – which has caused a 17% increase in the price of energy for non-residential customers of TEPCO, the monopoly utility that serves the greater Tokyo region – demand for energy efficiency technologies in Japan has grown significantly.

In particular, demand for building energy management systems (BEMSs) has grown as much as 30% to 40% year-on-year over the last few years, according to discussions I’ve had with market participants and key industry players in Japan.  Although the concept of BEMSs is mature in Japan, given that it is a requirement of the Act Concerning the Rational Use of Energy, the concurrent timing of the energy crisis and the market availability of software-as-a-service (SaaS)-based BEMS software has led to a surge in its adoption.   (It should be noted that the concept of BEMSs in Japan overlaps significantly with the concept of BEMSs in Europe and North America, though BEMSs in Japan often include additional technologies such as building-to-grid connections, smart meter technology, and others that are often considered part of the smart grid in other regions.)

Driving DR

At the recent World Smart Energy Week at the Big Sight in Tokyo, I was focused on learning more about the adoption of technologies such as building energy management systems (BEMSs), direct digital controls (DDCs), demand response (DR), and other intelligent building products in Japan within the 3^rd Eco House & Eco Building Expo.

I attended several sessions of the event’s Smart Grid Technical Conference, where representatives from organizations such as Itron, NEDO, and Toyota discussed smart building technology in the context of the increased intelligence of the utility grid.  In particular, the increased growth of PV and wind in Japan will continue to drive the country’s emerging DR market, which will expand further through the adoption of smart building technology.  As Taichiro Kawahara of Hitachi put it, “Demand-side energy management in Japan must be promoted through demand-side management and demand response.”

The conference not only explored the application of these technologies in Japan, but also compared and contrasted similar successes and challenges with smart grid integration experienced in Europe and North America.  This perspective is critical for ensuring that the adoption of smart grid technology in Japan unfolds as smoothly as possible and for providing Japanese technology developers with important insights into the market landscape in other regions into which many Japanese companies are looking to expand.  This sort of international forum is critical for spreading market-leading technology – and ensuring that the industry doesn’t make the same mistakes twice.

The demand response (DR) market is evolving from curtailing electrical demand during peak periods (typically only a handful of hours per year) to continuously balancing supply and demand for power on the grid.  Some observers refer to this new development as DR 2.0, while others are calling it “fast DR” or “grid balance.”  One of the major drivers is the need for ongoing adjustment to adapt to small, frequent changes in the power system on a second-by-second basis.  This becomes more imperative as more and more utilities have to incorporate intermittent renewables like wind and solar power into the grid, typically by adding ancillary or frequency regulation services that match total generation on the system with total demand on a second-by-second basis.

The major stakeholders, such as the Federal Energy Regulatory Commission (FERC), grid operators, and aggregators, are paying heed and are updating their policies and procedures to support the increased use of grid balancing.  For example, Ontario’s Independent Electricity System Operator (IESO) issued an RFP in August 2012 for non-generation suppliers to provide grid balancing.  It sought proposals from multiple vendors to procure 10 megawatts (MW) of regulation services from alternative sources, such as dispatchable and aggregated DR and storage technologies, including batteries and flywheels.  Similarly, New York ISO (NYISO) provides retail customers that are able to meet telemetry and other qualifications with an opportunity to bid their load curtailment capability into the market through regulation services.  These efforts have been given a boost by FERC, which released a new rule in October 2011 that requires grid operators in organized markets to compensate frequency regulation services based on actual services they provide.

Inherently Flexible

Several vendors have stepped forward to champion grid balance, including ENBALA Power Networks, which won IESO’s RFP and has been operating and delivering regulation services to the market served by the regional transmission operator, PJM Interconnection, for over a year.  ENBALA’s intelligent platform captures storage that already exists in the power system by aggregating available demand-side storage, by making small automated adjustments in the electricity use of equipment at commercial, institutional, and industrial sites, to deliver real-time flexibility back to the grid.  Another vendor, Calico Energy Services, recently announced that it’s licensing a set of technologies from Battelle called Grid Command Active Demand Management (ADM).  With this enhanced software capability added to its Energy Intelligence Suite (EIS), a hosted energy management platform, Calico will help utilities execute DR automatically, using two-way communications.

Undoubtedly, other vendors will emerge to provide fast DR as they begin to realize that many electrical loads, such as aerators, pumps, and chillers, have the inherent ability to be flexible without adversely affecting operating processes or changing the overall energy consumption of the system.  Fast DR represents not only a significant market opportunity, but also the next frontier of demand-side management.

Smart thermostats garnered a lot of energy industry and media attention in 2012 and will likely continue to do so as the market continues to grow (for example, a recent GigaOM article claims Nest is shipping 40,000 to 50,000 thermostats each month).  While the energy industry tries to figure out a) what smart thermostats are capable of and b) if consumers will pay to swap out their “dumb” thermostats, it’s clear these devices have the potential to help create more efficient homes by enabling consumers to adjust their energy use.  Still, some consumers continue to debate whether smart thermostats can actually save energy.  Thus, it’s a good time to review that ways in which thermostat setbacks can save energy.

Thermostat setbacks are defined as setting a thermostat at a lower – or higher, depending on the season – temperature than normal so the HVAC system will run less often.  Typically, setbacks are deployed when less heating or cooling is needed, i.e., during the day when occupants are at work, or at night when occupants are sleeping.  The common misconception around setbacks is that the extra energy needed to recover the original temperature nullifies the energy saved by using the setback, and can even raise energy bills.  The fact is, that’s not how setback savings works.

How It Works

The savings from temperature setbacks are directly related to the amount of time spent at the lower temperature setpoint (or, in summer, a higher setpoint).  The energy savings accrued while the indoor temperature falls (or rises) is approximately equal to the additional energy needed to bring the indoor temperature back to the original setpoint.  Since those two conditions cancel out, the measurable savings amass during the time spent at the lower setpoint.

Let’s look at a specific example in the winter.  Consider a thermostat using a comfort setting of 70°F while the home is occupied and a setback setting of 62°F while the home is unoccupied.  At 9 a.m., the thermostat lowers the indoor temperature from 70°F to 62°F.  At 5 p.m., the thermostat brings the home back to 70°F.

The savings accumulate during the 8-hour span while the home is at 62°F; again, the assumption is that the energy saved while the house dropped from 70°F to 62°F equals the energy required to bring the house back to 70°F.

Some argue about setback savings because they don’t agree with that key assumption.  Variables like a home’s physical characteristics (envelope, insulation, solar heat gain, etc.) as well as the HVAC system’s efficiency all help determine the effectiveness of setback savings.  In general, the older a home and/or its HVAC equipment, the more likely efficiency losses are present, especially while the HVAC system recovers from a setback.

However, it’s worth pointing out that the HVAC system doesn’t work harder per se to recover the original temperature; the system just cycles longer.  As North Dakota State University’s (NDSU) “Thermostat Setbacks Do Pay Off” article puts it, “It is not like the throttle on your favorite automobile, where the harder you push, the harder the motor works.  Heating systems are simply on or off.”

Still don’t believe the savings setbacks are selling?  Feel free to comment below to provide your arguments.