How commercial and industrial facilities can leverage load shifting to better manage energy cost

Well-executed energy consumption management is key for businesses to gain a competitive edge in today’s highly globalized economy.

It enables them to hedge against surges in energy prices while growing the bottom line and demonstrating action on sustainability. Despite their highly contrasting energy profiles, both small and large businesses benefit from optimized energy usage, demonstrating the universal application of waste elimination.

While energy bills are generally thought of as being tied to the quantity of power delivered, the reality is a bit more complicated, especially with large electricity users.

In these instances, global adjustment (GA) costs — which is the component of an energy bill that covers electrical infrastructure maintenance and upgrades and conservation and demand management programs in Ontario — can represent a sizable portion of the overall bill. But the good news is that these costs and operating expenses can be reduced through corporate proactivity, such as participating in the Industrial Conservation Initiative (ICI).

The ICI is designed to encourage shifting electricity consumption to off-peak hours, slashing global adjustment costs and helping defer otherwise needed investments in new electrical infrastructure. The savings produced through the ICI vary across industrial sectors, as would be expected. Participants of the program and their respective sites are referred to as Class A facilities.

In Ontario, Global Adjustment costs account for >60% of a Class A facility electricity bill. A Class A facility can manage these expenses by reducing demand during GA hours.

However, the challenge for many facilities is identifying the exact hour to curtail loads or dispatch a distributed energy resource like energy storage or a generator.

With a solution like GridPredict offered by Peak Power, a Canadian climate tech company based in Toronto, facility managers get alerts on potential GA hours with a 4-hour window to reduce the margin of error. A series of alerts are sent out 24 – hours, 8 – hours and 2 – hours in advance with varying degrees of likelihood of a GA event; this gives the facility manager the time and confidence required to act on a curtailment strategy and realize savings.

The faster and more accurately businesses can forecast peak demand hours, the greater their benefits. It’s also worth noting that the program produces undersupplied public goods by redistributing energy consumption in a way that’s more sustainable for Ontario’s electricity system.

Demand response programs, such as the ICI, will be critical to meeting the world’s environmental goals while satisfying its insatiable energy demand. According to the US Energy Information Administration (EIA), total energy consumption is set to rise by 48% before 2040, largely a byproduct of population growth, rising standards of living, and an increasing reliance on technology.

For businesses to be eligible to participate in the program, they must have an average monthly peak demand that surpasses 500kw during the prescribed annual base period (May 1 to April 30).

Requalification is required on a per annum basis. To not encourage unnecessary or wasteful energy practices, the ICI accounts for reductions in electricity consumption due to energy efficiency upgrades. Customers who fall below the program’s minimum threshold, for this reason, must work alongside their LDC to provide the necessary documentation to be reevaluated for eligibility.

As a demand response program, the ICI offers companies a way to grow the bottom line, relieve electrical grid loads during peak hours, and reduce greenhouse gas emissions. Cutting down on peak demand hours means fewer fossil fuels – like natural gas – have to be burned to satisfy customers, proving that sustainability, resiliency, and profitability go hand in hand.