Resilient Electricity Systems

FEATURED ARTICLE
Written By Tami Hutchinson

Managing the Peaks and Valleys

Source: Patricia Faucher | · DEC · | May, 2024

Starting with this month’s newsletter we will be presenting articles that explore various subject matters that relate to Decentralised Energy (DE). Each article will cover the basics and then explore in greater detail each subject. Would you like to see specific newsletter topics in our upcoming newsletters? Feel free to write to us with any suggestions or comments at pfaucher@deassociation.ca This month we had the opportunity to explore the important roles that demand side management and demand response play in our electricity system and how they enable greater integration of decentralised energy capacity into our distribution networks. We interviewed one of Canada’s leading authorities in electrification and an influential pioneer of the digital age, Glen Gordon, Co-Founder and CEO of Unico Power Corp.

Key Terms

  • Decentralised Energy (DE) is kinetic and/or potential energy (thermal, radiant, chemical, nuclear, and electrical) that is created and/or stored close to the point(s) of consumption. DE encompasses onsite energy generation, energy storage, and energy efficiency measures. DE projects vary in size and there is no set maximum capacity because systems are designed to meet local demand.

  • Demand Side Management (DSM) programs consist of the planning, implementing, and monitoring activities of electric infrastructure which are designed to encourage consumers to modify their level and pattern of electricity usage.

  • Demand Response (DR) is an important feature of DSM. It refers to balancing the demand on power grids by encouraging customers to shift electricity demand to times when electricity is more plentiful or other demand is lower, typically through prices or monetary incentives.

The Deep Roots of DSM

Previously known as Demand-Side Load Management, DSM started in the late 1970s as a response to changes in the electricity sector brought on by the Oil Crises. Utilities began looking into energy efficiency and conservation.

Then came the Canadian Energy Efficiency Act in 1992 establishing minimum energy efficiency standards for products consuming electricity. Utilities continued to investigate ways to increase energy efficiency onwards. Today, DSM encompasses a set of strategies and programs to reduce overall electricity demand, improve grid reliability, optimise energy efficiency, as well as improve customer service through incentives. DSM focuses on changing consumer behaviour, implementing energy-saving technologies, and using economic and financial tools to incentivize energy conservation and efficiency (mostly through government and utility programs). Such tools can include dynamic pricing, incentive programs, demand response programs, time-of-use-rates, energy efficiency certificates, and capacity markets. These tools lower the need for additional energy generation capacity, which is often provided by peak power plants and therefore make it attractive to consumers to change either their perceived need for increased power supply, and/or change the times at which they consume power. The gathering of data, monitoring, and analysis plays an important role in Demand Side Management. Utilities will collect data on how much energy is consumed over the course of a day, week, month, and compare with other times of day, or between seasons, to establish the pattern of a community when it comes to peak demand. They will then adjust and create the incentives mentioned in the previous paragraph to offer consumers.

Main Features of DSM

There are different features of DSM which can work together or independently to increase the efficient use of electricity and increase the reliability of the electricity grid.

Load shifting refers to when consumers use electricity outside of peak hours. Consumers are encouraged to use electricity when demand is lower by time of use pricing or incentives. Creating standards for energy efficiency such as energy efficient appliances, and promoting their use along with lighting and other technologies reduces electricity consumption. Demand response means that the utility signals consumers in real-time when they need to reduce their consumption e.g. during times of peak demand or when there’s the risk of having an unstable grid. Peak clipping refers to encouraging consumers to limit their electricity (or put it off for another time) during peak periods. Whereas Valley filling encourages consistent electricity use by promoting consumption during off-peak times. And lastly, but not least, Decentralised energy resources are optimising distribution networks through energy generation, storage and management solutions that are embedded into buildings and communities thereby reducing grid congestion and deferring costs of delivery infrastructure expansion.

Industry Transformation is Increasing the Value of DSM

Changing energy resources and changing energy demands is transforming the way electricity is generated, delivered, and consumed. Advanced Metering Infrastructure (AMI) and smart metres enable the collection of real-time data on energy usage which has in turn allowed consumers and utilities to monitor their consumption and optimise it.

The fact that we can use the internet to turn on our air conditioner at home with our new smart home devices, half an hour before we get home from work talks to the Internet of Things (IoT), and how energy usage patterns have allowed us to optimise our electricity consumption by not having had the air conditioning run full blast the whole day while we were away. These tech tools have allowed for more efficient use of energy and enable participation in DSM programs (more on that later!). Decreasing costs of Energy Storage and forecasted breakthroughs in storage technologies are expected to take decentralised energy design to the next level of performance. The diversification of energy sources brings benefits of reduced vulnerability and improved resiliency making energy more accessible and reliable. The heightened accessibility to Artificial Intelligence (AI) and Machine Learning has meant instantaneous analysis of large datasets and in turn optimises energy usage, demand forecasts, and is used in designing DSM programs. Advanced Metering and Analytics provide utilities and consumers with greater access to data (i.e. historical consumption data, weather data, building characteristics, consumer behaviour data, and appliance & equipment data, grid infrastructure data, and other external data sources such as data from government/ research agencies). Advances in technology have not only been useful for utilities but consumers as well through Mobile Apps and other Online Platforms which allow consumers to measure their electricity consumption in real time, and make informed decisions on how to modify their demand and thus participate in DSM programs. Peer-to-Peer Energy Trading supported by blockchain-driven platforms has allowed consumers to buy and sell excess energy with one another. This marks the dawn of the Prosumers era where energy customers are also serving the energy system as generators.

CASE STUDY OF ELECTRIC VEHICLES. Optimising Energy Usage in Multi-Residential Buildings through DSM and Demand Response

We interviewed Glen Gordon, Co-Founder and CEO of Unico Power Corp, a leading innovator in Intelligent Electric Vehicle (EV) charging and Energy Management Systems. Gordon talked about the rise of electric vehicles (EVs) and other high-demand appliances, and how utilities and building managers need to find innovative ways to balance energy supply and demand. Gordon suggested that in addition to incentives, DSM could include penalties, such as expanded use of demand charges: “A combined carrot and stick approach is often more effective.”

The Challenge of Peak Demand

Managing peak demand is crucial because the energy grid must have sufficient capacity to meet the highest possible demand.

Still today, peak power plants exist and are turned on to create more power in order to meet peak demand during certain hours of the day, even if sometimes it’s for one hour. These plants are highly inefficient, when we can either be conserving or adapting to how we demand power, Gordon contributes. In multi-residential buildings, for example, the introduction of EV chargers can dramatically increase peak demand. A single EV charger can demand up to 19 kW, compared to the typical 3-4 kilowatts for an entire apartment, but there’s a way to mitigate that, Gordon informed us.

Benefits of DSM and DR in Multi-Residential Buildings

  • Cost Savings for All Residents: Implementing DSM and DR can significantly reduce energy costs.In buildings where electricity costs are shared, non-EVowners benefit from not subsidising the high energy usage of EV owners. By controlling peak demand, overall electricity bills can be lowered, benefiting all residents. However, Gordon clarified that not all buildings have their systems set up, where in some cases everyone including non-EV owners are paying for EV charging.

  • Enhanced Grid Stability: Effective DSM and DR programs help maintain grid stability by preventing spikes in demand. This stability is crucial for utilities as it reduces the need for expensive infrastructure upgrades and minimises the risk of blackouts.

  • Encouraging Sustainable Practices: These programs promote sustainable energy use by encouraging residents to be mindful of their consumption patterns, thus contributing to broader environmental goals.

Gordon brought up an example of some of the challenges with implementing DSM was how one of Colorado’s major utilities, Xcel, had to suddenly turn down the airconditioning for 22,000 customers who had signed up for the utilities DSM program in return for annual financial incentives. This energy emergency unfortunately occurred during a heat wave, and there was little time to alert the customers leaving them upset feeling their comfort was compromised without adequate warning.

A successful case of where the municipal government implemented penalties was in the City of Lethbridge, Alberta & City of Lethbridge Electric Utility. A tariff system based on level of consumption and residential demand charges was introduced to manage peak electricity demand. Residents exceeding a set demand threshold were moved to a higher tariff rate (if they, according to Gordon, did not adjust their consumption/ time patterns after a second notice from the utility), encouraging them to adjust their energy usage. “This approach proved effective as most residents adapted their behaviour to avoid higher costs by charging their EVs outside of peak hours,” added Gordon.

Implementing DSM and DR in Multi-Residential Buildings

Unico Power specialises in multiresidential buildings, where DSM and DR programs can be particularly effective due to the communal nature of these environments.

“Residents already share resources like elevators and lighting, making it easier to implement shared energy-saving measures,” said Gordon.

“(At Unico Power) specialising in multi-residential buildings and EV charging stations, we’ve found that real-time monitoring and control of energy usage are key. By observing building demand in real-time, we can adjust EV charging rates to prevent surpassing peak demand thresholds. This method ensures that residents’ essential needs, such as having a fully charged car in the morning, are met without incurring excessive costs” Gordon contributed.

Overcoming Resistance to DSM and DR

When asked about how we can overcome resistance in adopting these programs, Gordon explained that while some residents may initially resist these programs, education and clear communication about the benefits are crucial. “Once residents see that their essential needs are consistently met, they often adjust their expectations. For example, an EV owner might initially want maximum charging power of 19kW (so that their car can get fully charged within a short time frame) but soon realises that having a fully charged car by morning is the real priority,” Gordon added. It’s about making people realise what’s important – having my car charged (or hot water in the hot water tank) in the end.

All in All

Demand Side Management (and Demand Response) are vital tools for optimising energy usage. By effectively managing peak demand, these programs can provide significant cost savings, enhance grid stability, and promote sustainable energy practices. Successful implementation requires a combination of technology, education, and clear communication to ensure citizens understand and appreciate the benefits of these programs. As we move towards a more sustainable future, DSM and DR will play an increasingly important role in balancing energy supply and demand, ensuring that our energy grids remain robust and efficient.

Further Reading

Demand Side Management

Smart Grids

Energy Efficiency

The Colorado Case

Lethbridge Alberta Tariff System

Tami Hutchinson
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