Conservation at the Touch of a Button

NY Times
November 7, 2007
By MATT RICHTEL

TALK about remote control.

The Super Stop & Shop grocery in Long Island City, Queens, is participating in a new system meant to take pressure off the local power grid. In times of peak demand, some of the grocery’s lights, air-conditioning and even refrigeration systems can be temporarily shut down — by a computer in Boston, 200 miles away.

Nationwide, several thousand businesses like Super Stop & Shop, as well as residential customers, are ceding control of their electrical systems during moments of unusually high demand. And they are being paid to do it.

The system, based on a concept called demand response, is one of the latest ways that Internet technology is being applied to improve the management of the nation’s taxed power supplies.

The supporters of demand-response technology say they can save utilities and their customers tens of millions of dollars by selectively curbing demand when the grid is at capacity.

Once the system is in place, the utility’s role is limited to notifying the operators of demand-response systems that it is time to start shutting down the lights remotely.

“We tie in to their electrical panel, toggle the relay and curtail 40 percent of their lighting,” said David Brewster, the president of Enernoc, one of several publicly traded companies in the demand-response business.

“We are like an insurance provider for the utility industry,” he added.

Enernoc is in Boston, but on a moment’s notice it can shut down lights and other appliances in about 1,850 companies nationwide, including some Whole Foods stores, units of AT&T and small local businesses. For instance, when power demands in the Queens area become severe, Enernoc flips the switch on some of the Super Stop & Shop’s wall and track lighting and cycles its air-conditioning.

In Boston, Enernoc has a 5,000-square-foot center that operates around the clock, where teams wait for crisis calls from utilities.

Enernoc installs a small device near a customer’s electrical box. The device collects information on electricity consumed at the site and enables remote access to the company’s electrical equipment.

An Enernoc competitor, Comverge, provides a similar service focused more on residences. Using a wireless paging system that sends signals to a device connected to a home’s air-conditioning system, pool pump or electric water heater, it can govern power use.

On Aug. 15, for example, ISO New England, the electric grid operator for the region, issued a system emergency because of peak demands created by hot weather. In five minutes, Comverge cut the demand from roughly 60,000 homes in southwestern Connecticut.

From January through August this year, Comverge has coordinated 101 such events around the country.

“This is going to be mainstream for utilities,” said Robert Chiste, chief executive of Comverge, which is in East Hanover, N.J., and works with nine large utilities.

Industry analysts say these businesses have a lot of potential, but they face challenges, too. The systems must function reliably and not inadvertently shut down power, or leave it down. They could become less economically useful if electricity supplies increase markedly; if the price of gasoline drops sharply; or if they fail to persuade utilities to participate.

Michael Carboy, a financial analyst for Signal Hill, said demand response on the whole was a good alternative for utilities that must otherwise pay high rates to buy electricity if demand exceeds supply. He said wholesale rates paid by utilities could hit $1,000 or more per megawatt-hour during crisis times, versus $60 during times of ordinary demand. (One megawatt-hour is enough to power a typical home for up to two months.)

Alternatively, a utility can pay demand-response companies to reduce use. For instance, a utility might pay Comverge $70,000 to $80,000 a year for each megawatt that the company can commit to eliminating from the load. By contrast, if a utility builds a power plant, it could pay $400,000 to $2 million for each new megawatt of capacity, depending on the type of power plant.

Utilities pay Enernoc about $80,000 per megawatt of saved energy.

Some of that money goes back to the individual residents or companies participating in the programs. For instance, Comverge pays residents about $35 each summer to take part. Enernoc turns over about half of the fees it collects from utilities to the grocery stores, industrial sites and other companies that enroll.

The deal has meant about $18,000 a year in payments from Enernoc to Krinos Foods, a maker and distributor of cheeses, peppers, olives, cookies and other Mediterranean foods in Long Island City. When needed, Krinos has agreed to have Enernoc temporarily shut down some of its lights and refrigerators and cycle its air-conditioning.

During electricity slowdowns, the company has suspended manufacturing lines and moved workers overseeing them to other jobs, like manual packing. John J. Tramontana, a plant manager at Krinos, said the situation had been a financial benefit to the company and had helped stave off broader power failures in the area. It had few downsides, with the possible exception of some grumbling from employees.

“People have gotten uncomfortable with the air-conditioning going down,” he said.

Utilities have tried many programs to encourage energy savings, including offering price breaks to large consumers who agree to limit electrical use during peak demand times. But the efforts have been inconsistent.

Providers of demand-response services, by contrast, aim to become partners of the utilities and a conduit between them and their customers. Enernoc constantly measures the electrical use of the businesses where it has installed a system. That way, it can verify for a utility that it has, in fact, cut use during a crisis.