What the next generation of demand response needs to look like

by FM Media
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Total Facilities 2012 speaker, MICHAEL ZIMMERMAN, BuildingIQ chief executive officer, provides an overview of the challenges involved in preparing buildings for interaction with smart grids, and details what the next generation of demand response needs to include.

The promise and hype surrounding the smart grid far exceeds its current capabilities. In no area is this truer than with demand response (DR) programs for commercial buildings and the need for critical interaction between a smart grid and a smart building.
In order to manage demands on the grid, utilities have created DR programs to provide financial incentives for building owners to reduce energy consumption during peak demand periods. Why would utilities pay end users to reduce power? The alternative is to build more power plants, which will cost the industry billions down the road.
DR successes in our industry are trumpeted far and wide as utilities launch new programs and initial customer contracts are signed. There are, however, some fundamental issues looming for building owners and operators that have and will continue to limit the success of these programs as they are rolled out. These include:

  • the risk to tenant service levels posed by DR events
  • the execution complexities of intelligently managing through DR events, especially in large, complex buildings, and
  • the capital requirements to fund the people or systems needed to ensure building owners and managers can address the above issues.

Current DR programs, which are more common in the US than in Australia, are rudimentary at best, despite the potentially huge scale of these DR programs and the large amount of dollars spent. We can classify these programs as ‘manual’, meaning an email, phone call or text message is manually sent from the utility or DR aggregator to a building manager, letting them know a DR event is coming up.
Then, manual changes to a commercial building’s energy systems are executed in an effort to reduce the load as best as possible. Basically, the building manager turns off some lights or the HVAC chiller.
So, now you have a ‘best guess’ scenario – did the building manager reduce the load enough to meet the target or did he overdo it, making the building (and its occupants) uncomfortable? Plus, with such a basic system in place, data collection and, therefore, the process of crediting a building with incentives for DR events, takes upwards of 60 to 90 days to complete.
How can building owners confidently participate in DR events this way? How can a utility build a scalable, effective DR program reaching the hundreds or thousands of customers they need to reach on these sorts of mechanisms? They can’t. And, if you talk to commercial building owners or utilities, you will learn that the industry has not been adopting DR programs nearly as much as one would expect, mostly because there’s got to be a better way.

Existing energy management systems in commercial buildings were not created in a DR world. The vast majority of the innovation to date has been focused ‘outside the meter’ (outside of the building) but, in reality, these DR programs will not succeed unless there is a corresponding amount of innovation ‘inside the meter’ (inside the building).
Well-known vendors in the space, although large companies with broad offerings, are not names synonymous with innovation and don’t have a lot of incentives to radically change their mature, stable and fairly concentrated industry. To their credit, a number of these companies are now starting to focus on these problems either individually or in partnerships.
Thanks to the work of US government labs like Lawrence Berkeley, industry bodies and some leading vendors, more intelligent automated solutions and standards such as OpenADR are being piloted, but things are moving slowly. These emerging ‘auto DR’ solutions still leave much to be desired as they basically consist of:

  • an electronic signal from the utility or DR aggregator to the building management system (BMS), and
  • a pre-programmed, fixed set of changes executed by the BMS over the building to respond to the DR event.

But, that’s where the innovation ends. These solutions still:

  • lack the ability to predict what actual load can be tolerably shed by the building
  • don’t take into account current or forecast weather conditions on the day
  • have limited ability to predict or determine the tenant comfort impact from response
  • have limited ability to validate the load shed versus target in real time, and
  • provide results that are best efforts based on the fit between the pre-programmed response and the specific situation on the day of the event.

In order to provide a scalable, widely adopted and valuable smart grid program for commercial buildings, the industry needs a much more fundamental increase in the intelligence of ‘inside the meter’ DR systems, and they need to be tightly integrated with the ‘outside the meter’ systems as well.
This next generation of DR – ‘optimised DR’ – will need to include:

  • an initial electronic signal from the utility/DR aggregator to the building manager, and then subsequent signals as the DR event progresses in the region with updates on any additional requirements
  • an automated response from the building’s energy systems back to the utility/aggregator to confirm the precise capacity of load shedding available given current conditions
  • incorporation of the DR event into the building’s energy optimisation plan for that day, with the energy plan tailored to comply with the event while minimising tenant comfort impact
  • dynamic adjustments to the energy plan and load shedding based on any changes to conditions (inside or outside the building) during the day
  • estimated and real-time validation of actual load shedding versus target
  • estimated and real-time understanding of tenant impact of response
  • estimated and real-time understanding of economic benefits of participating, and
  • confirmation back to utility or DR aggregator immediately after the event confirming actual results.

If the industry is to deal with these major barriers to adoption and achieve its potential in terms of the smart grid, it must move from ‘manual’ and the emerging ‘auto’ to the future – ‘optimised DR’ for commercial buildings.

Mike Zimmerman is chief executive officer of BuildingIQ, an energy efficiency software company that has offices in San Francisco and Sydney, and is backed by Exto Partners, a venture capital firm that has experience in commercialising technology from research institutions. Zimmerman is an executive/investor with a wide range of international company building experience, particularly with technology start-ups in the mobile and Internet sectors (consumer and enterprise). Over the last 12 years, he has worked as an executive, adviser or investor/board member of a wide range of venture-backed technology companies.

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