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July 30, 2007

A Green Recourse to Energy Management

Konkana Khaund, Building Management Technologies - Frost and Sullivan

Energy efficient homes and buildings have been gaining attention globally due to their potential to reduce energy costs, mitigate greenhouse gas emissions and consume fewer resources. A significant industry driver for adoption of energy management practices is LEED (Leadership in Energy and Environmental Design), a tool developed by the United States Green Building Council. LEED registrations and certifications estimate that the market for green buildings has a growth potential of 20-30% per annum through 2010. Unpredictable energy prices and noticeable effects of climate change due to greenhouse gas-induced global warming have driven a demand-based focus on energy in North America. Lifestyle practices, design systems and high-performance technologies are being sought that can reduce energy consumption and mitigate the production of greenhouse gas emissions.

Moving beyond short term goals

Technology and product innovation of companies are constantly up against restraining factors such as the ability to conceptualize a truly remarkable product platform, investment outlay, deal with nascence of adoption and barriers to penetrate a thriving conventional market set-up.

The ability to look beyond short-term goals and advocate a responsible technology platform, satisfying timely and unmet needs with built-in scalability to integrate changing environmental priorities, would undoubtedly be a good accomplishment.

In the energy management products and solutions market in North America, there are a few companies that have found fair success. Their technology solutions ranges from supply-side management solutions to integrated supply and demand-side management solutions and finally more sophisticated systems with built-in intelligence that are capable of bringing together load management with supply backup, energy efficiency monitoring and harnessing of renewable energy resources. These sophisticated systems provide innovative interface platforms between consumers and utilities, integrated through intelligently controlled web environments. A notable name in this segment is GridPoint Inc, based out of Washington DC. The company’s GridPoint Connect is a fully integrated turnkey solution in this area.

Emerging dynamics fueling the need

Across North America the industry has witnessed substantial hike in energy prices leading to frequent electricity rate increases, in some cases as high as over 70 percent increase. Added to that is the impact of Renewable Portfolio Standards goals and Carbon tax issues that will impact energy prices going forward.

Secondly, peak load requirement of utilities far exceeds the average load growth, thus putting a lot of capital inefficiency into the Transmission and Distribution (T&D) networks. This calls for incremental generation and T&D, failing which utilities have to resort to buying spot power at very high rates from merchant power plants. Ban on coal-fired power plants is further mandating green generation portfolio.

With consumers’ increasing dependence on more sophisticated power consuming gadgets, preference for larger homes and automated living concepts, the tolerance for power outages is fast declining.

There are yet other restrictions on the ability to build more power plants or expand T&D infrastructure in US, often leading to substantial rerouting expenditure on T&D (not-in-my-backyard issues).

With capital-inefficient peak load assets and much needed T&D upgrades, utilities have a capital exposure in either overbuilding their peaking capacity or increasing their operational expenses in buying spot power.

What utilities are going through has a direct bearing upon the entire innovation process behind some of the energy management solutions being developed as is evident from Frost & Sullivan’s exploration of evolving best practices in this arena. These solutions aim at capitalizing on the current burgeoning interest for mainstream green awareness, are sustainable to utilities and adequately address the overall desire for clean energy.

Technology Excellence – what defines it?

The ideal technology must not only propagate resource conservation but helps quantify it correctly and should be adaptive to changing environmental priorities.

Entrepreneurial dexterity behind such endeavor is rarely overlooked. However, a steady flow of investment must be able to sustain through the development period well into a thriving venture.

Elimination of environmental burden with obligatory reclamation and recycling services is an important aspect. For example, the lead acid batteries used in the GridPoint Connect are almost 95% recyclable, presenting high incentive for users to reclaim that lead, given the rising price of lead over the last couple of years. The company also takes responsibility of battery disposal and recycling.

A critical factor that distinguishes a technology in this area is "what level of visibility does it provide the consumers into their energy usage that can assist them in effecting reductions". More often there are solutions that leave the consumer speculating for reasons as to why their bill is high. Also it must be capable of showing what percentage of energy production in coming in from consumer distributed generation to utilities. The ability to regularly monitor this volume can provide utilities with a guaranteed amount of energy in the grids to tide over peak load problems.

From silo participation to collective accountability

In the present context, with climate change gaining paramount importance, no entity can afford to isolate any part of the value chain and operate in a silo. A ‘Grassroot Involvement’ is clearly necessary that enables community participation in conjunction with utilities and technology companies.

While the consumer would benefit from renewable energy integration, backup power and bill reduction, the utilities in turn will benefit from a virtual peaking power plant. Deploying such a system on a community-wide basis will increase power availability both on demand reduction as well as stored energy.

Keeping long term sustainability in mind, a good starting point to promulgate such technology would be their incorporation in LEED certified homes and buildings. Few companies have achieved notable success in revolutionizing the way net metering can be harnessed towards environmental sustainability. The key is to recognize the long term potential of alternate energy at a time when the critical nature of harnessing renewable energy resources have excited the innovative mindset of may such organization to create far less integrated or haphazard options incapable of efficiently controlling the edge of the grid.

A major step in modernizing North America’s energy management systems came forth with the forming of the GridWise™ Alliance in 2003 – a consortium of exponents of smart grid policies and technologies. The Alliance and its resolution, endorsing the adoption of intelligent and reliable energy systems have gained support and attention of stakeholders from various disciplines in recent times, including federal agencies (U.S. Dept. of Energy) and the U.S. Conference of Mayors.

On a more consequential basis, this is a paramount step towards consolidating efforts to drive sustainable economic growth and reduce the impact of climate change and global warming. The next few years will present a critical test period as these initiatives channels through phases of implementation and acceptance. What thrives and what falls out of the race will decide the gravity of the endeavor.