Office Buildings As Peaker Plants

My speaking schedule last week took me to Toronto, to a conference of commercial building owners and developers, along with a corps of product and service purveyors that do business with them. It was a good time to talk about the future of office buildings, looking beyond LEED and other green-building considerations to examine the role of buildings in a cleaner energy future.

First, a little context. I've long maintained that the same constellation of forces that are requiring us to re-examine our energy generation and use — worldwide growing energy demand, depleting oil stocks, constrained and fragile electric grid, climate change, and all the rest — is fueling a wave of non-energy companies into the energy business. I'm not referring to the hundreds of solar, wind, biofuels, and other clean-tech start-ups you've been reading about. I'm talking about some of the world's biggest companies that are finding themselves, largely for the first time, in the energy business. These new energy companies aren't traditional oil, coal, nuclear, or natural gas companies, or energy utilities in the traditional sense. Rather, they represent companies as diverse as the electronics firm Toshiba (making fuel cells for laptops) to livestock processor Tyson (partnering with ConocoPhillips to convert beef, pork, and poultry fat into biodiesel).

To a large degree, the trajectory of energy technology mirrors that of information technology. Consider: the first computer systems consisted of a central computer hardwired to a lot of "dumb" terminals — so called because their principal purpose was to draw information from a big, smart mainframe. Then PCs came along and were able to do useful things themselves, as well as to talk to mainframes and to other PCs. Now, of course, everything talks to everything else — our computers with a billion other computers, as well as with our televisions, phones, and, soon, our cars, refrigerators, and wristwatches — and can do so wirelessly.

Energy systems are developing along similar lines. Most of us still live in systems where a central "mainframe" power plant feeds energy to "dumb" terminals — our homes and businesses. Increasingly, some homes and businesses are becoming smarter, as we install solar and other renewable systems to generate power, selling excess energy back to the grid. In the not-too-distant future, major appliances like refrigerators and heating and air conditioning systems will be "talking" to the electric grid, making adjustments or perhaps powering up or down during the course of the day in response to shifting energy demands and rates. Our plug-in electric vehicles and hybrids will store electricity in their increasingly more powerful batteries, and will sell extra power back to the grid when needed. We'll be able to make energy transactions from our vehicles, PCs, PDAs, and cell phones. And much of this will take place wirelessly.

All of these activities require switches, routers, microprocessors, and software — the essential ingredients of computing networks and the Internet — meaning that companies like IBM, Intel, Cisco, and Microsoft will be increasingly in the energy business. (Mahvash Yazdi, the Chief Information Officer at Southern California Edison, one of California's large electric utilities, told me last year that when her company's service territory is fully retrofitted with "smart" meters that can be read wirelessly, SCE will be able to collect data from 5.3 million electric meters every fifteen seconds. That's a phenomenal amount of data and computing power.)

So, where do buildings come in? Consider that electric utilities maintain "peaker plants" — power plants that are turned on during times of high "peak" demand for electricity. In many cases, peaker plants are older, dirties plants that have been replaced by cleaner, more efficient ones, but kept around "just in case" electricity demands require that they be turned on; some peaker plants are used for only a few hours a year. Suffice to say, peaker plants are subobtimal — imagine keeping an old gas-guzzler in your garage and keeping insurance paid up for a vehicle to be used just a few days a year when relatives are in town — and are often the subject of citizen opposition — whether to build new ones or keep old ones operating.

But suppose there was another way? That's where commercial buildings come in.

Imagine the scenario: it's 4 pm on a hot summer day. Air conditioners are blasting, both in offices and in homes. The local utility has maxed out its available power and needs to add more to meet demand, which is expected to rise further before the day is out, as people go home and turn up their AC, among other things.

But rather than firing up a standby power plant, the local utility, by prearrangement, selectively and briefly turns off the large air conditioning or refrigeration units in large office buildings, warehouses, big-box stores, and other large facilities in its service area. It does this for staggered five minute intervals per hour — imperceptibly to the occupants — thereby reducing overall demand sufficient to avoid adding new generation capacity.

In this scenario, these dynamic, demand-responsive buildings serve as virtual power plants — buildings as peaker plants.

The building owners, for their part, get a special rate or credit for allowing the utility to do this — and may even be able to override the utility's control in special conditions — so it's pretty risk-free. Perhaps they'd get free energy upgrades — for lighting, hot water, heating and air conditioning systems, and other energy-intensive equipment — for being willing to participate. For the utility, such investments will likely be far cheaper than the $40 to $50 million price tag for at least one recent peaker plant — which doesn't include the plant's onoing operating costs. And that's assuming the utility can get the community to let them even build one.

There's a business opportunity here for enterprising souls able to aggregate several million square feet of commercial space in a given service area, then "sell" those relationships to the local utility as a virtual peaker. Based on local utility tarrifs and state laws, the entrepreneur might even be able to get tax credits or other incentives available to build new power plants. More than likely, however, such arrangements will need a spate of new regulations and laws that provide incentives — to building owners, utilities, and third-party entrepreneurs — to allow buildings to serve as peaker plants.

I'm sure there are 1,001 other barriers — reluctant building owners, technical challenges, and so on — but none of them seem insurmountable. What will it take for such sensible efficiency measures to trump the construction of new, fuel-sucking, emissions-generating power plants?

Something to ponder this summer as you crank up the AC.

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Comments

[Myke]

Excellent insights into leading edge energy systems. The price of oil has finally convinced the skeptics that we have to use smart energy systems and alternative energy production. This time is different!

[Bruce Klafter]

Great idea .. but I think one pitfall is that "turning off" systems and bringing them back on line is not that easy. Some large HVAC require a considerable amount of time to get back up and running and the energy requirements may exceed the savings achieved during the 5 minute downtime. the key may lie in cutting the system way back as opposed to an actual shutdown. By the way PG&E (and probably others) already enroll commercial property owners in a mandatory cutback arrangement to handle extraordinary peak demand periods; upon receiving notification from the utility we will cut back energy use in all of our office spaces, e.g. half of all lighting will be dimmed or turned off.

[ken]

This is new?

we had a box on the AC unit that did just this 10+ years ago. During certain times of the day, the power company (Reliant in Houston, iirc) could send a radio signal to disconnect the home AC unit is various problem areas. Granted it was just residential users at the time.

I think they dropped it.

[Dagny McKinley]

I'm amazed anyone would consider using chickens, cattle or pigs for biodiesel considering the impact on the earth of raising just one cow. It's not like we are trading our food for fuel, it will double the amount of water resources to feed them, the amount of waste that is already leaking into our waterways, not to mention the increase in cost for food consumption of animals, similar to the increase in cost of corn. Does anyone else find this a foolish solution?

Dagny McKinley
www.onnotextiles.com
organic apparel

[Tony Chadwick]

Joel. Thank you for your insightful comments yet again. The notion that we are following the technology adoption curve I believe is spot on. I am delivering presentations along similar lines. Us 'baby boomers'who have riden and led the digital and Dot Com waves are cognisant that the sustainability revolution is very similar yet this time it's not so much about US as I'm one who unfortunately didn't know any better and helped create this bloody mess. So now I'm evangelising to anyone who will listen because this time it's about the future of my kids and my grand kids that's really at stake. Keep up the great work. Go the Mob. Cheers Tony

[Patrik Marckert]

Those are some pretty neat ideas. Posts like these open new ways of thinking. Most interesting about this post is the point that backup plants are in general dirtier than other plants, so investments in this area would have a large impact regarding GHG emissions. In general, renewable energy and energy efficiency investments should be judged by this criteria as well: what is the ratio (CO2 saved/$ invested) for this particular investment? That statistics would come in handy for those designing subsidy programs.

Probably these ideas would be easisest to implement where (1) there is a reasonable amount of sizable buildings available and (2) the owner company of the buildings is also the owner of the power utilities. That is sometimes is the case in Europe, where large public companies manage both power and real estate.

Some interesting technology solutions coming out of Scandinavia could alleviate the peak load problem as well. Swedish company Climate makes use of the fact that the stronger the sun, the more you need to use your air conditioner. Their airconditioner uses sun energy to provide cooling. Another Swedish company, SEES, use geothermal drilling holes to store waste heat generated from cooling buildings in the summer, and use this thermal energy to heat the same building during winter time.
Further on, buildings could also cover part of their energy demand through small geothermal heating, solar power and wind power plants, However, this kind small-scale generation is often quite cost-inefficient.

I cover Scaninavian cleantech innovations on my blog.

[Mike]

This has already been done in Chicago. Not sure when. A van from the local utility drove around the downtown core area and used radio signals to turn off AC units on business accounts,if you agreed to it you received a cheaper power rate.In order for it to pencil out you do need a compact core area and a high enough sign-up rate.