How four industries use the same methods to cut energy costs

How four industries use the same methods to cut energy costs

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At first look, it would be easy to say that a steel mill, a retailer, a hospital and a school have very little in common. They are very different types of organizations with different goals, objectives and purposes. But look a little closer and they all share one thing: the opportunity to save money and generate new revenue sources by using demand management to rethink how they use energy.

Below are common electricity cost-reduction methodologies that organizations from across sectors can quickly and easily apply to reduce their energy costs.

Industrial businesses

For most businesses and organizations, the electricity consumed by heating ventilation and air conditioning (HVAC) and lighting account for more than 65 percent of their electricity costs. But for industrial businesses, the lion’s share is used to run processes and equipment.

Many industrial businesses can reduce their electricity costs simply by shifting the timing of their operations away from the “on-peak demand hours” to “off-peak demand hours.” In general, these businesses work with their utility to create a curtailment strategy that permits them to occasionally shift the timing of production operations to minimize electricity consumption during peak electricity demand hours (typically noon to 8 p.m.) in order to take advantage of financial incentives from demand response (DR) programs. To encourage participation, DR programs are designed to be financially attractive and easy to comply with.

Industrial businesses can and do participate in various DR programs, which vary in notification time.  Typically, the electric supplier notifies the business a day in advance to reduce its electricity usage. This usually allows businesses sufficient time to adjust their operations.

As an example, a water supply company that works with Comverge took advantage of its water storage capacity to curtail pumping operations for a number of hours on three different days. Specifically, it removed normally high electricity demand (1 megawatt) from the peak electricity demand on a few days. This resulted in the business being well compensated by the electric supplier for a relatively painless adjustment.

Commercial & retail businesses

Like most businesses, retail and commercial businesses use the majority of their electricity for HVAC and lighting. The most common way that these businesses save electricity costs is through upgrades to more energy-efficient lighting systems and the use of energy management systems. Businesses may benefit from an upgrade to their HVAC system, but this is case specific and requires a thorough engineering analysis, which Comverge provides customers as part of an overall energy audit.

Commercial and retail businesses may also have sufficient electrical loads to permit their participation in DR programs. Unlike industrial businesses, commercial and retail businesses are usually unable to shift the timing of their operations to reduce demand. Instead, they can turn off non-critical electrical devices, dim lights, reduce fan and pool pump speeds and increase air conditioning settings a few degrees.

Some commercial and retail businesses operate multiple, smaller facilities that individually may not have sufficient electrical load to qualify for participation in demand reduction programs. Drug stores, coffee shops and specialty clothing stores are common examples. In these cases, the business may be able to aggregate the demand reduction potential of all of its facilities in the service area of the same electric supplier. During a DR event, each store would simply raise the air conditioning thermostat a few degrees and dim non-critical lighting. One of our customers, a national specialty clothing chain, has reduced its electricity costs by more than $5.5 million a year primarily through upgrading lighting systems and participating in DR programs throughout its retail locations.

Health care and long-term care facilities

These facilities can often make use of their emergency backup generators to reduce electricity costs by participating in DR programs. Such facilities are largely self-contained centers providing all the services necessary for the care and well-being of their patients and residents. By the nature of their business, they require a higher level of reliability for their electricity supply than do many other types of businesses.

Hospitals, in particular, are required to have emergency backup generators on-site to supply electricity to critical (life-dependent) circuits and basic services such as lighting and HVAC in the event of power interruptions. Likewise, long-term residence facilities providing nursing care will typically have backup generators.

One long-term care facility working with Comverge participates in multiple DR programs by disconnecting from the grid and supplying all of its electricity needs with its backup generators during DR events. The facility receives an average of $125,000 a year after deducting the cost of operating and maintaining the generators.

Educational institutions

K-12 facilities have similar characteristics to commercial or retail facilities, and the same electricity cost-reduction techniques can be applied. In addition, some school facilities have large commercial spaces for kitchens, auditoriums, atriums and gymnasiums, which provide great opportunities to reduce demand through further refinement of the site specific curtailment.

Higher-education facilities such as colleges and universities have electricity-related characteristics that make them unique. Like healthcare and long-term care facilities, colleges have to support the 24/7 living, dining and other needs of a substantial population of resident students. Teaching, study and library areas on a college campus, however, have characteristics that more closely resemble those of commercial and residential businesses.

For these institutions, HVAC and lighting efficiency improvements, DR, energy management systems and complete energy audits are common techniques used to reduce electricity costs.

Because they are such large electricity consumers, colleges and universities have the potential to generate substantial cash from DR programs. They can then use those funds to pay for energy-efficiency programs and upgrades.

One major university working with us currently employs an extensive energy management system, DR and other techniques that have reduced its electricity cost by more than $2 million per year.

As these examples show, DR can be an integral part of electricity cost reduction for organizations across a variety of industries. In fact, it is increasingly playing a key part in our nation’s energy mix by helping organizations of all sizes optimize their energy usage in order to reduce costs, meet regulatory requirements and support sustainability initiatives. 

Image of power lines by Edin Ramic via Shutterstock