Christian Weeks, EnerNoc - Consumers’ energy requirements
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The Role of Consumers in Lowering Electricity Costs 8 th WA Power & Gas Conference | 11 March 2014
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Christian Weeks, Managing Director, EnerNOC Australia and New Zealand delivered this presentation at the 8th Annual WA Power & Gas Conference 2014. The conference represents a timely meeting for the industry to hear about the current changes affecting the WA energy and electricity market. For more information, visit http://www.informa.com.au/wapowerconf14
Transcript of Christian Weeks, EnerNoc - Consumers’ energy requirements
The Role of Consumers in
Lowering Electricity Costs 8th WA Power & Gas Conference | 11 March 2014
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Three Takeaways
• Consumers are where the rubber hits the road – they are key to
reducing system costs
• Consumers want transparency, predictability, and the ability to
participate in markets and respond to price signals to manage costs
• WA has got many things right but needs more price signals to allow
consumers to further reduce system costs
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Energy is a major expense for large consumers
Sample EnerNOC Customers Est. Annual
Electricity Spend
Mid-size hospital $1.8-$2.0MM
Large school $300-$400k
Diversified manufacturer $13-$15MM
Agricultural operation $500-$600k
Resources facility $15-$17MM
Source: EnerNOC estimates
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Despite declining consumption, costs continue to rise
Source: EnerNOC analysis of customer bills
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0.20
0.40
0.60
0.80
1.00
1.20
2009 2010 2011 2012 2013
Historical Consumption & Spend (sample EnerNOC customer)
Total Spend
Consumption
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For many consumers, costs have almost doubled
Source: EnerNOC analysis of customer bills, reflects c/kWh if the customer hadn’t reduced their consumption and demand.
Note: Other includes carbon, RET, ancillary services, metering, and “fees”
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
2009 2010 2011 2012 2013
Electricity Bill Components (same EnerNOC customer, totals in c/kWh)
Other(MWh)
Network(kVA)
Capacity(kW)
Energy(MWh)
11.1 13.4 13.7 18.7 19.5
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Energy management is complex and fragmented
Director of Financial
Planning
Procurement Manager
General Manager,
Operations
Global Energy
Manager
Director of
Sustainability
General Manager,
Supply Chain
Director of Facilities
Manufacturing
Engineer
Lots of Stakeholders… trying to make sense of this (various electricity bills)
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Energy management is becoming more strategic
Energy Intelligence Software
can turn these bills… into actionable ways to reduce cost
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“We’re seeing an unprecedented
inflection point in enterprise-class
customers investing holistically to
manage energy as a source of
economic advantage.”
- Paul Baier, Groom Energy, VP of Research
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Customers are looking for three things
Transparency • What are the components of my bill?
• How are they calculated?
Predictability • What will my costs be in the future?
Ability to Respond to
Price Signals • How can I control my spend?
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The key to lower costs is enabling consumers to
participate in markets and respond to price signals
Transparency • What are the components of my bill?
• How are they calculated?
Predictability • What will my costs be in the future?
Ability to Respond to
Price Signals • How can I control my spend?
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WA has got many things right but needs more price
signals to lower system costs
Transparency • Good for energy and capacity
• Getting better for networks
Predictability • Good for energy and capacity
• Harder for networks
Ability to Respond to
Price Signals
• Good for energy and capacity
• Poor price signals for networks
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Meeting WA’s reserve capacity requirement
Source: System Management trading interval load forecasts for year to 30 Sep 2013, from IMO, and EnerNOC analysis.
0
1000
2000
3000
4000
0 1000 2000 3000 4000 5000 6000 7000 8000
MW
Hours
Reserve Capacity Requirement
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Meeting WA’s reserve capacity requirement
Source: System Management trading interval load forecasts for year to 30 Sep 2013, from IMO, and EnerNOC analysis.
Baseload
Mid-merit
Peaking
0
1000
2000
3000
4000
0 1000 2000 3000 4000 5000 6000 7000 8000
MW
Hours
Reserve Capacity Requirement
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DSM
DSM provides reserves more efficiently than generation
Source: System Management trading interval load forecasts for year to 30 Sep 2013, from IMO, and EnerNOC analysis.
Baseload
Mid-merit
Peaking
0
1000
2000
3000
4000
0 1000 2000 3000 4000 5000 6000 7000 8000
MW
Hours
Reserve Capacity Requirement
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In a properly working capacity market, DSM participation
lowers costs for all consumers
• Competes with conventional
peaking generation to meet
reserve requirements
• Options without DSM: build
more peakers or increase the
risk of blackouts
• Both are good for peakers
but bad for consumers
$11.8 billion saved 2013/14 PJM BRA: Impact of DSM
PJM Market Monitor. Analysis of the 2013/2014 RPM Base
Residual Auction Revised and Updated, September 2010, p.52
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We have excess capacity for two reasons
• Overbuilding of generation pre-GFC
• Flaws in the original design of the capacity market
Excessive transmission cost estimates – fixed
Demand forecasts that never materialized – refined
Strong investment signal despite excess – fix in process
Capacity market flaws have or are scheduled to be fixed by June
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Customers can also help reduce network costs
• Retain capacity DSM to capture “spillover” network benefits
• Implement network tariffs to incent peak management
during coincident peaks for all users on interval meters
• Implement network DSM to avoid or defer CapEx
WA has a large base of consumers with DSM experience
who can help lower network costs
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Consumers have a critical role to play in lowering costs
• Hundreds of WA businesses are already part of the solution
• Capacity-based DSM is a best practice globally and has
many ancillary benefits that drive down system costs
• Enabling consumers to respond to price signals is key to
lowering system costs
