EnerNOC: Demand Response Solutions Texas Public Utilities Commission – September 15, 2006.

EnerNOC: Demand Response SolutionsTexas Public Utilities Commission – September 15, 2006

© 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution2

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Texas’ Underlying Needs

Types of Demand Response

EnerNOC Overview

Next Steps


Record-Breaking Peak DemandAugust 2, 2006, New England“New England consumers set a new record for electricity consumption today…. Regional electricity use reached 28,021 megawatts (MW) this afternoon, surpassing the record of 27,401 MW, set just yesterday.”

August 2, 2006, New York“The statewide demand for electricity reached a record for the second day in a row—and for the third time in two weeks—Wednesday as New Yorkers kept air conditioners humming and fans blowing to beat the heat and humidity of an unrelenting heat wave…. The hourly average peak load hit 33,939 megawatts (MW)…, breaking Tuesday’s record of 33,879 MW.”

August 1, 2006, Midwest“The Midwest Independent Transmission System Operator, Inc. (Midwest ISO)…met its second record demand of the summer, reaching 136,520 megawatts (MWs)…, eclipsing the record of 132,658 MWs set just two weeks ago.”

August 1, 2006, Ontario, Canada“Ontario set a new all-time record for electricity demand of 27,005 megawatts (MW)…, exceeding the previous record of 26,160 MW set on July 13, 2005.”

July 24, 2006, California“Another record peak was set at 50,270 megawatts…. This breaks the record of 49,036 megawatts set just last Friday, July 21.”

July 17, 2006, PJM“PJM Interconnection…set an unofficial record for peak electricity use of 139,746 megawatts today.”

July 17, 2006, Texas“The Electric Reliability Council of Texas, Inc. (ERCOT) region set a new electricity usage record of 62,396 megawatts (MW) of power today, …exceeding the previous all-time peak of 60,274 MW, set on August 23, 2005.”

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Record-Breaking Peak Demand

July 26, 2006, United States of America

“The United States has seven regional independent operators of electrical grids, stretching from California to New England, and every one of them experienced record power demand in late July…. Regional grid operators reported a new aggregated peak record of electricity usage of 483,233 megawatts during the extreme heat and high humidity, a full 7,500 megawatts above last year’s peak.”

- United States Department of Energy

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Current Solution: Demand Response

“Today’s peak record would have been hundreds of megawatts higher if it were not for ISO New England’s demand response programs and conservation efforts of consumers.”

- ISO-NEAugust 2, 2006

“The NYISO’s Demand Response customers, however, helped keep the statewide electricity load from climbing even higher by curtailing afternoon usage.”

- NYISOAugust 2, 2006

“Commercial customers…shed an estimated 855 megawatts just as California was setting the new sky-high record demand for electricity on July 24.”

- CAISOAugust 1, 2006

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Demand Response provides a better solution to meeting peak demand than the traditional solution of over-building generation.

Demand Response Impact Potential

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ERCOT Peak Demand: 63 GW

Nuclear

Gas/Oil Steam

Other

ERCOT Generating Capacity: 78.2 GW

Source: EIA Electric Power Annual 2003

8,760 Hours

1% of hoursrequire

~10% of capacity

Hydro

Coal

Renewables

Combined Cycle Gas


The New Energy Crisis

As much as 50% of the nation’s anticipated load growth over the next decade could be displaced through energy efficiency, pricing reforms, and load management programs.

The DOE’s five National Energy Laboratories concluded that cost-effective energy efficiency investments could displace 15% of the nation’s total electrical demand by the year 2010.

Customer market studies and load-response pilot programs demonstrate that the potential for load management is also quite substantial. Approximately 15% to 17% of commercial load could be managed in response to short-term price signals.

A FERC-commissioned study reported that a moderate amount of demand-response could save about $7.5 billion annually in 2010.

Source: Efficient Reliability: The Critical Role of Demand-Side Resources in Power Systems and Markets. Prepared for the National Association of Regulatory Utility Commissioners. Author - Richard Cowart, Regulatory Assistance Project, June, 2001.

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Texas’ Underlying Needs

Reserve Margin

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30%

2006 2007 2008 2009 2010 2011

Source: Report on Capacity, Demand and Reserves in the ERCOT Region, June 2006.

Projected

AnnouncedAdditions

Reserve Margins in TX are declining

Some suggest mothballed plants will be back online

Demand response is an underutilized resource that can be enabled to respond NOW


Demand Response in TX an Underutilized Resource

ERCOT load management programs declined significantly between 1998 and 2003.

Of all NERC regions, ERCOT has the lowest existing demand response resource contribution as a percentage of projected summer demand

Source: FERC Assessment of Demand Response and Advanced Metering, August 2006, pp. 22 & 100.


Texas’s Unrealized Demand Response Potential

Overall DR potential: 5 to 8% of peak load; equivalent to 3 to 5 GW today

Industrial Commercial Residential

Current Status of DR Most utilized resource

Virtually none utilized Some existed previously, but no

longer actively utilized

Potential DR Capacity ~ 1 GW ~ 2 to 3 GW ~ 1 GW

Comments More capacity possible with a few program changes

Capable resources are currently lying untapped but current programs and existing market structures will enable NONE of this potential

More cost effective than new peakers

In need of longer term contracts


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Underlying Needs


EnerNOC Overview

Next Steps


kW

h’s

24 Hours

$/k

Wh

24 Hours

Demand Response – A familiar slide todayDemand response is achieved when end-users reduce their demand for electricity from the grid in response to market signals.

Reliability/Security – DR can be brought to market more quickly and precisely than comparable generation or T&D, giving grid operators resources needed to better manage reliability NOW while paying end-users to tap into existing resources.

Price – DR can dramatically reduce pricing power of well-positioned generators and incentivizes end users to become active participants in energy markets – active participation keeps markets healthy and prices low.

Efficiency – Demand response raises the specter of efficiency. Increased end user market participation puts energy back on the business planner’s map and, when properly deployed, can save end-users 25% or more on energy bills.

Generation Capacity

Demand

kW

24 Hours

With EnerNOC

With EnerNOC

With EnerNOC


Demand Response in the Northeast

New York

– Emergency Demand Response

– Installed Capacity / Special Case Resources

– Day-Ahead Demand Response

New England

– Real Time Demand Response

– Real Time Price Response

– Day-Ahead Option

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NYISO Demand Response Performance


NYISO EDRP & SCR Capacity Growth – 1450 MWg

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ISO-NE Energy Management Philosophies

Demand Response Programs© 2005 ISO New England Inc.

Integrated Energy Management

• Energy Efficiency – Managing energy consumption.

• Supply Management – Managing the supplier relationship and risk.

• Demand Response – Managing load shape.


Supply and Demand Management

• Yesterday:– Prices set by the Regulator. Customers

had little interest in the wholesale markets.

• Today:– Prices set by the Supplier and Customer.

Customers have an incentive to be connected with the wholesale markets


ISO-NE Energy Management Philosophies



• A customer’s peak consumption creates a capacity obligation for their supplier

• A Customer who can not control when they use electricity transfer risk to their supplier. – The supplier must assume the risk that at any point in

time the customer can increase their consumption without any consideration for the supplier’s wholesale costs.

• Higher risk translates into a higher retail price.



• Customers who participate in a Demand Response Program can:– Improve their load shape,

– Respond to high wholesale prices or reliability events,

– Earn Capacity Credits to reduce their Capacity Obligation, and

– Help lower their supplier’s risk.

• Lower risk translates into a lower retail price.


ISO New England/NEPOOLDemand Response Working Group

Meeting© 2005 ISO New England Inc.

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DR Program Enrollments June 2005 – June 2006

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ISO New England Demand Response Capacity – 600 MWg

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2-Hour

30-Minute

Price

Profile


ISO-NE Experience on August 2, 2006


What is Demand Response?Demand response actions come in two basic forms.

Self Generation – This can include emergency/backup generation, peaking and continuous-duty distributed generation, or even UPS systems.

Curtailment – Turning off lights, turning up cooling set-points, turning off air handlers, shifting production schedules, escalators, elevators, water features, parking lights, signage, heating elements, etc.

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What is Demand Response?Demand response can be accomplished manually or automatically (i.e., remotely controlled).

Manual – Personnel receive an EnerNOC phone call, email, and/or page and respond to an event, shutting down devices, turning up set points, and turning on generation.

Automatic –EnerNOC remotely controls relays, ATS’s, and building management systems en masse to reduce demand or self-generate.

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Underlying Needs


EnerNOC Overview

Total Energy Management

Next Steps


Proven and growing track record - Over 350 MW’s of demand response capacity managed at more than 600 customer sites. Approximately 1,000 MW’s of peak demand in network monitored by PowerTrak®

Compelling offering – Total Energy Management Solutions Provider encompassing – Demand Response, Demand Management, Data Management, Research, Education, Permitting, Financing, Metering, Aggregation, Enrollment, Installation, Payment Reconciliation, Maintenance Management, Risk Management

Significant and growing market - Currently serving:– ISO New England (Certified IBCS and Demand Response Provider) – NYISO (Responsible Interface Party)– PJM (Emergency Demand Response Provider)– California (Demand Reserves Partnership Provider)– SDG&E, SCE, National Grid, NStar

Distinguished technology - Provides 24/7, real-time metering and web-based device monitoring and control through open architecture technology that leverages customers’ existing assets

Significant resources– Strong balance sheet and impressive financial track record– Deep management team – over 70 employees with more than 85

engineering and management degrees

EnerNOC is the leading technology-enabled, C&I-focused total energy management solutions provider

EnerNOC Overview


About EnerNOC: A National Clean Tech LeaderThe greenest kWh is the one never used

EnerNOC Recent Cleantech Company Awards

June 27, 2005: Red Herring names EnerNOC one of 10 Cleantech Companies to Watch

April 4, 2005: EnerNOC voted one of Top three companies at Cleantech Venture Network 2005 Forum

EnerNOC profiled in Forbes, May 8, 2006

A Sensible Energy Response

Brett Perlman and Phil GiudiceTuesday, April 25, 2006 –

The recent rolling blackout in Texas highlighted the need for fresh thinking about how the state manages its electric grid.

Last week, the Electric Reliability Council of Texas, the state's electricity grid operator, was forced to cut power to more than 200,000 customers when demand for electricity spiked due to unseasonably warm weather. With temperatures reaching almost 100 degrees and many generation plants still on spring maintenance, ERCOT failed to keep the lights on.


About EnerNOC: Growth Summary

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EnerNOC Examples and ExperienceEnerNOC’s rapid success is based on the value we’ve delivered to our customers through demand response and energy management solutions.

Government

Light Industrial

Education

Food Sales and Storage

Healthcare

Lodging and Resorts

Commercial Office and High Tech


EnerNOC enables existing assets with inexpensive, scalable technology to accomplish significant and guaranteed reductions in demand.

The Energy Network Operations Center


EnerNOC Examples and ExperienceAn industry-specific solution should always be deployed to maximize the demand response opportunity.

Supermarket 24 Hour Load Profile and EnerNOC Demand Response Application

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12:00 am 2:00 am 4:00 am 6:00 am 8:00 am 10:00 am 12:00 pm 2:00 pm 4:00 pm 6:00 pm 8:00 pm 10:00 pm 12:00 am

Time of Day

kW

ISO Calls “Event” 30 Minutes Prior

to Required Response

EnerNOC Responds

Automatically within 30 Minutes

EnerNOC Restores

Operations Automatically

30 kW from 1/3 Lights

20 kW from Store AC or Air Handler

20 kW from Backup

Generator


EnerNOC DR Event Summary – February 27, 2006EnerNOC’s aggregate coincident performance was over 100 MW during a demand response event in New England

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Notification by ISO - 9:45 AM Event Start - 10:30 AM Event End - 12:30 PM

Enrolled Capacity - 103,629 kW

kW

Peak Performance - 133,584 kW @ 10:50 AM

Total Performance - 167,134 kWh

Aggregate Coincident Performance

30-Minute Ramp-Up Window


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Notification by ISO - 9:45 AM Event Start - 10:30 AM Event End - 12:30 PM

Enrolled Capacity - 103,629 kW

kW

Peak Performance - 133,584 kW @ 10:50 AM


Aggregate Coincident Performance

30-Minute Ramp-Up Window



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kW

Notification 1:00 PM

Event Start 1:30 PM Event End 6:00 PM

Baseline

Stacked Meter Demand

Commitment: 370 kW

Performance: 416 kW

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Load Curtailment

Provider Summary

• Sites: 5

• Commitment: 370 kW

• Performance:424 kW (non-coincident) 416 kW (coincident)

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Voluntary Extension 7:15 PM

EnerNOC DR Event Summary – July 27, 2005Curtailment: University provider curtails more than 400 kW of load at five individual sites.


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Provider Summary

• Commitment: 1,450 kW

• Performance: 1,727 kW

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Notification 1:00 PMEvent Start 1:30 PM Event End 6:00 PM

Baseline

Meter Demand

Commitment: 1,450 kW

Generator Output

Load Curtailment

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Performance: 1,727 kW

Voluntary Extension7:15 PM

EnerNOC DR Event Summary – July 27, 2005Generation and curtailment: University provider combines generation with load curtailment to reduce more than 1.7 MW from the electrical grid.


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Baseline

Provider Summary

• Sites: 50

• Commitment: 12,050 kW

• Performance:13,418 kW (non-coincident) 12,980 kW (coincident)

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Commitment: 12,050 kW

Voluntary Extension 7:15 PM

EnerNOC DR Event Summary – July 27, 2005Parallel processing: Communications provider simultaneously transfers 50 facilities to backup generators, totaling over 12 MW.


DR Case Studies – EnerNOC SDG&E Clean Gen Project EnerNOC has deployed a 25 MW “Negawatt Network” in San Diego Gas & Electric service territory in 6 months and hopes to deploy another 25 MW’s in the next 6 months.

25 MW’s currently

Real-time control and monitoring of clean, fully permitted emergency generators

“Single Button” dispatch of entire network within 10 minutes of notification of CAISO reliability or economic event, such as Stage 2 alert


DR Case Studies – ISO-NE Winter Demand Response EnerNOC deployed a 100 MW “Negawatt Network” in 2 months in New England to avert a potentially disastrous winter peak and dependency on NG-fired central generation.

100 MW’s in 60 days

Real-time control and monitoring of curtailable loads (e.g., lights, BMS, electric heating, process), cogeneration, fuel-switched loads, and emergency generation

“Single Button” dispatch of entire network within 30 minutes of notification from ISO-NE of a OP4 Action 9/12 event


DR Case Studies – PJM Synchronized ReservesEnerNOC was the first company to enter the newly formed PJM Synchronized Reserves 10-minute market and has enrolled nearly 20 MW’s within first 30 days of program.

20 MW’s in past 30 days. Expected to grow to 500 MW’s

Fully integrated market control – PJM’s signal processed automatically by EnerNOC’s NOC and loads are automatically controlled

10 minute automatic dispatch


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Underlying Needs


EnerNOC Overview

Next Steps


• Up to 300 MW or more of quick-start peaking capacity to cover demand through 2008 in 54 towns of Southwest Connecticut (Meriden to Greenwich)

• Includes Emergency Generation as an eligible resource

• Participants paid for capacity (kilowatts) and load reductions (kilowatt-hours) in accordance with the ISO-NE Demand Response Program, but also receive supplemental payments for capacity through RFP

• Four-year contract term with an option to extend for one year

• Resources must be capable of responding to DR events within 30-minutes of notification

• Resources required to have an Internet-Based Communication System (IBCS) to transmit energy data to ISO-NE

Consider what other markets have done…EnerNOC won 76 MW’s of demand response in the Southwest Connecticut ISO-NE RFP.

ISO-NE’s SWCT Gap RFP

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Proposal Summary

Summer Average (MW)Resource Type 2004 2005 2006 2007C&LM 1 10 11 11Demand Response 126 279 348 354Generation 354 719 719 719Total 481 1,008 1,078 1,084

ISO-NE 2004 Gap RFP for 300 MW’s of Supplemental Capacity Targeted For Just 54 Towns in Connecticut

Summary of Proposals Received

Consider what other markets have done….

Source: ISO-NE


Proposal Summary

ISO-NE 2004 Gap RFP for 300 MW’s of Supplemental CapacityTargeted For Just 54 Towns in Connecticut

Summary of Proposals Selected

Consider what other markets have done….

Resource Type Customer Type 2004 2005 2006 2007C&LM Commercial 0.7 4.3 5.0 5.3C&LM Total 0.7 4.3 5.0 5.3Emergency Generation Commercial 13.9 43.7 49.3 51.8

Education 2.0 2.8 2.8 2.8Healthcare 0.0 9.7 9.7 9.7Municipal 10.2 33.5 33.5 33.5Other 69.3 69.3 69.3 69.3

Emergency Generation Total 95.4 158.9 164.5 167.0Load Reduction Commercial 16.6 26.1 31.1 33.6

Healthcare 0.0 0.3 0.3 0.3Municipal 3.1 3.4 3.4 3.4Residential 0.9 19.1 39.7 40.2Small Commercial 2.5 10.0 10.0 10.0

Load Reduction Total 23.1 58.9 84.5 87.4

Grand Total 119.2 222.1 254.0 259.8


Next Steps: Pilot ProjectThe following table summarizes key aspects of a program concept

Program Type Demand response resources participating in market as ancillary services

Program Size Address the Market’s Need for 2007, 2008, and beyond

Start Date Demand resources will be ready to respond June 2007

Notification Resources will be able to respond within 10 minutes of dispatch by ERCOT

Program specifications Program must incorporate existing technology to ensure that demand response resources are as reliable as peaking generators


EnerNOC, Inc.28 West 44th St. Suite 1200

New York, NY 10036212.624.0000 – Phone

212.624.0001 – Fax

EnerNOC, Inc.5155 Sunlight Place

Los Angeles, CA 90016323.937.7888 – Phone323.937.8889 – Fax

EnerNOC, Inc.75 Federal St. Suite 300

Boston, MA 02110617.224.9900 – Phone

617.224.9910 – Fax

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EnerNOC, Inc.1010 Lamar, Suite 1040Houston, Texas 77002

713-933-8836 - Tel713-659-0098 - Fax


Appendix


Load and Technical Analysis

Enable and Enroll Facilities

Program Management

Event Management

Conduct facility walk-through– Identify curtailable loads– Identify backup generator

potential– Identify existing metering

systems to integrate and save money

Interview facility engineering and operations staff to identify customer sensitivitiesDevelop technical solution optionsSummarize load analysis, present options for load control and program involvement, and present economic potential

Begin collecting dataResearch, file, and renew all required city and state permits for program participationMaintain all required recordsEnroll load in daily/monthly markets to maximize potential benefit while minimizing riskPresent real-time meter data to ERCOT for verification and to customer for reportingMonitor loads continuously and adjust enrollments accordinglyReconcile data with ERCOT monthly and collect and disburse program paymentsManage any program disputes and changes for customer

Notify customers in advance of potential eventsNotify customers during day of event of event “window” and requirementsCurtail load/initiate backup generator operation as requiredMonitor, meter, and adjust performance according to enrolled loadNotify customers of event completion and restore normal operationsProvide event and load reports accordinglyContinually ensure operational integrity of technical solution

Design technical solutionProcure required technology (e.g., metering, relays, controls)Install (or integrate with existing) metering, controls, and communicationTest and troubleshoot technical solutionInitiate monitoring and begin metering loadsApply for, administer, and secure eligible cost reimbursementsRegister as customer’s Responsible Interface Party (RIP)Aggregate customer loads as applicableEnroll assets into each DR program

EnerNOC’s offering is a tailored outsourced solution designed to maximize participation while minimizing end user and utility/ISO effort.

EnerNOC Approach


A modified BUL Market could increase demand response resources in ERCOT market

Three hurdles to consider removing:

ERCOT should enable payments to go directly to the demand response aggregator instead of the retail energy provider (REP)

Each end-user should have its own baseline; QSEs should be allowed to represent each end-user individually.

Demand response resources should be allowed to participate in both the BUL and the LaaR markets

EnerNOC: Demand Response Solutions Texas Public Utilities Commission – September 15, 2006.

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Transcript of EnerNOC: Demand Response Solutions Texas Public Utilities Commission – September 15, 2006.