This article is supported by Buildings Alive
This summer is the time to start practising load shifting in commercial buildings because by this time next year, the savings for demand management are going to become super lucrative.
Why? Because new rules allowing building owners to sell their unused electricity back to the grid at generous rates at times of peak demand, such as during heat waves or cool snaps, will come into play. (And by then, all things going smoothly, there’s likely to be a return to the office in some shape or form).
“In the future, not too far away, building owners will be able to profit by shifting loads when the network is under strain,” says Buildings Alive chief executive officer and co-founder Craig Roussac.
“There’s an opportunity for that to become really lucrative.”
These wholesale demand response changes, scheduled for implementation in October 2021, will allow large industrial and commercial customers to trade their energy use (through intermediaries) in the national electricity market.
The rule changes, when paired with the shift from half-hourly settlements to five-minute settlements for energy trading (to better reflect the ability of batteries and other technologies that can shift load in a matter of seconds), will put Australia on a path to a truly two-way electricity market where demand becomes more responsive to supply.
Not only will this create a new and potentially rewarding income stream, it will also see buildings play a firming role that will pave the way to more renewables entering the grid.
Australia is approaching a saturation point with solar, where big solar farms will be switched off when wholesale prices dip below zero in the middle of a sunny day. Buildings can make solar more valuable by acting like batteries, shifting their loads to ramp up energy use when the sun is shining and trimming it in the afternoon as solar generation starts to taper off.
“There is significant opportunity to shift load in buildings, and buildings can be thought of as part of the electricity system because they can use energy and release energy.”
So why start now?
The new demand response rules are still a year away but Roussac says that now is the time to start fine-tuning an active load management strategy.
The first reason is that building owners can already capture value by keeping capacity charges in check through managing their peak demand.
This fee is calculated according to a commercial energy customer’s highest peak in energy consumption over a short time period in the past 12 months, and is designed to help utilities cater supply to all customers.
Roussac says a third or more of a commercial building’s electricity bill is based on capacity charges, so there are major savings to be gleaned from active demand management.
“Even now the dollars are really, really significant, a typical building should be able to cut its energy bill by more than a dollar a square metre.”
The other point to consider is that practise makes perfect, with only one summer and one winter left to test the viability of any demand response strategies.
Roussac also says that earliest adopters will experience the biggest gains when the new demand response rules come in.
This comes back to the wholesale price of energy, which is particularly volatile due to the unresponsive nature of customer demand at the moment.
It can range from less than $0/MWh when demand is low to $15,000/MWh at times of peak demand. As such, early adopters of active efficiency strategies have the potential to swoop in and collect the big bucks before others jump aboard to create a more elastic market, and subsequently lower the value of load shifting during peak periods.
Fine tuning your craft
So, what can be done to match energy use with supply while still keeping visitors and occupants comfortable?
An introductory approach to active efficiency involves keeping an eye on the weather forecast for hot days. On these days, a common tactic is to drive plant and equipment harder in the morning so there is capacity to ease off during the afternoon, reducing demand during the troublesome early evening period (around 5pm to 7pm) when solar generation tapers off.
Below is how this plays out in a shopping centre (real world example).
By shifting 20 per cent of the load from 3pm-5pm to 12:45pm-2:45pm, Roussac says a cost reduction of 16 per cent was achieved.
He also says this is just the tip of the iceberg when it comes to manipulating a building’s energy use to respond to peak demand periods.
“People just think peak demand is on the hottest day, and it is to a certain degree, but energy use is more complicated than that.
“You can’t just look at the weather forecast and know what demand is going to be in the building.”
Other climatic conditions can influence peak demand, such as humidity or the overnight conditions.
“That’s why forecasting is actually really complicated at the extremes.”
The other point to consider is that demand management is more valuable in some states than others, with buildings in Victoria and South Australia likely to reap more benefits than buildings in Queensland and NSW due to the spikier spot prices and extreme weather conditions in those states.
The fact that many workers leave an office building before the afternoon peak demand should also be considered in any decisions around load shifting. The same can be said for shopping centres that close in the late afternoon, with load shifting more beneficial for those that stay open late.
Roussac says each building is different and will have different opportunities for matching energy use with supply, and reducing energy use in general.
This is where Buildings Alive is useful, he explains, because the company can devise a reliable forecast model for the demand profile in any individual building.
“We can forecast a building’s electricity demand very reliably, including under extreme conditions, and five days in advance.”
This puts building managers on the front foot to implement tactics to optimise the internal environments in their buildings while at the same time capitalising on peak demand events.