Energy efficiency is very important to me. I have always been somewhat of a fanatic about turning off my lights. I just do not want to use any more electricity than is absolutely necessary. A few years ago I had a new air heat pump system installed. I used less electricity and immediately saved a full one-third off my electric bill. This summer we installed new windows. The house was cooler in the summer and warmer in the winter (at least during the October snowstorm we had yesterday that I am counting as “winter”.). Based on a couple of bills, I estimate that the new windows have saved 10% off of my electric bills.
My house is all-electric, including electric heat. I am very oriented to ways I can be energy efficient. Additionally, Pennsylvania has PA Power Switch. This means that my electricity rates reflect the market price, not a cap enforced by the Pennsylvania Public Utilities Commission (PUC). It also means I have to make a choice whether to switch my electricity supplier from my local utility (PECO) to someone else. For residential customers like me, this started back in January 2011. For many businesses, this need to make a “power switch” as to their electric power supplier started several years ago.
Businesses have a couple of options to reduce their electricity usage and bills. They can either lower their overall electricity demand, and/or, they can lower their demand for electricity at specific times during the day. This latter option can be a little tricky because it involves reducing your electricity usage when everyone else is increasing theirs, like on a hot summer day with the humidity over 90%.
The first option is basically implementing various energy efficiency measures. Lighting is often a highly effective way to achieve savings—mostly because it tends to cost less than other options. Something as simple as replacing incandescent bulbs in EXIT signs can have a very positive effect. In fact, a school district near me did a comprehensive lighting retrofit a couple of summers ago and reported a savings of over $250,000! HVAC systems are often more capital cost intensive—but they can have great benefits also. I recently read a case study of a local hospital that saved almost a half-million (500,000) kilowatt-hours per year with their upgrades (and they got rid of the cold spots, also).
The other option is adjusting your electricity usage to the demand in the overall market. This demand response works best when a company has the ability to actually lessen demand at certain times of the day—the times when electricity costs the most. Contrary to widespread popular belief, the wholesale price of electricity varies during the day, similar to stocks. In fact, many electricity suppliers base part of their rates on how much a given business uses during peak system demand times as well as how much they use overall.
So if a business can actually figure out when these high system demand times will be and adjust accordingly, they can receive cash payments immediately and benefit from lower rates year round. This requires a detailed knowledge of both energy usage as well as how their business operations can potentially be rescheduled during the day. Focusing on late afternoon during the hottest days of the year is a good place to start.
I actually participated in a demand response program this summer. I agreed to allow PECO to curtail my air conditioner’s cooling ability for 15 minutes at a time when demand on their system was the highest (the fan still ran). In return, their Smart A/C Saver paid me $30 monthly for 4 summer months to do so. Given my bills, this is real money.
Like myself, the school district, and the hospital, many entities implementing energy efficiency initiatives are saving significant funds by doing so. Energy efficiency is a classic case where being good to the environment can also have very good economic benefits. As the Economist says, it is not particularly glamorous but it works really, really well from a variety of perspectives.
The Economist article:
PUC PA Power Switch site: