Peak Shaving

Join us to hear Mike Gemmolva talk about the benefits of peak shaving.  Be sure to like, comment, and subscribe to our podcast wherever you listen. Send feedback to Powerbytes@cat.com

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Transcript

Lou:  Good Day and welcome everyone to Power Bytes!  I am your host Lou Signorelli  and Power Bytes is your destination Podcast for power generation conversation.  As always please know how much we appreciate you, our listeners.  We hope you find our topics helpful and interesting.  There are several ways for you to get in touch with the show: You can send us an email at powerbytes@cat.com, OR visit us at Cat Electric Power on Facebook or LinkedIn.  If you enjoy your time with us today Please remember to subscribe to our podcast wherever you listen to your favorite podcasts. 
 
Lou: Regardless of the type of facility you operate, we all have one thing in common, that is the desire to lower our electricity bills.  As we all know, it can be much more complicated than simply turning off the lights when you leave a room.  Some facilities have huge changes in power demand or find themselves needing power at the most expensive time of the day.  To that end, there is a technique called "peak shaving" that really can help us. 
 
Lou: Joining us via the Cat Electric Power Hotline to tell us more about peak shaving is Mike Gemmolva.  Some of you will remember Mike from our episode on CHP.  Mike has over 20yrs of experience with Switchgear and Generator Paralleling Controls.  He is a part of Caterpillars Power Integration Team or P.I.T. Crew as we like to call it. Mike, thanks for joining us today. 
 
Mike: Thanks Lou.  I was very happy to hear about success of Power Bytes last year.  It's awesome that the show is heard in 129 different countries!  Truly a privilege to have been a part of that.    
 
Lou: Mike, let's start with an understanding what drives the need for Peak Shaving. 
 
Mike: Ok. So, what drives the need for peak shaving, is Demand.  Demand is the maximum amount of energy that a customer uses at any single point in a billing cycle.   
These Demand charges are additional fees that utilities charge  commercial users for maintaining constant supply of power. The fees usually amount to a significant sum of money that businesses have to pay on their electric bills.  Sometimes as much as 50% of the total electric bill or more. In some instances, demand charges can actually be higher than the energy portion of the electric bill itself. So, the price that a business is charged each month for electricity depends not only on how much electricity was used during the month, but also on the rate at which consumption of electricity occurred. 
 
Lou: So, if my business requires sudden influx of power, the utility is going to penalize me for it? 
 
Mike: Essentially yes.  So as soon as you hit that peak and even if it’s for as short as a 5-10min duration you’ve initiated the higher demand charge.  I’ll try to get into some ways to avoid that later in our conversation.
 
Lou:  And does that 'penalty' stay with the user for the year or just a one-time charge? 
 
Mike:  It’s just for that months billing cycle.  But again that 5-10min peak charge could be up to half of the electric bill.
 
Lou: ok, now I see the problem.  How is peak shaving designed to help with this problem? 
 
Mike: Peak shaving is the term used in the energy industry to represents the flattening out of peaks in the usage of electricity.  These peaks are important in terms of grid stability and influence power purchasing costs. 
Electricity costs for large scale customers are sometimes set by their maximum peak-load or demand.  For example: a customer could go from paying the higher demand charge of 12c/kwh to say 4c/per kwh by being able to drop their peak demand charges.  The reasoning for this is that the grid load and needed power production is designed to account for these peak intervals. 
 
Lou: Ok, so how does it work? 
 
Mike: With peak shaving, a user is reducing the power being consumed from the grid quickly and for short durations to avoid those spikes or (peaks) in consumption.  This can be done a couple different ways.  One of which is simply lowering production output during peak hours and then increasing production again when the grid demand is lower.  This manual technique can work, but it’s not foolproof. SO as we were discussing earlier, that 5-10min spike in energy consumption on one day could bring about a very expensive power bill for the month.  The lowering of production is also referred to as load shifting.  
 
Another way is by starting an on-site power generation system.  Generators, Solar and Energy Storage are common for these applications.  All have their unique considerations to address and that's why it's always a good idea to work with a trusted advisor like Cat or our dealers.
 
Lou: You mentioned Gensets.  Can you use gas gens in a peak shaving application??
 
Mike: With Gas there is still the cost of maintenance, but you certainly are in a more favorable position to meet emissions standards.  And there’s a few more variables to consider when deciding on Gas or Diesel.  For example, if site had larger motors, which drive larger starting kVA requirements.  A diesel might make more sense and you could use a smaller unit, thus offering a smaller $/kW.  I think we might need to have a separate discussion comparing Gas vs. Diesel application.
 
Lou:  So are there other ways to apply Peak shaving?
 
Mike: Yes, standalone solar arrays are becoming a popular way to reduce electricity consumption very and they can be used to mitigate demand charges to an extent, but they can’t provide guaranteed peak shaving. Cloud cover or shading can temporarily reduce solar generation and hamper the effectiveness of peak shaving. 
 
Now, Solar with a battery energy storage system is another great way to peak shave. Battery energy storage systems are dispatchable; they can be configured to strategically charge and discharge at the optimal times to reduce demand charges.  The control system can automatically detect when power usage exceeds a pre-determined threshold and switch from the grid or solar panels to batteries until the additional demand is over 
 
These systems let power users take advantage of the relatively low cost of utility power during periods of off-peak demand and generate (a portion or all of) their own power during peak periods thereby avoiding high demand charges. 

Lou: Mike it sounds like there are a few different ways a user can go to address peaks in their power usage and avoid Demand Charges.

Mike: Yes, that's why I encourage folks to utilize Cat's experience and expertise.  It's really all about understanding the site and what the user wants to accomplish.  There are also a few load management techniques that we can talk about too.

Lou: Does that mean you're willing to come back and talk to us about load management

Mike:

Lou: There you have it folks.  I'd like to thank Mike Gemmolva for sharing his expertise with us today.   Mike, we all are looking forward to having you back to take us through load management. 
In the meantime, If you’d like to suggest other topics for the program or have some feedback to share,  please write us here at powerbytes@cat.com or visit Cat Electric Power on Facebook or LinkedIn.   Please remember to subscribe to our Podcast wherever  you listen to your favorite podcasts.  Till next time, thanks for listening to Power Bytes and have a great day!
 

Let's pull the items below into our load management episode.
Do we want to talk about islanding or prime gas gensets as an alternative? 
 
I think we could discuss common Load Management operations of a typical Utility paralleling operation that would apply to both gas and diesel. We don’t have to mention CAT Swgr since this is relatively common operation.
 
Load Management
With these modes a system would be placed in what we call a Utility Tracking or Base Load mode of operation.
Import Limit – With Utility Tracking, the user sets the Utility Import Set point to the desired amount of kW that they want to import from the Utility.
Export Limit - The user sets the Utility Export Set point to the desired amount of kW that they want to export to the Utility.
Base Load Import - The user sets the Base Load Set point to the desired amount of kW that they want their generator plant to assume. The controls should not allow the generator plant to export kW to the Utility grid and will always maintain a nominal amount of Utility kW imported through a Utility main incoming Circuit Breaker.
Base Load Export - The user sets the Base Load Set point to the desired amount of kW that they want the generator plant to assume.The controls will allow the generator plant to export kW through the Utility Circuit Breaker.
 
To summarize all that, Utility Import/Export vs Baseload Import/Export, is when you’re in the Utility tracking mode the utility is set at a kw setpoint and the Gens manage load swings.
Baseload is basically the opposite.  Gens are at a set kw and the utility takes load swings.