Demand Charge Management, Demand Response, and Load Flexibility: Platforms and Applications
Based on the questions I get from customers, partners, investors, industry pundits, and other colleagues, we need to do a better job of describing exactly what Extensible Energy does.
I usually say “we deliver load flexibility software for commercial customers,” but what is that and what good is it?
What is Load Flexibility?
In simple terms, load flexibility (sometimes referred to as “demand flexibility”) is the ability to shift energy usage from one time to another to accomplish essentially the same work. The main point to remember is that load flexibility software is a platform that supports many different applications for the building owner and the utility or grid operator.
Load flexibility applications include demand charge management, time-of-use (TOU) price arbitrage, demand response, power procurement optimization, wholesale market participation, and more.
Some loads in commercial buildings are inflexible – computers and printers in offices, cooking in restaurants, lights in retail stores all need to be “on” exactly when the users want them on. Many other loads are quite flexible, however.
Specifically, heating and cooling, electric vehicle charging, and stationary batteries all have considerable flexibility in the exact minutes or hours that they consume electricity to provide their expected services.
Load flexibility software coordinates flexible loads to save building owners and grid operators both money and carbon emissions.
Demand Charge Management
When we talk to commercial partners and customers, we often emphasize applying our DemandEx software to demand charge management.”
To understand demand charge management, let’s first look at demand charges.
Most residential customers in the US pay for electricity by the kilowatt hour, and that’s about it. However, businesses typically pay for two types of charges. They pay for the kilowatt-hours they use, but they also often pay for the maximum usage in a single 15-minute interval each month. That’s called a demand charge, and in some areas that can be up to 50% of the customer’s total monthly electricity bill.
Think about that. That means up to half the bill is based on the worst mistake the building makes all month long. The good news is that demand management software like ours can reduce demand charges and save a commercial building owner thousands of dollars a year by shifting a portion of energy usage from a time of peak demand to a different time.
Demand Response
When we talk to utilities and grid operators, we often emphasize the value of DemandEx software for demand response. Utilities normally balance usage and generation by adjusting generation (e.g., adjusting the output of a natural gas-fired power plant). However, another way to achieve this balance is by paying customers to adjust their energy usage.
Demand response programs that provide such incentives to customers have been around for decades, but they are now being called upon more frequently as more wind and solar resources are added to the grid. By coordinating all the flexible loads in a building, our DemandEx software can deliver superior demand response results.
So, to sum up:
Load flexibility software is a platform that allows customers to save money on their energy bills every month through demand charge management.
Demand charge management is an application of that load flexibility software, which optimizes flexible loads (such as HVAC) for the purpose of reducing the customer’s demand charges.
Demand response is an application of that same load flexibility software, which allows customers to participate in utility programs. With demand response, customers earn payments from utilities by turning off high-intensity loads, such as HVAC, when the grid is stressed.
So, load flexibility software benefits a broad range of customers with its various money and carbon saving applications, and that’s why we created DemandEx. How can load flexibility help you? Let us know.