Energy in Boston is nearly 80% less expensive at night
March 9, 2016
If you knew that pumping gasoline for your car in the evening instead of noon would translate to saving 70 percent of what you usually spend, would you pump at night? Of course. Many would change their buying behavior as seen by the many consumers that take advantage of time of use pricing across different industries. From airlines to movie theaters industries incentivize consumers to change their behavior of when they act to off-peak times resulting in significant savings for participating consumers. And the energy industry is no different.
Understanding the energy bill
But you may be asking, where are the energy incentives? Most commercial building owners look at their utility bill and see a flat rate charge of for example $0.08/kWh. This is a bit deceiving because the utility bill encompasses a few different aspects of energy usage. What's first important to note is that just because residences are charged for energy usage (kwh) alone, doesn't mean that translates to commercial buildings.
"Energy in Boston is nearly 80% less expensive at night."
On the residential side, prices seem flat both day and night because residential electricity rates are not subject to the real time rise and falls of supply and demand. Residential consumers only pay energy charges, which are based on the total amount of energy used in a month. Commercial energy users however are billed differently through a mixture of energy usage (kWh) and demand (kW). Demand charges are based on the highest 15-minute or 30-minute demand peak each month and are accountable for up to 70% of the total electric bill. Since everyone in the utility's area needs to use electricity to operate and cool their building at roughly the same time, during the day, the grid becomes overloaded and energy prices skyrocket. In fact, Boston businesses regularly pay over $45.00/kW (the demand charge) during peak demand hours.
The effect of this $45 demand charge is significant. Effectively, through some back of the envelope math you find that energy usage spikes to an average of $0.36/kWh for Boston-based commercial buildings - a 79 percent increase. This extended charge isn't due to lighting or base loads, though. It's all because of cooling. In commercial billing, when energy is used matters more than how much energy is used.
Demand Charge Effect
Conventional Chiller System
Demand Cost /month
1000 tons x 0.8 kW/ton = 800kW
800 kW x $45.00 = $36,000/month
Energy Usage for Chiller for Month
1000 tons x 10 Hrs x 75% x 0.8 kW/ton x 22 days/month = 132,000 kWh
Approximate Cost for Demand / kWh
$36,000/132,000 kWh/month = $0.27272/kWh
Therefore Daytime Energy = $0.085 + $0.27272 = 36 cents/kWh
Thermal energy storage to the rescue
Currently, Boston has one of the highest demand charges in the United States. So what can building owners do against the high cost of electricity? The answer is simple. Reduce peak demand. Try to use a level electric load both day and night. This may at first seem challenging since most commercial and institutional buildings are unoccupied at night. However, Bostonians may accomplish this through a strategy named "load shifting" which according to Consulting Specifying Engineer, allows companies to use a local energy storage system to compensate for the facility's large energy consumption during peak hours of the day. Facility management may run the chiller plant at night to generate and store cooling. The next day they can still run the chiller plant but at a lower capacity because they have that stored cooling resource available, thereby leveling their electricity load and reducing peak demand.
Taking advantage of the lower energy prices at night will save commercial buildings a considerable amount of money and, unlike filling up a car with gasoline at night, it doesn't require building managers to be at the site filling up.
With thermal energy storage, Bostonians can shave their cooling costs by 70 percent, just by load shifting. While this savings is impressive in its own right, the benefits of running extend farther, with systems lasting over 40 years. More ways to save with thermal energy storage are to:
- Take advantage of the EPAct 179d tax incentive and receive $0.60 to $1.80 per/sq. ft in deductions for installing the HVAC system.
- Reduce carbon footprint.
- Reduce maintenance.
In Boston, GSA acquired a thermal storage system for the Federal Courthouse which saves about $1.5 million per year. GSA purchased the thermal storage system because it would help to avoid brownouts during hot summer days and the utility would not need to add more generation capacity. The system would handle 46% of the maximum daily cooling requirements while the chillers would handle the rest.
Stop falling victim to high demand charges during the day - thermal energy storage can help your building take advantage of the energy sales that gives you 70 percent off every night.
Interested in learning more?
Night-time electricity has historically been lower in price than daytime electricity due to the laws of supply and demand. Daytime electricity consumption causes a high demand on utility infrastructure, which often doubles the cost of electricity as a result. Utilities must match electricity demand precisely and demand usually peaks during the day. As this demand for electricity rises, the energy supplies becomes increasingly scarce especially on hot summer days when air-conditioning is running at full capacity. Utilities must turn on their most expensive and dirtiest plants to meet demand for cooling during these peak demand hours. In turn, day-time electricity costs up to 70% less at night.
To further help understand energy pricing and how to save, CALMAC's vice president of sales and marketing, Paul Valenta, and Director of energy solutions, Evan Berger, will be in Boston this week. Valenta will help attendees at AEE's GlobalCon 2016 understand hidden costs that affect Bostonians' commercial buildings utility bills and how property owners or tenants can take advantage of energy that is 70 percent less expensive at night. While director of energy solutions, Evan Berger, is joining a panel at NESEA's BuildingEnergy Boston to discuss energy storage technologies and applications. Follow CALMAC on Facebook to find where we'll be next.
