Steps That Can Reduce Energy Costs in a Real-time Power Market
September 16, 2003

By Staff
Appeared in Real Estate Journal

Building owners and managers increasingly are challenged to operate their buildings in a cost-effective manner, more so as the power market moves toward real-time pricing. When operating in a deregulated market, it is essential to take every opportunity to manage electricity consumption in order to avoid short-term spikes during peak-demand periods.

Seizing these opportunities requires proactive management and an effectively-designed and well-maintained mechanical system. Here are some steps that can reduce energy costs.

Adjust Space Temperature Setpoints…Energy Conservation Construction Codes typically call for daytime setpoints of 68 degrees F during the heating season and 78 degrees F during the cooling season, yet many buildings typically maintain daytime space temperatures of 72 to 75 degrees F year-round. That additional level of comfort requires more power consumption. Facility managers should educate and seek the buy-in of tenants to gradually adjust setpoints to code, especially during periods of peak demand. For example, a setting of 78 degrees at 50-percent RH should provide acceptable comfort when the outside temperature is 90. Make sure the mechanical system operates on setback control in unoccupied zones to the greatest extent possible.

Use Preventive Maintenance…As mechanical equipment and control devices age, performance declines. Review operation of existing systems, implement preventive maintenance programs, and repair or replace components in a timely manner to assure continued reliability and efficiency of systems. In extreme cases, in which no regular maintenance has been performed, a system overhaul can generate a payback in three years or less.

Seek Energy Independence…Utilize heating and cooling equipment that can use multiple fuels -- electricity, gas or fuel oil -- to allow operational flexibility and manage utility costs during periods of energy price volatility. Consider installing or retrofitting with combination gas/oil-fired boilers and electric/gas/steam-driven chillers. With proper planning, alternate energy sources can be cost-effectively implemented in plant equipment to provide the greatest flexibility.

Consider on-site generation of electric and thermal energy – via gas or steam turbines, engine generators, fuel cells or microturbines -- not only to reduce electrical peaks and better manage power purchases, but also to reduce thermal energy purchases. Viable facilities typically have at least one of the following operating conditions: (1) lower-cost fuel source compared to electricity, (2) a need for improved power quality and/or reliability, (3) opportunity for waste heat recovery, and/or (4) extended hours of operation. Consider thermal storage to shift plant operations to off-peak utility hours, producing chilled water or ice during the night and drawing off that stored capacity during the day to meet the load.

Optimize System Efficiency…Facility managers should review the comparative energy consumption of their heating and cooling systems. Reductions in energy consumption of up to 40% can be potentially achieved through proper design and operation of energy-efficient equipment.

Negotiate Better Prices…Facilities that can manage their consumption profiles to minimize short-term peaks can more aggressively negotiate reduced energy costs. Multiple properties can also use bulk purchases to improve unit pricing.
Prepare to Seize Emerging Opportunities…Older building management control systems look for operating alarms and maintain set points, and that’s about it. Predictive or real-time system controls, available today, measure actual operating conditions as a function of time-of-day and ambient conditions. These controllers can then determine optimal operation of plant equipment based on equipment efficiency, cost of fuels (demand and consumption), and predictive (historical) load changes.

Similarly, systems with remote monitoring and control capabilities enable the building manager to benchmark one facility against similar buildings in the owner’s real estate portfolio and make operational adjustments or diagnose system problems in a timely manner. In the near future, wireless instrumentation will significantly reduce the cost of installation both for new construction and retrofits.

In conclusion …Given the changes in the power industry, it is more important now than ever before to consider the demand- and supply-side opportunities to effectively manage building operations.