Public Power Magazine

Controlling Peak Demand

From the May 2013 issue (Vol. 71, No. 3) of Public Power

Originally published March 1, 2013

By Alice Clamp
March 1, 2013

When Breda, Iowa, wanted to control its power supply costs for its 500 electricity customers, the city was not sure where to start.

To help discern a path forward, the city needed to know what options might be available to it. Thanks to a community development block grant, Breda had $13,000 for a feasibility study.

“We wanted to use the grant to see if we could do anything to control our peak better,” said City Clerk Diane Lucas. The city purchases power from the Western Area Power Administration and the Municipal Energy Agency of Nebraska.

Breda turned to the Iowa Association of Municipal Utilities (IAMU) for assistance. And the association put the city in touch with one of its consultants, a former utility manager who was familiar with load management, Lucas said. “He reviewed our system and looked at our costs.”

IAMU Energy Services Engineer Joel Logan worked with the consultant. “We wanted to examine a range of options that would work for a small municipal utility,” said Logan. The team identified five options.

  • Upgrade the city’s load-control system
  • Shift municipal loads
  • Offer rebates for air-source and geothermal heat pumps
  • Develop a community photovoltaic (PV) project
  • Offer interruptible and time-of-use rates.

 Load control. Breda’s load control system monitors daily load on customer air conditioning units and water heaters and initiates control to keep peak demand below a given target, Lucas said. “The system has good customer acceptance, but it’s 30 years old.”

If the city were to spend money to upgrade the system, it could either install current technology or shift to a smart grid system, said Lucas.

“We recommended that all the original switches be replaced,” said Logan. “A number of the switches have failed or could fail soon.” In addition, IAMU thought the city might have to replace its radio transmission tower, which is about 30 years old. But Lucas said that will not be necessary.

“Breda knew the load-control program was saving money, but didn’t know how much,” Logan said. “The city needed that information to demonstrate the value of an upgrade.”

Municipal loads. IAMU also looked at city facility loads for peak-reduction opportunities. “We focused on the large loads and sequencing of pumps at the city’s water treatment plant,” Logan said. The team also examined high-efficiency lighting and heating/cooling systems for municipal facilities.

“We didn’t look at the efficiency of the water treatment plant equipment because it’s only a few years old,” Logan said. Instead, the IAMU team examined the plant’s operation during peak periods. If the plant is running at full capacity, the pumps represent about 62 kW of demand, he said. “That’s a significant increase in peak demand.”

To reduce that demand, IAMU suggested that all three tanks at the plant—the water tower, the clear well and the detention tank—be as full as possible prior to an expected peak event. The fill set-points should be adjusted during the event by switching on certain pumps. And finally, backwash on the filters should be performed after peak demand hours, not prior to it.

Heat pump rebates. Another option for Breda to consider is the use of rebates for air-source and geothermal heat pumps. The city is located in a rural area with no natural gas service. Many residents use propane for heating, but there is a significant amount of electric resistance heating, which operates during the utility’s winter peak, said Logan. Breda’s summer and winter peaks are roughly the same, he said.

“We looked at incentives that would encourage residents to replace their electric resistance heating with a heat pump,” he said. “If customers switched from electric resistance heating to a heat pump, the utility would lower its peak and customers would lower their bills.” And, he added, if customers switched from propane-fired heating to a heat pump, the utility would increase its electricity sales without significantly increasing its peak while customers would save money on heating.

Replacing an air conditioning system with a high-efficiency heat pump also would help reduce the utility’s summer peak.

According to Logan, a propane furnace or boiler costs the utility customer $25.19 per million Btu output, while an air-source heat pump costs $13.96 per million Btu output and a geothermal heat pump costs $6.57 per million Btu output.

Community PV project. IAMU also considered the possibility of installing photovoltaic panels to offset peak demand. “The installed cost of PV panels has dropped,” Logan said. “Three years ago, small systems cost $9 a watt, but in 2012, they cost $3.40-$4.50 a watt.”

The IAMU team wanted to find out how a PV system could reduce demand. It began by assessing solar availability during Breda’s summer peak—between 2 p.m. and 4 p.m. “We wanted to know if the peak coincided with sunny weather,” Logan said. “We looked at hourly load data, hourly weather data and sky conditions. And we found that Breda’s peak occurs when the sky is clear or with only scattered clouds.” The IAMU team concluded that solar would be available during the peak period.

The team also examined the option of fixed PV panels versus a tracking system. “We wanted to see what orientation offered the greatest financial benefit for the utility,” said Logan. “We found that a due south orientation maximized energy production during the peak period.” The team suggested that the PV panels be installed near the water treatment plant to help meet its large load.

However, the PV option raised concerns for Breda, said the city’s Lucas. “Under our power contracts, we cannot negotiate with our power suppliers.”

Rates. The IAMU team also took a “cursory” look at rates, said Logan. “The problem is that the city’s power suppliers do not offer any time-of-use price signals at the wholesale rate, so there wasn’t a good way to set up a different rate.” An interruptible rate is usually designed for large commercial and industrial customers. There are two small industrial customers in Breda, but neither one was willing to shift operations to a different time, and neither had a single large piece of equipment that it could shut down.

Study conclusions

IAMU ranked five options to reduce demand in Breda. “Upgrading the load-control system was the most highly recommended,” said Logan. “Next were incentives for heat pumps and changes to the water treatment plant’s operations. These three options would be easier and cost-effective,” he said. Breda could get enough peak demand reduction from these options, so it would not need the PV option. Nonetheless, the IAMU team did recommend the PV system, but “not highly.” Rate mechanisms were not a viable option.

Load control. Breda’s Lucas said the city is considering an upgrade of the load-control system. “We would need to upgrade the whole system, not just install updated switches.” This project is at the top of the city’s list, she said.

PV. The information acquired by the IAMU team on solar availability during peak periods could serve as a model for other utilities to evaluate, said Logan. “People often question the viability of PV, but the solar resource throughout the country is quite good. We found that Breda has roughly the same solar resource as Houston, Texas,” he said.

However, PV received lower consideration because of its cost. “We looked at energy as well as demand, and Breda gets cheaper power from WAPA.” But for Iowa utilities with higher cost power, PV might be a better option, he said.

Logan said that while the conclusions reached on Breda’s options were based on the city’s specific factors, the options themselves—and the information learned about them—could be of interest to other utilities.

Moving forward

“We’re looking at available funding,” said the city’s Lucas. “There’s no stimulus money available, but we’re exploring grant funding, a low-interest loan or a bond issue.” She said the city is considering what it can do right away. “It’s difficult to undertake any of these projects on a tight budget,” she added. “And we don’t want to raise rates.”

Lucas said the City Council is interested in proceeding with an upgrade of the load-control system. At a meeting in February 2013, the council decided to purchase new switches for its load control program. The switches, which the city plans to finance with a grant of approximately $100,000 from the Iowa Association of Municipal Utilities, are state-of-the-art, said Lucas.

The switches will be installed on all residential and commercial/industrial electric hot water heaters and central air conditioning units. “The program will be mandatory,” said Lucas. “We have already let customers know that we must control our peak if we are to keep rates affordable.”

The PV project was dismissed by the council as too expensive. “The payback wouldn’t work for us and we didn’t have a good site for the panels,” said Lucas. She added that there were not enough customers to justify a heat pump rebate, and the city wasn’t able to implement a time-of-use rate at present.

But the council is considering adjusting tank fill rates and times at the city’s water treatment plant to reduce demand, said Lucas.


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