Achieving Carbon Emission Goals with Demand-Side Energy Management

July 09, 2021

A convergence of pressures in recent years has caused organizations across North America to examine how their energy use can be managed to help achieve their carbon reduction goals.

These converging pressures originate from customers, who desire to do business with sustainability-minded companies; investors, who realize the inherent value associated with an organization being carbon neutral; and regulators, who are introducing laws that reflect and address society’s move toward a cleaner energy future.

Since these pressures show no signs of waning, the question of how exactly demand-side energy management can be optimized to achieve carbon goals is becoming a popular discussion in the industry today.

Some of the best practices for carbon-reducing with demand-side energy management are more obvious than others. Adopting energy efficiency measures or installing on-site renewable energy sources like solar are examples of strategies that have been around for decades.

Let’s examine, then, some of the newer concepts on the topic of achieving carbon goals with demand-side tactics.

Consider the drive toward a carbon-neutral future from the grid operator’s perspective. Across the US, grids face the same converging pressures as organizations and have worked to increasingly shift their generation mixes away from fossil fuels and toward renewable sources like wind and solar.

Of course, wind and solar energy sources are inherently intermittent and can subsequently cease generating if the wind stops blowing or the sun stops shining.

But the immutable truth that some days are overcast and others windless doesn’t ease the pressure on the grid and those who run it to drive toward carbon- neutrality! Nor does inescapable intermittency suffice as an acceptable reason for grid operators to sacrifice reliability in the name of sustainability.

So what’s a grid operator to do?

Here is where commercial and industrial organizations can fill the gap from the demand side and help the US electrical grid find its way to the clean and efficient energy future that everyone desires.

That the grid needs flexible resources which can be dispatched quickly to serve load when it’s needed due to wind and solar generation being unavailable is a central point readers of this book should be quite familiar with, given it’s been examined in detail within these pages over the last three years.

The same is true of the role demand response plays in providing that flexibility to the grid.

What’s becoming more apparent is how increased participation in demand response programs at the ISO and utility levels across the US is providing new tools for grid operators to harmonize their grids’ reliability with their drive toward a future of cleaner generation fuel mixes.

In effect, this demand-side participation enables the firming of renewable energy sources, allowing grids to transition toward cleaner fuel mixes. While demand response participation doesn’t directly help individual organizations achieve their own carbon reduction goals, the cumulative effect of all the organizations’ participation does help our society achieve its desired emission goals.

The pressures organizations face from outside entities that we discussed earlier play a role in driving a given company’s carbon-reduction goals.

Unfortunately, in a reward-based world dominated by measurable metrics, there isn’t a practical way to note just how effective a given organization’s demand response participation is in helping contribute to carbon and greenhouse gas reduction.

That’s starting to change.

Organizations like the non-profit WattTime are searching for and establishing ways to help companies receive measurable recognition for doing their part with demand response to help the grid maintain reliability during its transition to the future.

Naturally, how an organization uses energy can have a large impact on carbon emissions, but when energy is consumed can move the carbon reduction needle, too. By shifting energy usage to a time when the grid mix is cleaner—during the middle of the day when solar is more prevalent compared with coal, for example—overall emissions are lowered.

An increasing number of organizations and cities have sought to eliminate their emissions in the time period when they consume electricity, often in hour-by-hour increments. This is a practice called 24/7 Clean Energy.

The more generation mixes shift toward renewable sources and as more DERs integrate into the grid with help of regulations like FERC Order 2222, the more the 24/7 clean energy effect should increase. That is, an increase in peak renewable generation will likely result in a larger potential emission reduction due to the load having been shifted.

Companies, regulators, and markets are in the early stages of ascribing value to 24/7 clean energy practices.

Consider the New York market, where Local Law 97 (LL97) seeks to reduce carbon emissions in the city’s building stock by 80% by 2050. An estimated 50,000 buildings in New York City stand to be affected by the law, with many in the commercial sector currently above the law’s emission requirements. Retrofits are one means of achieving compliance with LL97. Load shifting may be another, albeit one that will require a tangible means of assigning value to the practice.

Here we have an example of a regulation (LL97) creating a need for a possible market incentive (the value assigned to load shifting) as a means to achieve the societal goal of lowering carbon emissions in a densely populated city.

Absent a concrete policy on climate change at the national level, the market is responding. Throughout each of the deregulated energy markets in the US, demand response programs are growing at the ISO and utility level. The markets are becoming more sophisticated with how they incorporate DERs, and they’re doing all of this at the behest of state legislatures as well as the citizens who the market and grid ultimately serves.

Demand-side resources deliver carbon benefits. They always have, but today more opportunities are emerging to earn revenue with these resources.

For years we’ve touted how flexible resources will help drive the US electric grid to a cleaner future. While the ways organizations that provide those resources will be publicly credited are still undecided, the ways they’ll be financially rewarded are apparent.

This post was excerpted from The State of Demand-Side Energy Management in North America Volume III, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.

CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly evolving landscape.

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Published by

Mathew Sachs

Mathew Sachs

Senior Vice President, Strategy & Business Development

Mathew Sachs
Mathew Sachs

Senior Vice President, Strategy & Business Development

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