GA – Peak Shaving
Peak Shaving is the voluntary reduction of load whenever a peak occurs on the grid. In most jurisdictions this occurs whenever a peak is “predicted”. A service provider typically provides these ALERTs (predictions) well ahead of the event and may also manage the client’s machinery for peak shaving and restore it to full load after the peak has passed. The following other phenomena are related to Peak Shaving:
- Demand Response is the voluntary reduction of load when called upon to do so by the Utility instead of in response to the “prediction” of a peak. A service provider typically provides these ALERTs (predictions) when called upon by the Utility well ahead of the event and may also manage the client’s machinery to reduce the load and restore it to full load after the event has passed.
- Price Arbitrage occurs whenever electricity is supplied from an auxiliary device (e.g. ESS or CHP) because the price on the grid is higher than the electricity that could be supplied from the auxiliary device. A service provider typically provides these ALERTs (predictions) and may also manage the client’s machinery for peak-shaving and restore it to full load after the event has passed.
The following techniques are used to achieve Peak Shaving, Demand Response or Price Arbitrage
LC – Load Curtailment
Also known as Load Shedding, this technique is used to shut down non-critical loads in response to the “prediction” of a peak or a situation when the price on the grid is uneconomical. It can also be used for Demand Response and Price Arbitrage.
ESS – Energy Storage Systems
Energy Storage Systems (ESS) typically consist of Batteries. Besides protecting a vital asset against an outage, ESS are used to supply energy, in response to the “prediction” of a peak. They can be charged during off-peak hours and discharged during on-peak hours on a daily basis, thus offering a “price-arbitrage” opportunity to lower the overall cost of electricity. The transfer of load to and from the grid is totally transparent. The largest application of these systems has been for the purpose of peak shaving in applications where the load cannot be lowered (e.g. Class A Global Adjustment, in Ontario) and in Demand Response.
CHP – Combined Heat & Power
CHP typically consists of a Gas Fried Power Plant (GFPP). These devices are used to supply the load in response to the “prediction” of a peak. They can be used to supply the load whenever the price of the grid exceeds the price of electricity from the CHP, effectively offering “price-arbitrage” to lower the overall cost of electricity. Besides supplying electricity, useful byproducts are a substantial amount of heat and carbon-dioxide. The transfer of load to and from the grid is totally transparent. The largest application of these systems has been for the purpose of peak shaving in applications where the load cannot be lowered (e.g. Class A Global Adjustment, in Ontario) and in Demand Response.
VPPA – Virtual Power Purchase Agreement
A Power Purchase Agreement (PPA) is an agreement to purchase power from a specific supplier, over a specific period of time, under a specific set of terms and conditions. Usually, the billing is done by the supplier on the Utility bill from the Local Distribution Company (LDC). A Virtual Power Purchase Agreement is one in which the supplier does his billing on a bill, that is separate from the Utility bill from the Utility (LDC).
This method can come into vogue when a new regulation is initiated, and there is a need to on-board new suppliers quickly. In the most recent case, the Ontario government has issued a new initiative, whereby Global Adjustment may be abated, if a customer purchases his electricity from a renewable source, such as Solar. The energy still comes through the regular wires from the Utility. However, the billing for the renewable energy is done on a separate bill, which may even be a credit for a “Settlement of Differences” under the terms of the VPPA. Additionally, the customer also receives Clean Energy Credits (CEC).