In peak times, a single switch to avoid blackouts

When demand for electricity spikes — or spot market prices jump — the regional grid operator, PJM Interconnection, springs into action to stave off blackouts or service interruptions.

One of the first places to which PJM turns is its curtailment service providers. These agents have networks of heavy power consumers — such as manufacturers or educational institutions — that agree ahead of time to cut their power use during a crunch in exchange for cash.

The program is called "demand response," and while it's effective, Peter Langbein, manager of demand response operations at PJM, said the process by which those alerts are communicated is inconsistent.

"Frankly, it's a variety, and it's a function of the demand response provider's capability," he said.

Some curtailment service providers get automated messages, and then can automatically turn down their end user's energy usage. Others get a phone call, and then place a call to their end users, who can manually manage their energy hogs.

If Rey Montalvo had his way, everything would be automated.

Montalvo is president and CEO of Consolidated Energy Design Inc., a Wall-based firm that has designed a system called Fully Automated Demand Response and Reduction System, or FADRS.

Montalvo said California already has an automated demand response protocol, and FADRS could make that a reality here.

The system is designed to be human-focused, meaning it aims to avoid uncomfortable fixes, such as turning off air conditioning. Even so, Montalvo said, a building's peak energy use might be automatically dropped by 40 percent to 62 percent; the system can achieve total reductions of between 15 percent and 30 percent.

In 2010, Consolidated Energy Design participated in a pilot program with PJM that demonstrated the system's ability to automatically trigger energy usage reductions within one second. It also gave PJM a wealth of new data, because it enables communication between PJM, demand-response providers and end users.

The FADRS system is ready for widespread deployment. The problem, he said, is getting facility owners to invest in installing the system. "We need support," Montalvo said. "With the recession that we've had, everybody is afraid to spend money, so they're looking for ridiculously low paybacks of six months to 18 months."

Montalvo said a building owner could recoup his investment in two to three years, thanks to energy savings and demand-response payments. He's spent much of the past two years in Trenton, lobbying lawmakers and the Board of Public Utilities for help.

"There's a concern at the BPU that electric rates might increase if they give money for demonstration pilots," Montalvo said.

Montalvo noted that Gov. Chris Christie earlier this year diverted $210 million in clean energy funds to help plug a widening budget gap; "I think the fact that we had money — $210 million — left over shows that there is money (to fund energy-efficiency incentives) without increasing rates."

Montalvo said the state needs more robust incentives to more fully take advantage of technologies like his. He says such programs would create hundreds of jobs.

Assemblyman Upendra Chivukula (D-Somerset) said technologies like Montalvo's are important, but the state already has incentives aimed at boosting energy efficiency in buildings. He said he thinks more companies would invest in systems like FADRS if the state moved toward a pricing system that was more spot-market reflective. Right now, he said, energy bills are based on averages, so it doesn't matter if a user consumes electricity at peak hours or the dead of night.

"We don't have the real-time pricing capability, which would provide the incentives that are needed," he said.

But Montalvo's vision is a lot wider than automated demand response. He said the real goal is reducing energy consumption.

"The aging grid infrastructure that we have in America is over 60 years old … during that period of time, the population has grown two times, but the demand for electricity has grown 7.5 times," he said.

In addition to regulating buildings' energy usage and enabling automated demand response, FADRS can also help with frequency regulation as more and more renewable power sources come on to the grid.

"We love everything that's green, but the problem with renewables like solar and wind energy is that they have an ugly side," he said. "That ugly side is that they are intermittent power generators, and as a result, they create a voltage imbalance in the grid."

Langbein said he would love to see more automation integrated into the system.

"Automation's great, and it seems like that effort definitely continues to increase as some of the cost of the infrastructure is coming down," he said.
Still, Langbein said, more investment is needed, at various levels of the system.

Montalvo argues New Jersey should take a bigger role in funding that transition. He said California has been the leader, but he believes New Jersey can — and should — overtake the Golden State.

"We can't be looking to California as the leader," he said. "We have to now take on the leadership role."

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

Clarification The print version of this story should have indicated total energy use could be reduced by 15 percent to 30 percent through FADRS. It has been clarified above.