AS PART OF ITS LONG-TERM PLANNING, THE TENNESSEE VALLEY AUTHORITY HAS ADOPTED A STRATEGY OF PROMOTING ENERGY EFFICIENCY AND PEAK DEMAND REDUCTION. In the summer of 2008, in partnership with power distributors such as Nashville Electric Service (NES; Nashville, Tennessee, U.S.), the Tennessee Valley Authority (TVA; Nashville) initiated a demand-response (DR) program for commercial, institutional and industrial (C&I) customers.

NES signed on to the program as a way to increase customer satisfaction by putting money back into the pockets of its C&I ratepayers, while promoting environmentally sound alternatives to supply-side resources. EnerNOC (Boston, Massachusetts, U.S.), North America's largest C&I DR provider, was selected to administer the program. In a four-hour DR event dispatched by TVA in August 2009, the C&I DR program delivered 102% of 122 MW of committed capacity. As of October 2009, in partnership with 99 of TVA's 158 power distributors, the program has grown to a 155-MW resource.

THE SYSTEM PERSPECTIVE

TVA, the nation's largest public power provider, is a federally owned corporation. Its mission is to serve the Tennessee Valley Region through energy, environment and economic development. TVA's service territory includes most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia. This area covers 80,000 sq miles (207,199 sq km) with a population of more than 8.7 million. Financed solely by power revenues, TVA sells electricity to 158 power distributors and 58 directly served industries and federal agencies.

TVA not only hit an all-time system peak of 33,482 MW in August 2007, but also exceeded its prior peak demand 13 times over the course of that summer. TVA's 2007 strategic plan stated: “TVA will strive to be a leader in energy-efficiency improvements and peak demand reduction over the next five years.” Accordingly, TVA and its power distributor customers began seriously evaluating a DR program for C&I ratepayers as a cost-effective alternative to traditional supply-side resources.

At times of high prices, TVA dispatches a DR network through EnerNOC. The network is comprised of hundreds of C&I sites, all located in TVA's service territory, that agreed to reduce nonessential load in exchange for financial payments.

MEETING DISTRIBUTOR AND CUSTOMER NEEDS

NES is the second-largest TVA power distributor, distributing electricity to about 357,000 customers in a 700-sq mile (1813-sq km) service territory, including the city of Nashville. Like TVA, the NES system peaks in the summer, at about 2700 MW. Until the recent economic downturn, NES had been experiencing growth in demand of about 20% over 10 years. Nashville, in particular, had been experiencing tremendous population growth with new downtown expansions and additional corporate headquarters. In some cases, this growth resulted in dramatic increases in load at specific substations.

In light of these pressures, NES became an active partner with TVA and other distributors in reducing peak demand. Through TVA's C&I demand-response program, NES sought to improve customer satisfaction and business competitiveness, while also achieving environmental benefits. Particularly in today's economic climate, providing an avenue for participating customers to better manage their energy costs has a direct impact on overall customer satisfaction.

With respect to its own finances, NES's revenue erosion from DR is limited, because TVA will not dispatch the program more than 80 hours a year. In addition, some customers reduce load on peak by shifting it off peak. As such, NES views keeping customer satisfaction and competitiveness high through DR as one way to enhance its own long-term financial health.

HOW IT WORKS

DR puts to work an untapped resource: the combined ability of many C&I customers to reduce their load when called upon at times of high demand and high prices, on a cost-effective, reliable, and verifiable basis. DR helps avoid or defer new power generation, transmission and distribution infrastructure needed to meet peak demand for relatively few hours per year.

In partnership with NES and other distributors, TVA designed its C&I DR program to create the greatest value for the system, while also making it possible for a significant number and variety of customers to participate. TVA can dispatch the program year-round, for up to 80 hours per year, but anticipates calling DR events mainly in the summer. TVA can call these events in a window from noon to 8 p.m. in April through October and from 5 a.m. to 1 p.m. during the other months of the year. When calling events, TVA provides a 30-minute notification. An event can last anywhere from two to eight hours.

C&I customers not on interruptible rates are eligible for the program. Each customer must be able to commit at least 100 kW of load reduction in line with the program rules. In return, participants receive monthly capacity payments at a level commensurate with their capacity reductions, plus payments for energy reduced during DR events.

A wide variety of customers have enrolled, with each given innovative load-reduction plans customized to their facility. A few examples of the customization are as follows:

  • A farm supply store reduces 350 kW by shutting down its pellet and hammer mill, and turning down lights on a targeted basis.

  • A public school system at four locations shuts down rooftop package units, heat pumps and wall-mount classroom units for 500 kW of reduction.

  • A metal composting and recycling facility shuts down its shredder completely to achieve 1600 kW of reduction.

TVA contracted with EnerNOC in 2008 to implement the program. EnerNOC works closely with the 99 participating power distributors, including NES, along every step of the process:

  • Recruiting customers for the program and developing customized load reduction plans for each of them

  • Installing real-time monitoring and control technology at each customer site

  • CUSTOMER SATISFACTION

    Notifying customers of DR events when dispatched by TVA

  • Managing event performance in real time from its Network Operations Center

  • Calculating baselines for each facility

  • Measuring actual load reductions during events

  • Providing reports to TVA, NES and other distributors.

EnerNOC's technology is central to the DR program's performance and to the measurement and verification of results. At each customer site, EnerNOC installs, free of charge to the customer, a gateway device that establishes communication with EnerNOC's Network Operations Center. This device provides real-time visibility into end-user energy consumption, based on five-minute interval data. It also enables EnerNOC to remotely control a customer's load at the customer's discretion. EnerNOC assumes and manages risk. If the network underperforms when called, EnerNOC pays a financial penalty to TVA. Individual end-use customers who may have underperformed during an event are never required to pay out-of-pocket penalties

This energy-consumption data feeds into PowerTrak, a Web-based energy management platform. End-use customers have free, continuous access to PowerTrak, which allows them to view their facilities' energy consumption in real time, 24 hours a day, year-round. Both TVA and NES also can see the data through PowerTrak, enabling them to monitor the resource's performance during DR events.

To initiate an event, TVA alerts EnerNOC, which then automatically notifies end-use customers. Based on its real-time view of the DR event, EnerNOC contacts customers to “coach” their performance if the site's load reduction is less than expected. The development of tailored customer plans, the use of technology to track event performance and the aggregation of customer sites into a DR portfolio all help to deliver reliable and verifiable load reductions. During the summer of 2007, TVA ran a 4-MW proof-of-concept C&I DR program in which NES also participated. Over the course of six events spanning 30 hours, EnerNOC delivered an average of 101.3% of the committed DR capacity.

NES's customers value the opportunity DR gives them to better manage their energy costs and to dampen the pressure of increasing energy prices on their communities. As explained by Brad March, facilities manager at Associated Wholesale Grocers (AWG), a participant in the C&I DR program, “We want to be part of the energy solution, not part of the problem.”

AWG in Nashville is a hub for grocery storage and distribution to its more than 300 co-op members, including Apple Markets, Piggly Wiggly and HG Hill. The facility includes more than 750,000 sq ft (69,677 sq m) of dry and refrigerated storage. AWG is a major energy consumer, using more than 1 million kWh per month.

In the summer of 2007, AWG participated in TVA's and NES's proof-of-concept DR program. Because AWG stores temperature-sensitive items such as produce, management initially assumed it would be impossible to participate in the program. The more AWG looked into its use of energy, however, the more flexibility it discovered. During events, AWG moved temperature set points by approximately 3F° (1.7C°) in its extensive cold storage area. The company found it was able to reduce its energy use by about 600 kW during DR events without affecting its operation or the quality of its goods.

In the current program, AWG has found ways to provide approximately 850 kW in energy reductions during events. The significant payments earned go directly into the general facilities fund and help pay for other cost-saving measures. AWG is spreading the word about the DR program to other facilities throughout the region. According to March, the facilities manager, “DR makes a big difference to our bottom line, and it's easy to implement.”

TVA's C&I DR program is an effective way to help customers control their energy costs while creating value for the system. In addition to the regular DR payments, several customers have gained insight from PowerTrak about their energy usage. For example, the energy management software has enabled customers to save by better managing their demand charges and verifying the impact of energy-efficiency measures.

From access to energy-consumption data to customized load-reduction plans, with features like these, it is clear that taking the time to design a strong DR program yielded positive results, not only in customer satisfaction, but also in savings and load reduction.

In a little over a year, the closely coordinated efforts of TVA, NES, other distributors and EnerNOC have built a 155-MW peak reduction resource for continued use by TVA.


Jim Purcell (jpurcell@nespower.com) is the energy services manager for Nashville Electric Service. He began his almost 30-year career at NES as a lighting and heating consultant, specializing in energy conservation and project management. He progressed to marketing supervisor, program implementation manager and then to his current role. The management of energy services engineering includes all commercial and residential new business, large customer care call center, key accounts, energy-efficiency programs, demand response, green power, net metering and technical services. Purcell is a graduate of Middle Tennessee State University.

Michael Ingram (mringram@tva.gov) is the senior manager of demand response with the Tennessee Valley Authority responsible for developing and implementing direct load control programs and establishing policy to support TVA's smart grid implementation. He has more than 22 years experience with TVA. Ingram is an IEEE Fellow and a registered professional engineer in the state of Tennessee. He is also a two-time recipient of the TVA Engineer of the Year Award.