Unlike any other commodity, the more electricity you need to produce, the more expensive the last unit you produced will be. So how do we reduce prices for everyone?
Here’s the odd thing about electricity: unlike any other commodity, the more electricity you need to produce, the more expensive the last unit you produced will be. That is because the last unit, the highest cost electricity generator, sets the price for the whole market for that period. Everyone wins if the utility does not have to call on that last, most expensive generator.
So how do we reduce prices for everyone? We can reduce the number of times we have to call on the last, highest price power generator. But how do we do that?
By tracking our energy use, we can take control over it and begin to identify ways to lower use in general and control when we do use energy.
How does this become potential revenue for the building owners? It all boils down to establishing ways to control the electricity load of your building. This “controllable load” means knowing what devices in your building can be turned down (or off) for short periods without reducing comfort or operations. Let's take a typical large office building.
For example, if the weather forecast for tomorrow predicts 90° temperatures, we know everyone’s air conditioner will be going full blast from noon to 3 p.m., the hottest part of the day.
But what if our building’s AC system knew that it would save us money to “pre-chill” the office building between 5 a.m. and 7 a.m., when power demand and hence prices are lower. And what if our building knew we'd avoid peak demand charges if we let the inside temperature rise by 2° from lunch through 3 p.m., something no one would notice.
Think of it as a fancy programmable thermostat that is in constant two-way conversation with the larger grid about when electricity prices will go up or down. The same principle can be applied to our homes.
One such demonstration project in the residential sector is the Pecan Street Project in Austin, Texas, where smart meters were installed in homes.