Impact of Electricity Deregulation on Industrial Assessment Strategies

Abstract

This paper explores many of the changes in typical industrial assessment recommendations, which have resulted from deregulation of the electric and gas industries. While anticipating that energy efficiency would almost always be a good idea, changes in rate structures and indeed the very nature of how energy is purchased can put some energy efficiency technologies outside of normal economically acceptable ranges. A major focus will be changes in and the elimination of time-of-use rates for electricity. An entire generation of DSM'ers (people working in "Demand-Side Management") worked under the principle that there was economic benefit to load leveling. Time-of-use rates are changing throughout the country and in many cases disappearing. Bulk purchase of electricity has even resulted in cases where, with minimum consumption requirements, industrial plants need to find ways to increase their electrical use to avoid penalties. Energy storage devices including thermal energy storage must be re-examined in terms of this new paradigm. There are applications where they are advisable, but for different reasons then demand management. Another area of particular interest is fuel selection, multiply fuel capability, and contracting. An industrial assessment at two neighboring plants can result in entirely different recommendations based on how energy is purchased and billed. In many cases, an industrial plant may be better off spending resources on energy purchasing agents as opposed to anything like an energy efficiency project. Onsite generation of power and the changing rationales for its adoption has also experienced big changes. Energy security is becoming a strong motivation for industrial plants, options are increased, and third party funding is also starting to appear. Intermediate solutions like gas driven compressors bring these two areas together and leave industrial clients with more options but often more confusion than ever before. Finally, the paper discusses some of the new challenges facing an industrial assessment team in terms of information gathering. It is becoming necessary to examine many possible energy purchase options and each has ramifications on energy efficiency projects. Use of the Internet, computer tools and other information sources is presented.