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Question

What is the best source of information regarding grid incentives and cost saving opportunities for manufacturing plants in US states?

Ethan O'Brien's picture
Group Energy Manager Klockner Pentaplast

UK based Group Energy Manager for a multi-national manufacturing organisation. Full Member of the Energy Institute (MEI), and a Chartered Energy Manager (CEM). A '35 Under 35' Environment Media...

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Hi to the community. I'm a Group Energy Manager for a global manufacturing company with sites in the US. I'm not overly familiar with the ins and outs of the energy incentives markets there - i.e. peak power management, any potential rebates or incentive schemes to reduce power costs. I would be very grateful if there was a member on here who could signpost me to good sources of information on the topics.

Thank you, Ethan

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That is a very interesting and multi-facetted issue, and can only be answered State by State. Yet it will determine who will come out a winner from Covid19 lockdown, who can control his costs without cutting payrolls and can keep his staff.

Solar is a big issue, depending on grid grid fees and deregulation you need (or are allowed to add) batteries, involve an ESCO or go it alone, and perhaps even play arbitrage.

The first stop is always the state's incentive organization, they keep up to date on what they can offer, and what special rates and incentives that the utilities are allowed to offer by regulation.

DSIRE offers some additional information if you are willing to participate in demand response, or renewable energy.

There is no up to date central repository of state and federal (also in some cases county and city) incentives for manufacturing. An organization was created to do this as part of the Advanced Manufacturing Initiatives in the 1990's - but the funding has been cut and cut and cut over the years in favor of other initiatives, so that task has fallen by the wayside.

There may be a private business that has this information, but they probably use as part of doing real estate deals.

Most of these programs are administered on the state level, so  you have to do a separate search for each state where your company has facilities.  In New York, start at www.NYSERDA.ny.gov.  Some states have delegated incentives to the electric and gas utility companies, and there may be several in each state.  If you Google the name of the gas or electric company, you should be able to get to their web site, then search for industrial energy conservation programs.

 

My experience as an energy consultant for industrial plants has shown that one very effective way to go - in addition to checking all the available programs using independent sources - is setting a high level meeting with each local utility that connects your company's sites

1) Show the local utility what's the challenge for each site in consideration from a competitive prospective 

2) Ask the local utility what they can do to improve that specific site power costs

I would be open to energy efficiency, demand response programs, cost arbitrage considering other energy sources such as gas, biomass, etc., distributed generation alternatives, etc., etc.

This is what I was told by the CEO of an electric utility company in the MidWest (USA). A major agro-plant in their service territory was about to close its operations  As soon as Alliant's CEO was told about this sad news he asked for a meeting with the client's CEO.

He discovered in this meeting that the problem was the cost of operations of that plant. The differentiating (bad) factor was that the grains were brought by train till their plant's gate. Then it had to be transported (1/2 a mile) by diesel truck to the plant. And the associated cost was killing the feasibility of that plant.

The CEO asked what was the maximum cost that this last 1/2 mile could be to keep the plant operating. He got a number and asked for 2 weeks before a final decision. He came back with the following proposal (that was crafted by the non-regulated Alliant's business unit) : they would invest and build this 1/2 mile railway and would be compensated by this number that was given to him. 

The plant decided to keep it operations! It was a huge win-win!

Bottom line: in addition to the innumerous options officially provided by the utility companies it makes sense to open high level contacts with the local utility companies and explore your options. 

The most important challenge for you is then be very well prepared for this meeting. Have solid metrics related to the current and future energy usage (including all sources), indicate the type of activities of that specific site, show the most important energy conversion processes so that your utility counterpart may consider a number of options including technical, financial and energy management solutions.

This challenge you came up with is a very interesting one! 

Geography drives incentives and other monetization opportunities, unfortunately there is no central repository of offerings.  Let me share some thoughts and hopefully good ‘first steps’!

With respect to peak power/demand management I would start with the Peak Load Management Alliance, PLMA, https://www.peakload.org/.  You’ll be able to access research documents, historical information, make connections with peers and service or technology providers especially those who work multiple markets across the country, etc. 

If you have locations in restructured states I would explore opportunities at the wholesale ISO level; New York ISO, PJM, ISO New England, ERCOT, California etc.  Depending on your size, risk tolerance, ability to flex load/demand and so on you may see opportunity on the supply (day ahead/real time energy markets) and demand sides as well as ancillary services.  Regardless of where you are located (restructured or not) I would connect with my local utility, there may be distribution level opportunities available as well; Con Edison in New York is an example.  Certainly there will be with respect to energy efficiency across the board, load management is more geographically targeted. 

States that have carbon reduction targets, renewable portfolio standards or really any level of mandated, legislatively driven objectives are actively incenting action from customers.  New York and California come to mind first but there are obviously others.  They should investigate opportunities through the New York State Energy Research and Development Authority; https://www.nyserda.ny.gov/.  In California that would be the California Energy Commission; https://www.energy.ca.gov/

The ’customer to grid’ market is definitely evolving as we speak.  As opposed to infrastructure investment many utilities are exploring/piloting non-wires alternatives; see report linked here.  Frankly if I had a facility with automated load/demand flexibility and there were no formal market or incentive based opportunities I would still connect with my utility as it’s not unusual for them to enter into ‘on-call’ contracts for services with large customer entities. 

I would advise also to monitor/connect with their appropriate State Public Service Commissions.  Not only can you engage in shaping, potentially, policy or regulation it would also connect you to advocacy groups specific to manufacturing, Multiple Intervenors in New York, http://www.multipleintervenors.com/,  is an example, I’m sure there are peer groups in other locales. 

Not sure this helps, hopefully it does!

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