Efficiency, Resilience, and Smart Energy

Far too many of the presentations at Connectivity Week last month touted building efficiency. Efficiency is important to Smart Energy, but can also work to defeat Smart Energy. Resilience is ultimately more important than efficiency for meeting the goals of Smart Energy. What energy efficiency can do, is support energy resilience.

A Smart Grid is one that can work despite a growing volatility of supply. Today’s grid already has a reduced ability to support the ever-changing aggregate consumption by the end nodes. Buildings, houses, and industry, the end nodes of the grid, will be the basis for Smart Energy.

So far, today’s efficiency efforts have wrung the slack from the system. A system without slack becomes brittle because it has a smaller margin for error. The most efficient buildings are limited in how they can trim load when asked. The overall grid has reduced margins for error. An exclusive focus on efficiency drives the impulse to direct load control in the end nodes by the central systems of the energy supplier.

Resiliency is the capacity of a system to absorb disturbance and still retain essentially the same function, structure, identity, and feedbacks. At the local level, resilience is dependent on the ability to adapt and to use diverse resources to achieve the same ends. At the broader level, resilient systems are characterized by diverse participants with non-uniform responses. Homogenous collections of systems respond to a given stimulus in similar ways, resulting in “panics” or “stampedes”. Smart grids will provide many systems with a similar stimulus as power availability changes.

Smart Energy results when the end nodes are able to respond to situations announced by the Smart Grid. It is critical to note that the purposes of the end nodes are not those of the grid. The Smart Grid will present its problems with reliability and balance to the end nodes. The end nodes, whose goal is to deliver divers services to their owner / occupants will use this information to optimize their own service delivery.

Let me present two examples of systems whose proper goal is service resilience rather than energy efficiency.

Cloud computing data centers use immense amounts of power, converting it to business process and to heat. Cloud computing relies on virtual computing machines that can be started and stopped, created and destroyed as needed. Cloud data centers have a growing ability to move these virtual machines between data centers. They are using this capability to provide service resilience whether or not a given data center is operational.

Data center resilience used to be provided through physical security, redundant systems, and back-up generators. The new model provides resilience through an ability to run from the problem, moving a virtual machine from one center to the next. The cost of each data center is reduced as the redundant systems and unnecessary generators are eliminated; construction savings of more than 50% were reported. Each data center is less robust, but together the data centers gain resilience.

Resilient data centers can respond to Smart Grids by moving processes from one site to another. Cloud services are part of smart energy in ways that data centers never could be. This resilience is not built on energy efficiency; six data centers may replace one. They have achieved resilience by focusing on their own missions rather than on support of the grid.

Commercial buildings and homes can achieve resilience by focusing on the times of energy surplus. Many renewable sources on the grid are unable to find adequate markets when they are producing at their maximum. Times of energy surplus may occur every day, while energy shortages may occur a dozen times a year. When the wind is blowing, when the sun is shining, Smart Grids will let the end nodes know with low prices. It is these low prices more than peak price events that will provide the incentives for smart energy.

Periodic low prices will fund resilience in those end nodes that take advantage of them. Capturing and storing the surplus, particularly with in-process storage, makes each building better able to weather shortages. Through storage combined with efficiency, each end node will lessen the urgency to buy power now. A building that is planning around the temporary power surpluses is able to respond to shortages without loss of service. The net effect to the participant is more reliable service at a lower price than competing buildings and properties.

Over time, end-nodes that commit to on-site storage will find that their internal markets change. On-site generation will be the market for site-based energy, in preference to grid-based distribution. The better market is the internal one, wherein storage can enhance service to the building owner and occupant.

As their site-based storage grows, the technology costs will drop. With each progressive step, building resilience grows , and grid dependency is reduced. Because there are many buildings, with many owners, and many motivations, smart energy in buildings better supports the market dynamics of rapid innovation. Because the building owners are inherently diverse, and building systems naturally autonomous, building based smart energy gains resilience as a larger system of systems.

Efficiency supports this developing resilience by reducing the demands. A building that uses half as much energy need store only half as much energy. A building that uses less energy can better weather periods of limited support from grids. To the end node, the advantage of a smart grid is better situation awareness, and an improved ability to broker whatever services are needed locally for the occupants.

The largest Smart Energy opportunities are not in selling to the grid. The real opportunities are in building end-node resilience despite power whose price, quality, and availability will be more volatile. The purpose of this resilience is to better support the owner and the occupants of the end node, not to support smart grids. This focus, on the local decision maker and their needs will lead to faster adoption.

Forget Efficiency and Demand Response, Load Bank for the Grid

All the Smart Grid attention is on Demand Response, that is, on the half dozen times a year when the grid runs out of energy or has to turn to expensive energy sources. All the building attention is on efficiency, using the least energy inside the building possible. Neither approach supports renewables, or distributed energy resources. Efficiency may reduce the ability to respond to Demand Response signals. Buildings should turn to productive load banking instead.

When I am at home, my smart thermostat turns my home temperature up and down. In the winter, the temperature setting goes way down at night. The house becomes parsimonious just as the local wholesale power market goes negative. The price goes negative because it is expensive to turn up and down the power generation. I don’t see wholesale prices, so efficiency is what I do for now. In a better market, I would increase my use at night, and turn the temperature down when I get up. Instead, I efficiently use more energy by using it at the wrong time.

Load banks are familiar to those who test and install generators. Generators can burn out the circuits they are on, or the equipment on those circuits, if there is not adequate load to consume the power generated. Load banks are paired with generation to use any excess energy. Most load banks do little more than heat the air to burn off excess energy. If we can make our building systems create value while load banking, we will turn grid economics upside down.

Renewable energy, or rather intermittent generation, often generates energy when there is no market for that energy. Wind farms often produce far more energy than they can sell at that time. Just google “wind farm Texas toaster” for description of the problem. The problem is not, as many decry, subsidies. The problem is lack of markets. With no place to sell enough power when the wind is blowing, the great Texas toaster load banks wind power into heat.

Building systems should look at what they can do to use more energy, but at the right time. Ice Energy, which chills water at night to avoid air conditioning during the day, is better thought of as a daily load bank. The real impulse behind utility support of electric cars is that if charged only at night, they provide load banking while expanding their market.

I always laugh when I go to a conference “powered by wind”. I know that they are paying un-economic fees to a power source that is not the wind, which promises to buy wind at some later time. If you want to encourage renewable energy, you need to buy it when it’s available and cheap, not on some pretend market which sells you conventional power, and promises to buy wind later when it is not needed. If we instead bought energy when the wind is blowing, we would increase the value of wind energy. I the great wind farms could sell more than 40% of what they generate, they would be instantly more economic, without waiting for new technologies. Think of it as canning fresh tomatoes in summer. You don’t can tomatoes in summer to heat the house; that would suggest canning in winter. You can tomatoes in summer because that is when they are fresh and cheap.

The most efficient place to store energy is in the middle of a process you were going to do anyway. Ice Energy is effective because it stores cold in the middle of the air cooling process. My home well would be a great load bank if I had a means to store several days of water pressure. A maker of home water heaters marshals thousands of home units to provide fast 4-second load banking to meet the needs of the gird—and radically changes the net cost of water heating. Load banking that performs a useful service creates value you can see every day.

Look at your buildings, and ponder, what you can do in advance, and do it when there is a load banking opportunity. Look for ways to productively load bank your distributed energy resources rather than sell excess to the grid. Look for ways to use more energy, right now.

Demand response happens now and then. For the last couple years, with a down economy and lower industrial demand, it might not happen at all. Load surplus opportunities happen every day. If your building systems can take advantage of this surplus, consume energy when it is cheap and plentiful, to provide service when it is expensive and scarce, you can find new value streams from energy engineering, renewable energy, and building systems.

Smart Energy in Industry: Introducing MRP4

Last week, I spoke at the Department of Energy’s Industry to Grid (I2G) Summit, a pre-meeting of the ARC World Industrial Forum. For me, it felt like something of a homecoming. Several careers ago, my biggest customers were manufacturers. In the late 70’s, popular imagination held US manufacturing to be dead, poorly managed and low quality. In a famous Newsweek article, a celebrity athlete boasted of a summer in the UAW, during which he deliberately added rattles to pass the time. As often happens, a renaissance had begun some years before public perception hit bottom.

As a young programmer, I was working with companies trying to improve quality while keeping costs under control. With double digit inflation the norm, the US was beginning its great inventory squeeze. A passing familiarity with the Japanese Kanban system could take you far in industrial consulting. JIT inventory was being supplemented by JIT production. In Toronto, at the world APICS conference, we split MRP (Materials Requirements Planning) into MRP1 and the new MRP2. MRP2 reached beyond the factory floor to incorporate sales budgeting and HR planning. A year later, I first saw AutoCAD, astonishing because it ran on a PC.

Those were the roots of today’s integrated global supply chain management. Eventually MRP2 came to cover all facets of a company, and was re-christened ERP. Time-phased resource acquisition is a critical component of today’s commerce. Executives in every sector now are evaluated based on ratios determined by how lean their inventory is.

Even when it makes no sense, we apply these management principles today. For example, Coal plants used to pride themselves on weeks or even months of supply on hand. Coal is easy to store, and it does not go bad. Still, many utilities today run on same day coal deliveries; any interruption of the supply chain, of the constant stream of trains from mountain to generator, would take a significant portion of US electrical supply off line.

This last week, we saw the effects of a similar lean supply chain in natural gas. The cold snap increased demand and reduced supply, causing affecting electricity supplies in Texas, New Mexico, Colorado, and California. Lean supply chains are brittle. Through ERP, we have made are electricity supplies brittle as well.

Current plans are that we introduce intermittent electricity sources, i.e., solar and wind and tides, throughout the grid. Today, we backstop these with the same natural gas whose supply chain we manage so tightly. Lean supply chains and thin markets demand predictability. When smart grids fail, lean supply chains can make then fail badly, and the effects will be regional.

Pulling this back to my early days in industry, APICS propagated the essential equations for to compute supply chain decisions. In those days before PowerPoint, I used to be able to write these equations, in the style of a grammar school teacher, on the board, behind my back, while facing my clients. Many of them depended upon another, the Cost of Stock-out (COS). The simplest COS was solely lost sales per day. The better ones started with opportunity costs and factory reconfiguration and extended to lost reputation and permanent loss of customers. It is easy to undervalue the COS.

Public Utility Commissions have made affordability their top concern for decades. Utility executives strive to make their financial ratios look like other industries. Volatile energy supplies will increase the likelihood of stock-outs, i.e., shortages of basic supplies. Lean supply chains and renewable energy create a dangerous mix.

The industrial decision-makers in the audience wanted a quick take-away on what smart energy means for them. Many of them generate their own power, and are looking for better ways to bring their excess to market. Others are just beginning to consider the effects volatile prices that swing every day. To me, it was easy, they are already the thought leaders in this area. Industry gave us MRP1 which grew into MRP2. MRP3 is ERP, the dynamic management of resource supply and use that runs our global supply chains and businesses of all kinds. For the end node, smart energy is MRP4, accounting for volatility of supply, and factoring it directly into scheduling on the factory floor.

Making Smart Energy Less Exceptional

Yesterday, I presented the NIST B2G (Building to Grid) group with a proposal to simplify integration within buildings and between buildings and the grid by relaying on existing well-defined, and well known web services standards. The feedback was surprisingly positive. Now I have to consider how to get it into the Energy Interoperation specification.

Energy Interoperation was conceived of as the market and situation awareness gateway for the premises. As energy markets change more during each day, the home, the commercial building, and the industrial site (the premises) must become aware of these changes, and the premises-based systems must be able to respond. A significant early profile of Energy Interoperation will be OpenADR 2.0 (Automated Demand Response). OpenADR 2.0 will serve as a gateway to more rational energy markets, better able to accept intermittent energy sources (wind, solar) and distributed energy resources (on premises, storage, etc.). We call the external interface of premises-based systems the Energy Services Interface (ESI).

OpenADR 1.0 terms each premise a resource, able to provide services to the grid. These resources are tied to the “nega-watt” concept, wherein finding a MW of reduced energy use is as good as finding a MW of increased generation. The bulk of Energy Interoperation is defining the market transactions needed to support a variety of market structures and tariffs.

If we had mature markets, each premise would be responsible for absolute energy use. Many industrial sites operate in this mode already. Absolute results, though, are considered beyond the abilities of today’s commercial buildings, and more importantly for today’s homes. If the family arrives home during a DR event and starts cooking, their energy use will go up even as though their thermostat was automatically turned down. To assess performance in today’s markets, market makers want to see some of what’s behind the ESI.

To support this need, Energy Interoperation needs to support some level of not-quite-direct control of systems or devices inside a Resource, or perhaps merely some level of monitoring. We call these exposed systems and devices Assets. It is important to think of an Asset as a virtual device, one them may represent a smart toaster, a water heater, or an entire production line in a factory. What matters is that a contract allows it to be exposed and its function “directly” monitored.

Distributed Energy Resources (DER) are a particularly interesting class of Assets. A home solar panel, or a roof-top wind turbine, or a grid integrated thermal storage system might all be Assets. In any case, Assets need only a constrained set of interactions (On, off, half speed, set thermostat to 76, is it running now, charge up, discharge, how much electricity is it generating now…). Limited metadata is expected as well, largely to let Transmission operators deal with covarying Assets. 500 solar panels on the south side of town are covarying Assets as the same clouds might take them all out at the same time. Today’s Assets are covered by Tariffs, and this is all closely regulated. In the future, Assets may be offered to the market as tenders, contracted, and exposed.

Yesterday’s proposal was that we use the Managed Discovery Interface defined by the Web Services Discovery and Web Services Devices Profile (WS-DD). WS-DD is already used in many networks to discover services such as printers and faxes. WS-DD is supplemented by Device Profiles (DPWS) to ascertain the capabilities of each device. For example, you may want to find only printers that support color and two-sided printing. Discovery only works local, as the internet is built to prevent printer searches consuming all bandwidth. The Managed Discovery interface offers a secure way to ask a remote system to share the results of local discovery. You can imagine that corporate headquarters allows remote employees to print at only a few designated printers. We can use the same approach to share Assets with grid operators.

To do this, we need to define Standard metadata compliant with the Device Profile, including a list of available services and their WSDL description. This standard metadata would be extended to define profiles of interest to energy interactions, while excluding detailed interactions that would increase complexity while reducing interoperation. We discussed whether devices would expose separate services beyond those needed for energy interactions.

Fortunately, ASHRAE SPC 201 has been hard at work for months, working with NEMA to define what the energy interactions for premises based systems are. For some systems, these are quite simple. A thermostat might expose a method to turn it up for a period of time, and a method to verify its current setting. For now, these services could be registered by hand though the system that hold the ESI. In the future, such systems may be able to autodiscover systems, and ask the [owner] which ones to share with the energy market.

Assets need some concept of Events, that is, a way of notifying remote systems of things that change locally. WS-DD prescribes the use of WS-Eventing. This specification defines how to support supports the simplest levels of interfaces for notification producers and consumers for a distributed event management system. WS-Eventing is a W3C recommendation that is widely implemented in the enterprise.

We can use these specifications to solve critical needs for Energy Interoperation without delaying its final completion. This approach will also support re-deployment of these services and events to support applications that today we do not imagine.