Encycle Blog

Saving Energy Earns You Money

Posted by Robert Palmer on Sep 22, 2017 10:04:32 AM

Keeping up with all the changes occurring in the electric utility industry these days can become rather bewildering. Not only are of dozens of new “smart” and “connected” gadgets available (e.g., thermostats and meters), but also at least as many new, uber-cool software technologies for managing your energy use. And pricing structures for utility rates are also in a state of flux. For example, the California Public Utilities Commission (PUC) recently adopted radically new pricing structures for residential users and will surely be modifying industrial and commercial rate structures as well.

Generalizing what’s happening in California to the rest of the country, it looks like time-of-use (TOU) pricing is really becoming a “thing.” TOU pricing is similar to “demand” pricing, but is also distinctly different. TOU pricing rates vary based on the time of day and season, which more closely reflects the actual time-varying cost of electricity. It usually has a three-tier daily rate structure as well as seasonal rates.

Screen Shot 2017-05-02 at 4.24.47 PM.pngDemand pricing is simply based on your highest monthly (and sometimes yearly) average power level over any 15-minute period. Utilities like demand charges because they incentivize users to curtail use during peak demand periods, but newer TOU pricing schedules may accomplish the same objective. In fact, it may make more sense for electricity prices to be based on TOU because there is no reason for penalizing high electricity use during off-peak hours when the grid is not stressed. But, at least for the time being, demand charges are still a thing in California, where the rates are about $13.00/kW during the peak season June through September, and around $4.50/kW for the period October through May.

Although the future of energy pricing is still rather uncertain, one thing is pretty clear – your electricity rates are a lot more likely to be going up than down. So, it’s probably a good idea to get ahead of the curve and start thinking now about taking measures to improve efficiency and reduce waste.

Your HVAC system may be one area where your energy use can be significantly reduced. On the hardware side, there may be things that can be done to improve efficiency. And, on the energy management side, there are many BMS/EMS options to choose from.

With regard to reducing demand charges, loads are usually put into one of two categories – either “fixed” or “discretionary.” But HVAC loads actually fall somewhere in between. Depending on factors such as your building’s thermal “inertia” and HVAC over-capacity, there is only so much you can curtail or shift cooling without seriously affecting occupant comfort. And this is especially true on hot days when HVAC loads and demand pricing are both at their highest. So there is not a lot of opportunity for rescheduling HVAC loads to off-peak hours when it’s hot outside. But, are there ways to reduce the impact on occupant comfort while still curtailing aggregate HVAC demand?

One solution to this HVAC control dilemma is to leverage control software that orchestrates the operation of multiple rooftop units (RTUs) to minimize the large variations in aggregate load that occurs when these loads are cycling randomly. Such a load leveling system not only reduces peak demand, but also has a salutary impact on comfort level.

Of course, the value of any energy saving product must justify its cost. Although reducing energy use has definite social and environmental benefits, it’s probably the return on your investment or ROI that’s of primary interest. And remember, all that money you won’t be giving to the utilities goes directly to your business’s bottom line. For help in calculating potential energy savings, check out our latest white paper. 


Determining energy and cost savings requires not only determining how much and when energy is saved, but also knowing what the utility rate structure is in your area. And, there are many other variables that also go into determining savings, many of which, such as weather, are highly variable; so estimating savings for prospective clients will always be inherently difficult. But you can look at the actual year-to-year savings that other comparable facilities (e.g., size and climate zone) have already achieved with a reasonable expectation that your results will be similar. For more information on how Encycle solves the RTU synchronization and control dilemma, learn about our SwarmStat and Swarm Service energy management technology.


Topics: energy savings, Energy Efficiency, building energy efficiency, HVAC Control, HVAC efficiency