Posts

Demand Response for Manufacturers – MES #4

February 25, 2021 – Did you know that a demand response program will pay you for curtailing your usage? In this video, Senior Energy Advisor Michael Zaura, CEM explains how this program can serve as an additional revenue stream for your manufacturing facility.

Video Transcript

Hello, and welcome back to Manufacturing Energy Success. Thank you for joining me!

Did you know that there is a program that will pay you for curtailing your energy usage? In this week’s topic, we are going to cover the Demand Response program and the additional revenue it might mean for your facility.

What is Demand Response?

Demand response is a program that was designed to alleviate stress on the grid during critical times.

Think about over the summer. 100 degree weather, lots of humidity, air conditioning and probably your machines working a little harder than normal. Demand response asks you to curtail during these extreme times to help alleviate those stresses on the grid and prevent blackouts.

How do you receive payments?

Now let’s get to the good part: how do you get paid for being part of a demand response program?

There is a one-hour test even that usually takes place toward the end of June to mimic what an emergency event would look like. You’re given three- to four-weeks’ notice in order to prepare for this test event. Most of our manufacturers do a scheduled maintenance day or maybe a lunch so they can curtail as much as possible during that one hour.

After that one-hour test event, a few months are used to evaluate the data of how much you actually curtailed during that one hour. Then, your payments are determined. For one client last week, we estimated that they can earn $50,000 annually by participating in the demand response program.

What’s after the test event?

Now that the test day is complete and you’re enrolled in the program, what’s next?

If a critical day is called, you will be asked to curtail as much energy as possible on that critical day. Critical day sounds a little scary, I know. But there are two positives to keep in mind in regards to a critical day.

  1. If you curtail as much as possible on that critical day, you get extra energy payments for whatever you curtailed that day.
  2. There has not been a critical day or a grid emergency called in over 12 years in our territory otherwise known as PJM. So, your chances are very good that the only curtailing you’ll be asked to do during this program is on that test day.

“There’s no way we can curtail.”

The number one comment I get from manufacturers all the time when it comes to this program is “Mike, there’s no way we can curtail.”

Would $50,000 of new revenue to your facility make an impact? I’m guessing it would.

Now when we say “curtail,” keep in mind that we don’t mean a complete shutdown of your facility. “Curtailing” could be adjusting the thermostat by a few degrees for that one-hour test event. It could be shutting down an air compressor, a chiller, a rooftop unit, maybe a manufacturing line just for that hour.

The point is, you can curtail as much or as little as you want. But keep in mind: your payments will reflect how much you curtailed during that one-hour test event.

The enrollment deadline is coming up soon!

In closing, demand response is an incredible program to generate revenue for your facility. If you’re interested in seeing an estimate of what payments might be for your facility, I’m happy to help! The enrollment period is coming up fast — it usually ends in late spring, but it could be earlier depending on how many megawatts are accounted for. In this program, there are a certain number of megawatt-hours available, and once those are claimed, enrollment is shut down until next year.

Thank you for watching! I hope you found today’s video valuable. Join me next week for our final video in the series on energy efficiency. Have a great evening!

Follow us on LinkedIn!

Special Alert: Operational Flow Order – MES #3

February 17, 2021 – In this special edition of Manufacturing Energy Success, Michael Zaura explains how packaging manufacturers can help relieve stress on the natural gas grid during an Operational Flow Order.

Video Transcript

Hello, and welcome back to Manufacturing Energy Success. This week’s topic was supposed to be on demand response. But, because of the major event that occurred in energy this week, I thought it would be more helpful to cover what has happened and what you can do to help.

What is an Operational Flow Order?

On Monday, Operational Flow Orders (OFOs) were called by natural gas utilities across the country. An OFO or Critical Notice occurs in rare instances when excessive demand puts massive strain on natural gas infrastructure. You may have read about the blackout in Texas and Oklahoma as a result of this.

While we are lucky here to have not experienced anything like that yet, you still may be affected by these orders.

What does this mean for you?

Chances are, you’re going to have higher energy bills not only in February, but possibly in a few months following as well. this is due to extra charges from the utility for any natural gas used above your normal monthly quantities during this critical time.

What can you do?

As a manufacturer, you’re in a unique position — your actions this week can not only reduce your energy usage but also relieve some stress on the grid.

Curtail whatever you can this week. It’s tough to shut off the heat or shut down completely, especially with this weather. But, if you can:

  • Reduce the thermostat a couple of degrees in your facility
  • Turn off some extra lights
  • Idle a production line until the weekend.

These small actions can be a big help to the grid during this time and ensure that energy is delivered to places like Texas and Oklahoma that need it the most.

 

Thank you for watching! If you have any questions about OFOs or ways to curtail your usage this week, please feel free to reach out.

I’ll be back next week with our regularly schedule programming where we talk about another form of curtailment in the form of demand response. This program is a great way to get some of those dollars back into your budget. Stay warm out there!

What is RPS on your electric invoice? – TMT

Video Transcript

Hey! I’m Mike at Nania Energy.

If you’ve looked into green energy options in the past, you know you can source 100 percent renewable energy by purchasing RECs. However, you might be surprised to learn that some of the energy you consume has already been generated by renewable sources. Some states mandate the minimum amount or renewable energy a facility consumes through a charge called Renewable Portfolio Standard.

In this week’s Two-Minute Tuesday, we’re going to dive into what RPS is and why it matters to you.

What is RPS?

In the US, 29 states plus Washington, D.C., require electric suppliers to include a minimum percentage of renewable energy in their electricity supply. As of right now, there’s no federal law mandating renewably sourced energy, so it’s left to the states and their constituents on how they want to tackle green energy adoption.

Because it’s not centrally regulated, RPS programs vary from state to state, as you can see here.

RPS Programs by State

RPS Programs by State. Source: Berkely Lab, Electricity Markets and Policy

Some states have chosen very aggressive goals, like Washington, D.C. at 100 percent green by 2032. Others have more modest goals, like Arizona at 15 percent by 2025. As deadlines for these approach, most states are electing to extend them, but some let them expire, like Iowa did with their 1999 goal.

Why is there an RPS charge on your electric bill?

So why are you seeing this additional charge on your invoice? Regardless of your electricity supplier, they’re going to pass the cost through to you to comply with state law. You’ll see this on your electric invoice as a line item most commonly referred to as Renewable Portfolio Standard or RPS.

RPS Line Item Example

RPS Line Item Example

Depending on your state and your electricity product, the RPS charge might be included in your fixed price or separated out on your utility bill.

For some of our clients, RPS makes up as little as two percent of their electricity cost, but for others it makes up over ten percent of their total cost. If current trends continue, we’re going to see Renewable Portfolio Standards become a larger part of your electric costs.

If you have any questions about RPS that we haven’t answered here, feel free to reach out.

Thanks for watching! If you found this video helpful, please like, comment, or share below.

Follow us on LinkedIn!

3 Energy Opportunities for Your 2021 Budget – TMT

Video Transcript

Welcome to 2021! By the end of last year, you probably set some pretty aggressive goals for this year’s budget. Now, you’re a couple weeks into the new year, and you’re wondering, “How are we possibly going to hit all of these goals that we set?”

In today’s Two-Minute Tuesday, we’re going to explore three opportunities in energy that will help you hit those goals for 2021.

Opportunity #1: Review your current agreements.

Opportunity number one is probably the easiest: review your current electricity and natural gas agreements. You’d be surprised how many people think their agreements expire much later than they actually do.

Say, for example, your agreement expires in June. You have six months’ worth of opportunities to evaluate all of your options. You can set up a market alert or market watch to hit a certain price point that you’re looking for.

When the market hits that price point, you’ll be alerted so you can take action. Your new rate will take effect after your agreement expires in June. Let’s say it was a seven percent savings. You now have seven percent extra dollars in your budget that you didn’t otherwise plan for.

So, taking this simple step of reviewing your agreements can have a significant impact on your budget.

Opportunity #2: Generate revenue.

How big of an impact would it be to your budget if you were to create another revenue stream that you didn’t plan for?

Demand response is a program you can enroll in where it asks you to curtail energy usage during the time of a grid emergency. You get quarterly payments based on how much energy you can curtail, which is determined by a one-hour test event every summer.

If there is a grid emergency, you can earn extra energy payments based on how much energy you curtail during that emergency. Luckily, in our PJM territory, there has not been a major grid emergency where anyone has been asked to curtail energy in over ten years.

If generating a new revenue stream would be important to your budget, you’ll want to act now because the deadline to enroll is coming up in the spring.

Opportunity #3: Energy efficiency.

Say you have dollars allocated in your budget this year for an efficiency project, but you’re not sure which one to tackle first. Consider doing an energy audit.

An energy audit will help you identify areas of need, utility incentives currently available, and the ROI for that project. Whichever project you tackle will significantly lower your energy usage not only for this year and this year’s budget, but also for many years to come.

Seize these opportunities and make the most of your 2021 budget.

Energy can have a positive impact on your 2021 budget. By reviewing your energy agreements and their end dates, generating a new source of revenue, and reviewing efficiency projects, not only will this impact your budget for 2021 but also in the years to come.

Thank you for watching! And if you liked what you saw, please like, comment, or share below.

What Is Your Covid Energy Strategy? – TMT

Video Transcript

So you’re an energy buyer, and you know the market’s at 20-year lows. What can you do with this information?

Determine Your Priority

An important first step is determining your priority. Prior to Covid, we were hearing more from clients about energy strategy, risk tolerance, and budget.

But it seems like overnight we’ve really shifted to a PnL economy, especially for those industries that Sam highlighted as the ones who are hurting. They’re after absolute dollars savings.

So the first step is to determine which bucket you’re in: Cost Savings or Budget Stability. Or maybe you’re in a hybrid, and you want to look at options for both.

If Your Goal Is Cost Savings…

As Mike mentioned earlier, we’re in 20-year lows for both electricity and natural gas. If you’re in that absolute dollars savings bucket, there are different options and energy strategies that we can employ.

Option 1: Sweet Spot

The first is called a sweet spot. Typically, people look at 12- , 24- , and 36-month terms, something that’s structured around a year. But now, we’re seeing a lot of popularity around sweet spot pricing. So maybe a 15- 27-, or 33-month term gleans the lowest rate instead of the typical one, two, or three year terms.

Option 2: Blend and Extend

The second option is blend and extend. Let’s say you have less than a year left on your agreement. Under that scenario, you would engage with your current supplier and, for example, in exchange for adding two years onto your  agreement they’d open up the months left on your current term and lower the cost for you. That provides some immediate rate relief.

Option 3: Strike Price

The third option is strike price. For example, maybe the market’s at 5 cents for electricity, but you really want a rate that’s 4.8 cents. You can ask for an alert to be more aggressive on pricing. If we ever hit that 4.8, we get an immediate notification, and you’re able to take advantage of a volatile day in pricing.

If Your Goal Is Budget Stability…

For those that are still thinking long term and still thinking strategically, you might want to look at longer-term agreements, such as four or five years. We’ve definitely seen a long-term trajectory for clients that are still healthy.

That’s going to depend on credit and a willingness to go that long, but we’re certainly seeing an appetite for longer-term deals in light of where market prices are at.

 

Follow us on LinkedIn!

UV Lighting and Indoor Air Quality – TMT

Video Transcript

With people returning to the office, kids going back to school, and others remaining in their residential buildings, everyone is concerned about keeping shared spaces safe. One solution you may be hearing about is UV radiation in air ducts to improve indoor air quality and kill germs.

If you’re getting questions on this or it’s something you may be looking into in the near future, then this Two-Minute Tuesday video is for you. We’re going to talk about 3 things you need to know before looking into UV solutions.

1) Does it work?

The first thing you need to know is, does it work?

And the short answer is: yes. The right type of UV lighting can kill many germs, bacteria, and viruses. It can even help with mold spores and odors in the air.

Now according to the FDA, UV radiation — specifically UVC — has been shown to destroy proteins in other coronaviruses, ultimately leading to deactivation of the virus. Early findings support that it could be equally effective for COVID-19.

Which takes us to the second thing you need to know.

2) Not all UV lights are the same, and not all UV radiation is the same.

While UVA and UVB can kill some germs and bacteria, there is a specific wavelength of UVC that was used to successfully inactivate other coronaviruses, such as H1N1 and SARS.

Enough exposure to UVC-254 damages DNA so viruses can’t replicate. However, direct exposure is also dangerous to people, damaging both skin and eyes. This is why the strongest equipment has been used in medical applications for years, and why it’s installed in air ducts and not in the lobby.

When you’re evaluating UV lights themselves, make note of the type of UV (A, B, or C) and check the light rating. That’s an indication of its effectiveness.

Overall, the effectiveness is based on dose and duration, so power is important. Handheld wands, for example, have a very low dose, and it’s not enough to immediately damage a bacteria or virus. This means it would take prolonged exposure in order to render a virus inactive.

3) Work with an HVAC professional.

The last and most important point: this is NOT a DIY upgrade. You need to work with a professional.

You can buy lights on your own, and in some applications it may seem like an easy install. But there are a lot of ramifications throughout your building that can easily be overlooked. If adequate adjustments are not made to your HVAC system, you can overwork existing equipment or cause condensation issues throughout the entire building.

Be sure to consult an HVAC professional. They can:

  • Tell you whether your current HVAC system can handle UV radiation,
  • Identify the best types of lights that will work with your existing system, and
  • Make the necessary adjustments after they have been installed.

 

These are just a few quick things you should know in case you’re asked about UV lighting. Our November webinar will dive deeper into this topic. So if you’re getting questions or have further questions yourself, please share them in the comments section below, and we’ll be sure to address them in that webinar.

Take care, and thanks for watching!

Follow us on LinkedIn!

 

Technology and Energy Strategy – TMT

Video Transcript

By this point, the impact of COVID-19 has permeated our lives in almost every conceivable way. With the changes you’re facing, you’ve had to adapt to a world where almost everything is now online, including managing your energy strategy.

In this week’s Two-Minute Tuesday, we’re going to talk about a couple of ways you can leverage technology to save you time and money in the energy purchasing process.

Video Conferencing

The first way seems obvious, but it’s worth mentioning: digital communication and data exchange. In this day and age with so many ways to communicate, we are continuously surprised by how impersonal energy procurement can be. There’s nothing like meeting in person, but video conferencing is the next best thing.

Zoom, GoToMeeting, and Microsoft Teams all provide excellent platforms to see each other during meetings and to share and review data. Not only are video communications more personal, but they’re also more productive. More accomplished in less time means more time for you to dedicate elsewhere.

E-Signature

Speaking of saving time, e-signatures are next on our list, and they have skyrocketed in popularity for documents that require signatures. If you’re tired of negotiating with the scanner like me, e-signatures are going to be your best friend.

Reverse Auction

Another way we’re leveraging technology is with a reverse auction. If you’ve never heard of it, you’re going to want to take some notes.

The completely online procurement event has suppliers log in and compete against one another in real time in an online platform. The streamlined event can produce results up to 10 percent better than a traditional sealed bid. Couple that with a 15-minute time limit, and you save time and money all online.

Our workplace is definitely different than it was in January of this year, but that doesn’t mean that your productivity has to suffer. Our mission remains the same: make energy easy to make you successful.

If you’d like to learn more or just want to chat, hit me up and I’ll send you a Zoom invite. Thanks for watching!

Follow us on LinkedIn!

 

 

Off-Site Renewable Assets: Two-Minute Tuesday

Video Transcript

Say your company has just instituted some lofty sustainability goals, where 20 percent of generated electricity should be from solar or wind energy. But, you don’t have the land space for a wind farm or you don’t have the roof space for solar panels.

In today’s Two-Minute Tuesday, we’re going to talk about off-site renewable assets and how this might be a solution for your company.

What is an off-site renewable asset?

An off-site renewable asset is a structure deal, usually in the form of a Power Purchase Agreement (PPA), that involves a commitment to take power from a dedicated asset — usually a green one, such as a solar field or a wind farm.

Who’s a good fit for this?

There are three general parameters for someone who’s a good fit for an off-site renewable asset.

  1. You want to make sure that the site that you’re picking has planned longevity (think 10-15 years).
  2. The location doesn’t have the ability to house a green asset like solar panels on the roof or enough land for a wind farm adjacent to the facility.
  3. Your company or organization has sustainability goals.

A recent example of this is General Motors. Obviously, they’re a very large energy user and they had a sustainability goal of having 20 percent of their electric energy generated through a renewable source. They picked the HillTopper Wind Farm in Logan County, Illinois, to provide 100 percent renewable energy to their Ohio and Indiana facilities.

These facilities have been around a long time, and they’re going to stay around for quite awhile. So, they committed to the HillTopper Wind Farm to provide the 100 percent renewable electricity, and they met their sustainability goals. They did this through a Power Purchase Agreement.

Economic Considerations

Let’s talk about the economics behind an off-site renewable asset. In the General Motors example, they signed a Power Purchase Agreement and agreed to take a percentage of their power from that asset (in this case the HillTopper Wind Farm) at a designated rate.

The good news is these rates are usually below what “brown” power is and gives your location budget certainty for many years to come. These Power Purchase Agreements are sometimes 10, 15, or even 20 years or longer, so the longevity of your site is very important.

If there are any residual energy needs, say that facility increases usage and needs to take more, that’s typically pulled from the grid.

Want to learn more?

That’s just a brief overview of off-site renewable assets, who might be a good fit for them, and the economics behind them. If you’d like to engage in further conversation about this or just green energy in general, I’d love to hear from you. If you found this video helpful, please like, share, or comment below.

Thank you for watching!

 

 

TMT: How Oil Impacts Natural Gas Prices

Video Transcript

The coronavirus has had a huge impact on the price of commodities, with oil being the primary media focus in recent months. But did you know that approximately 16 percent of natural gas harvested in the United States comes from oil wells?

In this week’s Two-Minute Tuesday, we’re going to talk about how the relationship between oil and natural gas drives domestic energy prices and give you some tips to control your risk.

How are oil and natural gas related?

If a company produces crude oil in the United States, chances are they also produce natural gas. The two commodities are related because natural gas can be a byproduct of oil drilling. This is called associated gas — otherwise known as natural gas that’s associated with oil production.

With a nationwide average of 16 percent of natural gas (and as much as 40 percent in some areas of the country) coming from oil, it is safe to say that a good chunk of domestic natural gas production is reliant on oil.

What happened with oil prices?

Oil prices absolutely plummeted because of a perfect storm in March and April of this year. Plunging demand due to the coronavirus coupled with an OPEC disagreement on production cuts cause the collapse of oil prices.

There are two consequences of low oil prices as they relate to natural gas:

  1. The immediate impact is it’s no longer profitable to harvest oil domestically and the associated natural gas that comes with it. Oil drillers in the US have higher operating costs and a higher break-even point than drillers elsewhere in the world. The 16 percent value of natural gas coming from oil is reduce or, in some extreme cases, eliminated.
  2. In a longer-term view, sustained low oil prices will cause future development of oil and associated natural gas resources to be cancelled or postponed. This is really a balancing effect of supply and demand. So the longer oil remains low, the larger the potential impact it will have on future supply levels of natural gas.

We’ve seen oil demand come back here in July, almost reaching the same levels as 2019. The Wall Street Journal is also reporting that the worst effect of the coronavirus on global oil demand have passed but will continue to echo throughout the rest of 2020 and beyond. With resurgent cases we’re seeing in the south and talk of additional business closures, this remains to be seen.

How does this impact you?

So, what should you do with this information?

If your natural gas agreement is expiring within the next 18 months, you should absolutely be reviewing your options for renewal. Prompt month prices hit 25-year lows in early July 2020.

If you’re locked farther out, I would also encourage you to review options for extending your natural gas agreement. With the historical low point we’re currently at coupled with risks to long-term production, now may be the time to take some of that risk off the table.

Thanks for watching! If you’d like to review your options for natural gas, my team and I would be happy to help. If you enjoyed this video, please like, comment, and share below.

TMT: 3 Factors Impacting Your 2021 Energy Budget

Video Transcript

Hi! It’s Calvin, back with another Two-Minute Tuesday. It’s budget season, so this week we’re going to take a look at three macro factors that may impact energy budgets for Illinois customers in 2021.

Budget Factor 1: COVID-19

The first and most obvious factor is COVID-19 and the potential for a second wave later this year.

Initially, with stay-at-home orders, we were in a shoulder period when there wasn’t significant usage for heating or cooling. If there’s a second wave, it’s likely going to come during the heating season. So there’s a big potential for staying at home to increase usage, thus driving up natural gas costs.

Budget Factor 2: Clean Energy Legislation

The second major factor is Illinois clean energy legislation.

There’s legislation on the table right now that includes Northern Illinois being removed from the PJM market. What this means is Illinois residents and businesses will be paying a completely different structure for their capacity costs. The goal of this is to support renewable generation, which historically is higher cost, so it could lead to dramatically higher rates for capacity and overall electricity costs for Northern Illinois customers.

Budget Factor 3: Oil Prices

The third major factor, hot off the presses, is oil prices.

Over the weekend, OPEC announced that they are considering increasing production. They’re meeting tomorrow, July 15, to have discussions and potentially vote on increasing production starting in August. This means that they consider the market to be recovering or demand to be increasing in the future. It could just be wishful thinking on their part, but if they’re correct, then we could see a continuing increase in oil cost and, ultimately, energy rates for 2021.

 

So to recap, the three big things to keep an eye on for next year: COVID wave two, Illinois energy legislation, and OPEC’s discussion to increase production.

If you have questions on this or are looking for additional guidance in your budget planning for 2021, please feel free to reach out to us! You can give a call or email info@naniaenergy.com.

We thank you again for tuning in to another Two-Minute Tuesday, and if you found it helpful please like or comment below.