“Pulling the plug on facility energy usage through ‘demand response’ can have a staggering effect on reducing occupancy costs”

Facility energy usage accounts for approximately 30% of the total corporate real estate occupancy costs making it one of the biggest buckets to address when reducing costs.

The two primary ways to attack energy costs are operating efficiency to reduce energy usage and implementing a “demand response” plan. The emerging energy management and smart grid technologies that enable demand response strategies are transforming the way the corporate occupiers use and pay for energy.

Many energy management technologies can:

  • Save and even earn money through incentives, improving bottom line financial performance
  • Help communities by preventing blackouts and brownouts
  • Benefit all energy users by helping to stabilize energy prices
  • Reduce the need to build more carbon-emitting power plants
  • Contribute to a green energy future

Demand response is a quite different concept from energy efficiency alone. Services (lights, machines, air conditioning) are reduced according to a preplanned load prioritization scheme during the critical timeframes.

This innovative approach will allow CRE/facility executives to shift from an event based demand response towards a more 24/7 based demand response where the company will benefit from incentives for controlling load all the time.

One advantage of smart grid applications is time-based pricing. Customers who traditionally pay a fixed rate for kWh and kW/month can adjust their usage to take advantage of fluctuating prices.

The impact on pricing and costs are staggering. It is estimated that a 5% lowering of demand would result in a 50% price reduction during the peak hours.

Studies have found that even small shifts in peak demand would have a large effect on savings to CRE/facility organizations and avoided costs for additional peak capacity. A 5% drop in peak demand would yield substantial savings in generation, transmission, and distribution costs – enough to eliminate the need for installing and running some 625 infrequently used peaking power plants and associated power delivery infrastructure. This would yield an annual savings of $3 billion translating into a present value of $35 billion over the next two decades.

With the ability to use technology to assure smarter energy consumption that equates to occupancy cost savings, what’s not to love about demand response strategies?

How are you addressing a reduction in energy costs?

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