The federal government has set some aggressive goals for itself when it comes to energy efficiency, sustainability and clean energy goals. Meeting many of the targets falls to the largest tenant in the U.S., the General Services Administration, which oversees the business of the federal government.
The agency oversees the federal buildings in Washington D.C., but also around the country. The challenge to participate in demand response is difficult enough in one region, but understanding the complexities for each region makes it nearly impossible.
To create a more cohesive strategy, the GSA recently worked with World Energy Solutions to auction 24 megawatts of demand response over a three-year term. That isn’t a record amount of DR by any stretch of the imagination, but it does show a shift from how DR procurement was previously done.
In the past, most government agencies have requested quotes individually from DR companies and then negotiated contracts directly. “It’s a hodgepodge of different rules and complexities,” said Mark Ewing, Director of GSA's Energy Center. “Using World Energy was our attempt to herd cats.”
For other energy services, like procurement in electricity markets, the GSA had already been using auctions for years. The pilot with World Energy was to see if it would work to get demand response providers to meet a standard agreement and then bid on the megawatts.
The previous method earned an average 75 percent share in revenues. The two sets of auctions, which were for some GSA buildings in PJM territory and U.S. Department of Veterans Affairs facilities in New York, boosted revenue shares to an average of 91.8 percent. “We wanted to make the competition as level and transparent as possible,” said Ewing.
The higher revenue stream means that more money can be put back into the agencies for other energy efficiency projects, or just other areas where money is badly needed.
"The whole approach, from the design of the RFP to the marketing and execution of the auction event, put us in control of the process and yielded considerable benefits,” Frank Napoli, Network Energy/Fleet Manager VISN 3 at the U.S. Department of Veterans Affairs, said in a statement. “Every extra dollar we gain from our participation in the demand response program translates into more resources for providing high-quality care to the veterans we serve."
Each local market has different drivers, so each DR contract got different prices, but “people were really eager to get to this market,” said Ewing. It’s no wonder that companies are so excited to get in with GSA. The agency owns or leases nearly 10,000 buildings and has an inventory of more than 370 million square feet of workspace.
GSA has 11 different regional customers. The agency does not direct them on how to produce demand response, but can provide best practices and a baseline so that facilities that can participate can do so as effectively as possible. “We wanted some kind of comfort level that everyone was operating at some level of sophistication,” said Ewing.
Many buildings are already under demand response contracts, and so they will have to wait for those to expire before moving to an auction-based system. But more auctions will be coming.
Like so many other areas of smart grid, demand response takes an incredible amount of education. Demand response even more so, because of the incredibly complex -- and constantly changing -- market rules for each region.
For GSA, demand response is just one piece of the puzzle. Although standardization of the DR procurement process could open up many more megawatts, there are also other ways to drive efficiency, whether it’s adding in PV or combined heat and power plants to large facilities. In some markets, it’s more attractive to have distributed generation than it is to drop load during peak -- especially because demand response events aren’t necessarily called during the highest peaks of summer.
Nearly all demand response is also currently manual, rather than automated. Having more dimmable ballasts and other systems could open up some facilities for autoDR. However, the government is wary about letting a third party control its systems, so many buildings under GSA’s jurisdiction, or that of other federal agencies, might never move into fully automated DR programs.
Even if autoDR doesn’t make inroads with GSA, a standardized procedure could empower many of the agencies’ regions to reconsider demand response. “We’re really encouraged by the results,” said Ewing. “It’s an evolutionary process for us.”