In the News
Ontario to Pay Big Power Users to Cut Demand The Globe and Mail
April 3, 2008
OTTAWA -- Atlas Cold Storage, a heavy user of electricity at its operations across Ontario, will soon be paid to dim the lights and turn down the air conditioners during serious spikes in demand for power. It's one of a growing number of companies taking advantage of an Ontario Power Authority program designed to reduce the need for costly power plants to satisfy peak electricity usage.
Essentially, Ontario electricity users will be paying some commercial and institutional customers - through contracts with corporate middlemen - to turn down their power consumption upon request.
Two U.S. power-management companies, Boston-based EnerNOC Inc. and ConsumerPowerline, of New York City, announced yesterday they each had signed five-year contracts with the OPA to arrange a 25-megawatt reduction in demand from heavy users on those days when the electricity system faces a surge in demand. Major retailers like Wal-Mart Stores Inc. and Loblaw Cos. Ltd. have embraced energy efficiency, both as a means of reducing operating costs and as a marketing strategy in a more environmentally conscious marketplace. Loblaw is among the participants in the OPA program. Atlas Cold Storage is the Ontario arm of VersaCold Atlas, which operates around the world as part of Icelands Eimskip Holdings Inc. and is aggressively trying to cut its energy consumption.
As part of the EnerNOC contract, VersaCold Atlas will guarantee to reduce its power consumption at five Ontario sites for a number of hours on days when the power system is stretched to capacity. Typically, that peak demand occurs on hot summer days, when people rely most heavily on air conditioning. "We are pursuing aggressive energy reduction strategies throughout our organization, and this [EnerNOC] opportunity fit right into our strategies," the cold storage company's vice-president John Fountain said in a telephone interview.
While power users and middlemen, known as aggregators, profit from the program, other electricity consumers benefit because the utility does not have to build as much generating capacity to meet peak demand.
"Its excellent value to the system and to the consumers," said Sean Brady, director of demand response and industrial programs at the OPA. Mr. Brady said the OPA is in the early stages of the effort, and expects to generate 566 megawatts of "demand response" - eliminating the need for that much peak power capacity - by 2010.
While he wouldn't comment on specific contracts, the average price Ontario pays for demand response is $124,000 a megawatt a year. At that rate, the two contracts announced yesterday would be worth $15.5-million each over five years.
Over all, the provincial authority expects demand-reduction programs - including efficiency and conservation measures - to reduce Ontario's peak power needs by 1,350 megawatts by 2010. It is targeting an overall reduction of 6,300 megawatts in forecast peak demand by 2025 - or six nuclear reactors. EnerNOC chief executive officer Tim Healy believes Ontario has huge potential for demand reductions. His company signed its first contract in New England for 30 megawatts four years ago, and now has 750 megawatts under management in the region, which has peak demand of 27,000 megawatts, roughly the same as Ontario.
The company estimates that Ontario could eliminate 68,850 tons of carbon dioxide emissions annually - equivalent to taking 125,000 cars off the road - if it meets its 1,350-megawatt target.
Hans Konow, president of the Canadian Electrical Association, said power utilities across North America must invest heavily in demand-side measures because they face serious constraints to the addition of new generation capacity and transmission. "The customer is going to face an increase in his electricity bill as we invest in all this new infrastructure and pass the cost back to him," Mr. Konow said. "How do we help him deal with his bill? If he uses less of it or uses it more efficiently, his bill may stay the same or at least be reasonable."