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How Demand Response Can Turn Your Hotel into a Virtual Power Plant

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Not long ago, energy management was a fairly simple affair for hotel managers. Bills arrived, were promptly paid, the lights stayed on, and the guests stayed happy. Unfortunately, those days are over. With energy demand trending to new heights, an aging transmission system, concerns over unpredictable prices, and increasing pressure to meet corporate sustainability goals, suddenly energy management has been thrust to the forefront of long-term planning. In the face of an economy that’s still lagging, hotel managers are looking for new ways to mitigate energy-related risks and get the most out of every dollar, while still delivering the first-class service guests expect.

One way hotel executives are addressing energy management is through demand response (DR), a program that helps managers save money by using less energy. Through DR, hotels can generate incentive payments in exchange for the willingness to reduce usage where and when it’s needed, while helping to stabilize the overall electricity grid.

What is Demand Response?

Because electricity cannot be stored on a large scale like other resources, supply and demand must remain in balance in real-time. Traditionally, a spike in demand creates a corresponding increase in supply, as utilities call upon designated peaking power plants to boost generation. Yet, keeping this supply in reserve has proven a costly and highly inefficient solution—approximately 10 to 12 percent of North America’s power plants are used less than 1 percent of the time but are considered essential to maintaining grid stability.

DR tackles the peak demand problem from the other side of the equation—it focuses on reducing the amount of demand for electricity, as opposed to generating more electricity supply. That means that with the proper technology, commercial and industrial properties of all kinds—including hotels—can act as “virtual power plants,” adding stability to the grid in times of high demand, without needing to build additional power plants. Better yet, DR participants are paid for their efforts. By giving electricity users incentives, in the form of a check cut directly to the hotel to reduce energy consumption when called into action, demand response reverses the ever-upward trend in energy spending.

What Happens During a ‘Dispatch’?

During DR dispatches, demand response providers work with commercial, institutional, and industrial businesses to identify ways for individual facilities to reduce energy consumption, without affecting business operations, comfort, or product quality. In most cases, the changes are undetectable to staff and hotel guests. While the strategies vary by site, they include making minor temperature adjustments of two to three degrees in common areas and dimming lights, as well as turning off fans, fountains, and other non-essential elements. These changes are designed to be subtle, while delivering real energy savings. Participants are typically called upon to act less than 80 hours in an entire year.

Some demand response providers use advanced technology to ensure that demand response capacity is available where and when it is needed. The company installs a small gateway device to the site’s electric meter, collecting electricity usage information in five-minute intervals, and sending that data back to its Network Operations Center (NOC). When dispatched by the local utility or grid operator, the DR provider sends a signal to the customers in its network indicating that it is time to reduce energy usage.

When notified, facility managers then enact their customized energy reduction plan for the duration of the demand response dispatch, which can last from a few minutes to a few hours. In EnerNOC’s case, a facility’s performance is monitored by its Network Operations Center staff. If the five-minute interval data shows that a customer is not hitting its reduction targets, the NOC staff will coach the site through additional measures that can be taken to ensure that the site’s DR payment opportunity is protected and maximized.

Of course, there may be times when participating in a DR dispatch is impossible. With some demand response providers, facilities retain control over their energy reduction strategies during DR dispatches. Facilities can choose their specific energy reduction plan based on where current operations and processes stand. Other times, they can choose not to participate at all. Some providers will assess financial penalties for those instances of non-performance, so to minimize risk, it’s important to select a DR provider that will protect its customers from the penalties associated with non-performance.

DR in Action—Seaport Boston Hotel

The Seaport Hotel is one of the leading hotels in the Boston area, a 330,000-square-foot mixed-use facility at the forefront of the green hotel movement. As part of its award-winning Seaport Saves program, the Seaport Hotel enrolled in a comprehensive demand response program in 2009. During DR dispatches, the hotel adjusts its air-conditioning, reduces its laundry activities, and shuts off or reduces non-essential lighting. These changes, controlled centrally via the hotel’s building management system, temporarily reduce energy use by more than 300 kilowatts. In turn, this reduction earns the Seaport Hotel thousands of dollars in annual payments, which it uses to fund other sustainability efforts.

“Demand response adds another dimension to Seaport Saves, fits nicely into our green portfolio, and fulfills our mission of being environmentally responsible and sustainable,” said Matthew Moore, director of rooms and sustainability at the Seaport. “One of the great things about DR is that it lets us reduce electricity in ways that are virtually invisible to our guests—and that do not impact guest comfort in any way.”

Inspired by the success of its participation in demand response, Seaport was able to tap into a large source of energy usage data to pursue one of its other large-scale environmental goals. Seaport is now using its energy usage data to get a holistic, auditable, and streamlined view of its greenhouse gas footprint.

DR as a Long-term Strategy

Not only does demand response offer financial incentives in the short term, but also, with the proper planning, it can become an integral part of long-term business strategies including corporate and environmental responsibility, efficiency, preparation for outages, and community support.

Gregg Dixon is senior vice president of marketing at EnerNOC, Inc. To learn more about EnerNOC’s demand response program, visit www.enernoc.com/solutions.

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