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Application: Energy tariff optimization
Pains & drivers
Minimizing risk and maximizing value through securing stable electricity contracts is a high priority for energy managers and executives. By negotiating the most advantageous supply agreements, and investing in schemes to make the best use of available tariffs, customers can optimize the cost of their consumed energy.
How can a customer manage energy more efficiently?
- Through the analysis of electrical rate structures, the collection of electrical consumption data, and what-if analysis energy managers can make a significant impact on the overall financial contract with utility suppliers. Knowledge of how a facility’s electrical energy is consumed, used and purchased provides a huge advantage for the purchaser in contract negotiations. Energy managers leverage this energy procurement analysis and consolidate multiple facilities to reduce the financial impact that electrical energy has across the entire enterprise.
- Depending on the tariffs offered by the suppliers and the loads under the control of the customer, users can reduce energy costs in a variety of ways.
- Peak demand charges can be reduced by detecting an impending peak and shifting non-essential loads to other periods. Peak shaving uses on-site generation to keep loads on-line without setting a new utility peak.
- Customers may also be able to take advantage of tariffs offered by utilities which suffer from a lack of capacity or high marginal cost of production, for example during the hot summer months. A demand curtailment agreement allows the customer to benefit from an attractive energy rate. In exchange, when a utility requests it, the user will reduce their load temporarily.
- Time-of-use rates are another incentive for those customers who can distribute loads to lower-cost times of day and thereby reduce their energy bill.
- Avoiding reactive power charges is another way to optimize cost. Inductive loads such as transformers and motors use not only real power, but also reactive power. These types of loads absorb energy during part of the AC cycle, stored in the device’s magnetic or electric field. The energy is then returned to the source during the other part of the cycle. Utilities have to provide capacity to support this reactive power, and increasingly reactive power charges are applied on energy bills. If your tariff includes reactive power charges, power factor correction is a way to erase this charge from the energy bill.
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