Well, I think it's safe to say that this summer was as hot as it was expected to be. Consequently, across the United States, from California to Texas to Illinois to Connecticut, the grid was overstressed and this summer represented a watershed period for advanced, technology-enabled demand response and the value it can provide to grid operators, utilities, and, ultimately, to consumers.

Just how hot was it and just how overstressed was the grid? Let's take a look at these fascinating facts:

1. July's heat set over 2,300 daily high temperature records across the nation in 2006, the hottest in 70 years according to the Weather Almanac for 2006.
   
2. The mean temperature across the United States for the months of June, July, and August was the second highest on record according to the National Climatic Data Center.
   
3. More than 270 people died in a rash of heat-related deaths during the 2006 summer heat waves.
   
4. All-time electrical peak demand records were set by utilities serving customers in more than 25 states including: California, Texas, Illinois, New York, Pennsylvania, New Jersey, and each of the New England states.
5. Each of the nation's seven regional independent operators of electrical grids, stretching from California to New England, experienced record power demand in late July according to the United States Department of Energy.
6. The peaks set in these regions were not just the result of normal, annual demand growth. On average these peaks were 4.58% higher than in 2005, nearly 100% higher than expected load growth of 2.4% according to the United States Department of Energy.

As a result, the need for demand response was unprecedented and utilized extensively by grid operators and utilities nationwide. The summer of 2006 has proven demand response is needed in every region of the US and the value of this unique resource is no longer in question, rather, the scepter has been turned toward determining how to maximize the value of this resource everywhere, and quickly! As EnerNOC helps grid operators and utilities throughout the US maximize the value of this resource we find it interesting that the most frequently asked question that we get from system operators and utilities wanting to take advantage of demand response is, "So, what was the customer experience like during all of these demand response events?"

The answer to this question is best left to our customers to tell you themselves, in the testimonials below about their participation in demand response events this summer across the country. For the record, EnerNOC dispatched its Negawatt Network™ 17 times in California, 5 times in New York, 2 times in New England and provided more than 1,515 MW's of proven, real-time demand response capacity for 109 hours of response. You'll see that our customers participate with enthusiasm and you'll also notice that demand response is a significant gateway to even greater energy management value – what we call Total Energy Management™:

California

The Energy Coordinator for a member institution within the California State University System relays that his primary motivation for participating in the Demand Reserves Partnership (DRP) is community goodwill. As a state institution, he adds, it is his duty to help lower electricity prices for all consumers in the state.

Each building on campus has a designated contact and a written response plan to ensure the execution of its pre-determined manual curtailment activities. The individual response plans, which contain a wide variety of conservation measures, were developed out of a contest run by the Energy Coordinator to find the best plan.

During DRP events, the university automatically shuts down non-critical air conditioning through its energy management system at the central chiller plant. Each building's written response plan is also carried out, which includes shutting off non-essential lighting, lab equipment, and non-centrally controlled air conditioning.

The university strives to achieve substantially more than its current nominated capacity to maximize its contribution to other energy consumers. Awareness of the program around campus is very high, as the university conducts PR activities in advance of the summer season to prepare everyone for potential demand response events which ultimately raises the presence of energy efficiency and conservation.

New York

Another university, this one in New York, cites its participation in EnerNOC's SCR/ICAP demand response program as being closely aligned with its own goals of partnering with the community and reducing energy costs. When the heat waves hit New York City this summer and triggered Demand Response events on four separate occasions, the university consistently achieved curtailment levels of 200% to 300% of their enrolled capacity.

"The hardware and software that EnerNOC provided us were key tools that allowed us to manage and maximize our participation," said the university Director of Business Affairs. "With EnerNOC's energy information portal, we were able to measure our actual load curtailment in real-time and cycle HVAC loads among multiple buildings on campus."

Thanks to the efforts of key personnel in the Facilities Department monitoring curtailment activities, the demand response events proceeded with minimal impact to students, faculty, and administration, and maximum benefit for the university and the local community.

Connecticut Part I

One of EnerNOC's more interesting customers is a process manufacturer who uses EnerNOC's PowerTrak™ system as a tool to track load impact on three separate switchgear locations. When production is down on the weekends our customer can start-up large manufacturing systems to see exactly what it costs to run a 600 horsepower mixer with no load and then compare that during production hours under load. Our customer can also compare the variation in load when working with different densities of raw material compounds.

Here is a good example of the many things this manufacturer is doing with our PowerTrak system: Our customer runs production for two shifts and ten hours each shift with a lag time of four hours between shifts each day, five days per week. The customer was leaving a 100 horsepower air compressor running between shifts because the process requires air pressure to keep valves open on hot oil systems. They are now switching off the 100 horsepower compressor and turning on a 50 horsepower standby compressor for air supply for the four hour lag time between shifts. If you do the math that comes out to 50 horsepower x 746 watts per horsepower which equals 37.3 kW at 20 hours per week which totals 746 kWh per week. 746 kWh per week at $0.14/kWh equals $5,431 per year in energy savings from this one measure alone.

"I couldn't make an argument before I had PowerTrak because I had no proof of the savings. Now, with very little effort, I can run a report, print out a chart, show it to all involved, and voila, 'We are saving money.' What a concept, huh?!? Anyway, it fell on deaf ears and closed eyes before, but now I have undisputable proof that I'm not a raving maniac or the power police. I don't like to waste energy!"

Connecticut Part II

A leader in the manufacture of specialty lighting with a long history in Connecticut signed up with EnerNOC this year. The company's motivation, according to the Director of Operations, was two-fold – monetary incentives and the opportunity to contribute to the reliability of the grid in their local community.

When making the decision about how much capacity to enroll in the program, the manufacturer elected to be conservative initially to ensure minimal operational impact. However when they were notified for Demand Response events on August 1^st and 2^nd, they pulled out all of the stops.

"We took the steps which had been agreed upon with EnerNOC and shut down air handling units to curtail 300 to 350 kW's, but wanted to do more to help out the grid. Our President and I went around the facility turning off every non-essential light and load we could find – he even turned off the light in my office," said the Director of Operations. "My office was a bit dark, but aside from me none of our employees even noticed the difference."

Massachusetts

Over a year ago, a family-owned chain of supermarkets serving customers in Connecticut and Massachusetts signed up its first group of retail locations. EnerNOC's facility analyses showed early on in the relationship that the stores' backup generators were lightly loaded, so the first step was to increase the load on the backup generators to increase demand response potential and to utilize an asset that was simply being underused.

When the record heat and power consumption of August 2^nd triggered a Demand Response event, the grocer followed procedures and activated their backup generators. In addition, staff reduced lighting around the store perimeters and in the sales areas through their energy management system. These steps helped this customer perform above their expected capacity levels.

This customer shared with us that the key to successfully managing these events is communication. The details of the Demand Response program were communicated to store personnel beforehand, including a preview of the lighting conditions during an actual event. "Everyone from store managers to store operations personnel were fully aware and supportive of the program and contributed to making it run smoothly," said the Energy Manager. "Nine times out of ten, customers do not even notice a demand response event occurred. When they do notice and ask, they appreciate what we are doing for the power grid and the community."

Discovering the Value of Demand Response

These customer examples highlight a true enthusiasm for both demand response and the value gained through additional energy management opportunities that were surfaced as a result of employing demand response. The value gained from demand response program participation is contagious to other energy management initiatives.

Consequently, these customers are very eager to enroll their facilities in new demand response programs that are being introduced in many other regions. This is a boon for grid operators and utilities seeking to maximize the value of demand response quickly due to the simple fact that once a customer understands and is comfortable with demand response participation in one region there is inclination to act quickly to get involved in new programs.

Ultimately, the market momentum that we are experiencing now will result in demand response being integrated into every grid throughout the world as a standard market resource with standard market rules.

For more information about how to bring EnerNOC's Negawatt Network to your area or business, call (617) 224.9907 to talk to my colleague, Phil Giudice, Senior Vice President of Corporate Development.

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