Insider’s Guide to Power Reliability & Resiliency
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The Insider’s Guide to Power Reliability and Resiliency
Today we depend on electricity more than ever before. At the same time, we are seeing a rise in the number of power outages in the United States. In fact, according to a 2015 report by the Pew Charitable Trust, “the United States experiences more electric outages than any other developed nation.”1
So why are the lights going dark more often these days? The United States has an aging grid system that no longer receives the same level of preventative maintenance by utilities as they try to keep costs low for customers. Couple that with an increase in the number and intensity of extreme weather events like Superstorm Sandy, and companies in the U.S. can find themselves in a vulnerable position.
Experts in the field predict the number of power outages will only grow as the power grid continues to age. Large portions of the U.S. power grid were built in the 1970s and ‘80s. Upgrading the grid to better withstand severe weather and better protect against potential cyberattacks will cost hundreds of billions of dollars.
In 2013, the Department of Energy estimated that weather-related outages alone cost our country an average of $18-$33 BILLION per year.2
What are these outages costing you?
Consider what a one-hour power outage does to your bottom line. You may be paying employees to stand around while systems reboot. You may have spoiled inventory, or in the case of one client working with plastics that will harden once the temperature cools, you may need to spend even more time cleaning machines before you can get back up and running again. The loss of power for just one hour in one location can have ripple effects across the world in this increasingly global economic market.
Now imagine what 48 hours without power does for your business.
Likely, you know the detrimental cost this can have on your business and that’s why you’ve begun exploring your options for a backup power system. If you have not yet calculated the cost of a power outage, contact us and we can help walk you through the formula.
Finding the Right Fit for You:
As more and more companies recognize the need for reliable backup solutions to the power grid, several options have surfaced. The right solution for you needs to factor in your energy
usage (i.e. load profile) as well as cost. Below are possible solutions to providing reliability and resiliency for your company:
1. Diesel Backup Generators: Diesel generators have traditionally been the solution for companies due to its relatively low cost, compared to natural gas-fired generators. Diesel generators can only be run for emergency programs due to higher levels of carbon monoxide, hydrocarbons, NOx and particulate matter in its emissions. As a result, it isn’t eligible for all the grid subsidies through programs designed to help balance the grid. Still, diesel generators may still be your best option for you if most of your energy consumption is during traditional workday hours.
2. Natural Gas Backup Generators: While the initial price tag of a natural gas-fired generator is higher, its emissions footprint is significantly better, allowing it to be run more frequently. This means that you can take advantage of grid-supplied programs designed to help balance the grid system. These programs will actually pay you to run your generator at times of peak electricity usage, which can almost pay for the backup generator itself, depending on your load profile. Natural gas backup generators are an especially good option for companies that run production lines 24/7 or have buildings that are occupied around the clock.
3. Battery Storage: Battery storage has received a lot of attention in the past few years as there has been an increase in research surrounding energy storage. A significant advantage to batteries is that it can power on almost instantaneously while generators can take 8-15 seconds to be brought online and up to speed. When coupled with a backup generator, battery storage can be an important part of a reliability and resiliency strategy for organizations. Batteries are not yet suited for long-term outages, however. Power outages lasting longer than 30 minutes become prohibitively expensive using battery storage alone.
4. Reliable Power Purchase Agreement: Also known as a RPPA, a Reliable Power Purchase Agreement provides reliability and resiliency by taking advantage of different programs and subsidies available in a deregulated market. The end result is a backup generator on your property with no initial capital required from you and a long-term contract to purchase power at a low, fixed price. This contract protects you from potential future rises in the cost of electricity and provides a backup generator, often for the same price you were already paying for electricity or just a fraction more.
Are You Making the Most Out of Living in a Deregulated Market?
Deregulated electricity markets break up the monopoly utility companies have traditionally held by owning and operating every step of the process from generation to the meter. In a deregulated market, customers have the opportunity to compare rates and services of third-party marketers or Electrical Distribution Companies (known as EDCs).
In a deregulated market, customers have the option of choosing a fixed rate or variable rate electricity plan. Most customers opt for a fixed rate plan because it is easier to understand – you pay the same amount every month, regardless of the price of electricity. Fixed rate plans appear safer to many customers because it protects them from spikes in their bill when electricity rates go up. Unfortunately, it also means they may be paying more for electricity when rates are low.
Choosing a variable rate, in which the price of electricity can fluctuate hourly, can seem like a risk. But what if you had a safeguard that allowed you take advantage of grid power when the price was low and generate your own when the price was high?
How a Reliable Power Purchase Agreement Can Give You Savings and Security
Approximately 85% of the time it is cheaper for most industrial customers to purchase electricity from the power grid at an hourly rate. That means about 15% of the time it’s cheaper to generate your own power. Your transmission and distribution charges are determined by how much energy you use during the five hours of the year where demand was at its peak and electricity was at its most expensive.
By partnering with Penncat Critical Power, we can install a backup natural gas-fired generator(s) on your property and turn them on during peak usage hours. By running your backup generator 1,000 – 1,200 hours a year (which you can, unlike diesel generators that have limits on the amount of time they can run due to harmful emissions), you can drastically reduce your peak load contribution, which in turn reduces your transmission and distribution charges. Additionally, we’ll be able to enroll in different programs with PJM to take advantage of subsidies.
Penncat works with utilities to forecast your cost of electricity with your generator running at peak hours. As a result, we are able to offer you a low, fixed-rated rate contract that offsets the price of the generator. In most cases you will be spending the same amount on electricity you were before and receiving a backup generator or microgrid for FREE, or just pennies more.
With the Reliable Power Purchase Agreement, Penncat will execute an engineering, procurement and construction agreement to install the generator or microgrid. The utility that supplies the low-cost fixed-rate agreement will own the asset, and as such, will be responsible for the operation, maintenance and insurance of your natural gas-powered generator. The utility will also determine the right time to turn the generator on to balance the grid load and lower electricity prices.
The Reliable Power Purchase Agreement is a unique offering power Penncat Critical Power Systems. Penncat can also work with you if a diesel generator is better suited for your load profile. We would be happy to sit down and talk about your energy usage to determine the right solution for your needs.
Contact Van Morris at V.Morris@penncat.com to discuss how we can best provide a reliable and resilient backup solution to fit your needs.
Let us focus on your electricity needs so you can focus on your business.
1”Pew: U.S. power outages rising,” by James Osborne. Dallas Morning News, Oct. 27, 2015.
2“Why blackouts are becoming more common, in two charts,” by Brad Plumer. The Washington Post, Aug. 13, 2013