According to an upcoming paper in the journal Applied Energy, manufacturing businesses could potentially save more than 30 percent on their electric bills by adjusting their production schedules to take advantage of CPP.
"Manufacturing enterprises can take advantage of critical peak pricing (CPP), a demand response technology, in the transition towards smart electric grids to significantly lower their energy cost," said Yong Wang, assistant professor of systems science and industrial engineering at Binghamton University. "They can do all of this while contributing to reducing greenhouse gas emissions, too."
Wang and co-author Lin Li, an assistant professor of mechanical and industrial engineering at the University of Chicago, studied California’s CPP rates over the last ten years with a specific focus on industrial manufacturers.
Their research determined that manufacturers with one- or two-shift production schedules could save up to 30.45 percent on their electric bills by rescheduling work patterns around CPP events, such as hot summer afternoons. A secondary benefit of doing so is a 5.63 reduction in greenhouse gas emissions resulting from reduced electrical demand.
Demand Response in California
Utilities in California use two types of demand response: Time of Use (TOU) pricing and CPP. TOU pricing applies to usage over blocks of time in terms of on-peak hours (i.e., six hours during summer weekday afternoons) and off-peak hours (i.e., all other hours in the summer months). In these cases, prices for peak and off-peak hours are fixed.
In comparison, CPP is much more variable. Specific dates for critical-peak events are announced to customers 24 hours before the event occurs, and during these events electricity use rates can be as much as ten times higher than average for the same period of time. However, customers are also offered discounts for other days of the year.
"Manufacturing businesses are more energy-intensive than residential homes," said Wang. "Industry often runs multiple shifts and have less flexibility with production processes than residential appliances such as air conditioners, refrigerators, washers, dryers and ovens. It is challenging to simultaneously coordinate production activities, energy consumption and environment impacts to achieve manufacturing sustainability. With the new development of smart grid technologies, new financial and environmental opportunities have emerged."
Changing Manufacturing Production Schedules
Of course, this strategy assumes that manufacturers are capable of rescheduling production with only 24-hours’ notice, a point conceded in the published research.
"Whether a manufacturing customer will experience a saving or a loss on the average annual electric bill when choosing one rate over the other depends on whether they have the flexibility to shift production so the electric use during the high-cost periods can be at least partially avoided," Wang and Li write.
It’s also worth emphasizing that this strategy only applies to one- and two-shift productions—three-shift production sites cannot lower their electricity costs through rescheduling production alone, though Wang and Li suggest that this could still be possible through delicate adjustments to individual production processes.
What do you think? With only 24-hours’ notice for CPP events, can manufacturers actually put this advice to good use? Comment below.