Last month, we reviewed how market-based flat power pricing under electric deregulation could actually shorten paybacks of some building automation upgrades that reduce wasted off-peak power. This month, we look at the flip side of that coin: how such flat pricing can actually make some types of hvac and mechanical upgrades a tougher sell.
A recent analysis of an otherwise profitable thermal storage system found that much of the potential saving of this option also disappeared. Such systems store cooling at night by making ice when demand charges are low (or nonexistent) and off-peak kWh are cheaper than during the day. Those differential costs make up nearly all the savings that accrue to such a system. In most cases, actual energy use stays about the same (and may, under some circumstances, be slightly higher). Once the cost of all kWh becomes the same, and demand charges are no longer differentiable (except for T&D charges), the dollar savings from thermal storage may be greatly reduced. In the case at hand, a system in a Northeastern city with high demand charges (over $25/kW for summer months) saw its payback period nearly triple, making the rate-of-return too low for the customer to consider.