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A Maryland Strategy for Summer Peak Demand?

Peak summer demand drives the electricity system in important ways.  It determines the minimum amount of generating and transmission capacity that must be on hand.  It drives costs as generation capacity must be kept on standby for peak periods.  Peak demand activates more costly, less efficient and even more polluting generation capacity.  Projected increases in peak demand may tempt system planners into wasteful and controversial transmission expansion plans.  And Maryland clearly needs more leverage in regional power markets.

There must be a better way.  There is — take targeted measures to lower peak demand.

The steady growth of peak demand arises largely from the design of our power market that shelters users from the actual costs of generating power during the hot summer months.  If those astronomical costs were passed through, hour by hour, then users would have a strong incentive to cut back.  Until political leaders are willing to inflict those costs on voters (instead of spreading them over twelve months of electric bills), we need other tools.

The problem centers mainly on air conditioning usage by residential and commercial customers during periods of hot and humid weather.  Thanks the climate change, this will only be more of a challenge in coming decades.

By moderating electricity consumption during hot summer months, we can better control the financial and environmental costs of our power system.

Here are some steps we can take:

1. Cool Roofs.  Roofs that reflect the heat of the sun can lower cooling costs significantly.  While buildings and conditions vary widely, an EPA report found an average savings of 20 percent.

2. Solar PV. The installation of photovoltaic systems on homes, farms and businesses could be greatly accelerated through a program modeled on Germany’s highly successful “Feed-in Tariff.”  After all, there is plenty of sun on hot summer days.  It’s a dependable source of peak power.  SB 355, introduced by Maryland Senator Pinsky and six others is a positive step in this direction.

3. Ice Storage. New systems that retrofit onto existing commercial AC units use cheap power at night to make ice.  During the day, AC refrigerant is cooled by the ice instead of the AC’s compressor, cutting power use dramatically.  The Southern California Public Power Authority has announced a utility-scale project with Ice Energy.

4. Demand-side management. This term includes programs that allow utilities to control residential air conditioners from a central location, through radio or internet controlled switches mounted on AC units.  Customers get a lower bill in exchange for allowing the utility to cycle off their AC for a few minutes every hour.  A local example is the Pepco’s Energy Wise Rewards program.  (This is a revival of Pepco’s similar Kilowatchers plan that was strangled in 2004 by the perverse incentives of Maryland’s deregulation legislation; 162,000 customers took part according to the utility.)

5. Weatherization. We often associate improved insulation with warmth in winer but it also pays off during the hot months.

6. Energy-efficient air conditioning.  Incentives are available to help homeowners replace their old AC units with more efficient ones.  However, without the other elements of a comprehensive strategy for managing peak demand, this step by itself may not be the most cost-effective one for homeowners or society as a whole.

Bits and pieces of this approach are available in Maryland already.  To really make a difference, these components need to be highlighted and accelerated.  The hot days of summer are only a few months away!

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