Critical peak electricity pricing for sustainable manufacturing: Modeling and case studies

Abstract

Critical peak pricing (CPP) is an electricity demand response technology that has great potential to lower the electricity cost and eliminate the need for more GHG emitting power plants. Many utilities start to offer CPP as the default electric service for industrial customers in their market design. When a manufacturing customer defaults to CPP, it is vital to understand what it is and how it will influence their energy budget and facility operations. In addition, given the option to opt-out to a time-of-use (TOU) rate, it is not always easy to tell whether the switch will result in higher bills or more GHG emissions. These questions will be answered in this paper. Specifically, we will model and compare both CPP and TOU rates to gain more accurate knowledge regarding annual electric costs and GHG emissions. With these results, manufacturing enterprises will be able to make more informed decisions on which service to choose and how to use electricity while fulfilling their role for sustainability by enrolling. The case study results show that for industrial customers with production flexibility, with proper rescheduling of electric use, they can save money by adopting CPP, while contributing to reducing GHG emissions. The savings on the annual electric bill can be 30.45% with a simultaneous GHG emissions reduction of 5.63% for an average industrial customer.