CHICAGO, IL- The new downtown smart grid pilot program announced late last week by the Building Owners and Managers Association of Chicago could net large building owners more than $200,000 per year, Executive Vice President Michael Cornicelli exclusively told GlobeSt.com. The experiment, which will begin this year with 40 of the association's more than 260 buildings, will not only help cut energy usage and costs, it will eventually allow owners to renegotiate the agreements they sometimes make to curtail energy use at strategic times.
“Some of our buildings are already involved in these [agreements], but right now they don't pay very much,” Cornicelli said. In these transactions, called aggregated demand responses, the need for more electricity on one part of the grid, perhaps from New York City on a hot August day, will prompt a request to a large building owner to cut their energy use so the utility can route the saved power to an area with higher demand. “Sometimes you're asked to move a megawatt of load on 20 minutes notice and there are few buildings that can do it.”
Cornicelli estimates that a typical large downtown office building of 1 million SF can only gross about $26,000 per year from these agreements, and the middlemen needed for the deals usually take 50% of that.
After the installation of advanced smart meters, however, along with Internet-based data collection tools provided by Georgia-based Automated Logic Corporation, owners will have real-time access to their buildings' energy use and the ability to coordinate responses with other buildings. On existing meters, it takes at least one day to get detailed information.
And when that request comes in to quickly help out a sweltering New York, “we can bid as a group,” Cornicelli said. “Independently, they couldn't [provide 1 megawatt] but in the aggregate they can. And the more they ask you to do and the less time they give you to respond, the more you get paid.”
“Nobody's talking about turning off the air conditioning on a hot August afternoon,” he added. Depending on the request, buildings may simply let their indoor temperatures rise one degree.
In addition, their new capabilities should allow owners to access more advanced and more lucrative aggregated demand response programs.
“The other aspect to this is we're going to bid out the programs,” and instead of losing 50% to the middlemen, BOMA hopes they can negotiate those shares down to 20%.
BOMA does not have any plans to involve tenants in the pilot program. Instead, large building owners will have roughly 10 smart meters installed to monitor detailed usage of their major systems like heating and air conditioning. This will allow owners to identify sectors that needlessly waste energy. Cornicelli estimates this infrastructure, and the needed software, will cost at least $11,000 for an office building with 1 million SF. However, he also estimates that, if the building spends $440,000 on energy per year, “we think we can reduce that to $390,000.”
If owners calculate all the changes brought about by smart meters, including the expenses, energy savings and revenues from new demand response programs, especially if the contracts with middlemen get renegotiated, a building with 1 million SF could net more than $200,000 extra per year.
ComEd, Chicago's electric utility, has concentrated on bringing smart technology to residences and small businesses. “But they're not doing very much, frankly, for large businesses,” he said, “so we're doing it ourselves.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
