If you thought the prices of Internet stocks fluctuated rapidly, you should take a look at the local energy market. And just as a fortune can be made on Wall Street with a few prudent trades, a fortune can be saved in energy costs by playing the market right. That is exactly what the University is trying to do.
By taking advantage of new technology and the recent deregulation of energy prices in the region, the University is hoping to cut down its energy costs — possibly saving more than $1 million each year out of the roughly $10 million spent on energy.
"[Our goal at Facilities engineering] is to look for the opportunities where we can both most cost effectively deliver energy to the campus and reduce our net emissions to the environment," said Ted Borer, manager of mechanical systems.
The University consumes energy in three different forms: electricity for appliances, steam for heating and cold water for air conditioning.
The University's Cogeneration Facility, built in 1996, is the heart of the campus' power system and produces both electricity and steam. The plant provides more than half of the electricity used on campus and all of the steam, both of which can be used to make cold water — taking care of all of the energy needs in one system.
Playing the market
Starting in August, the University has taken advantage of fluctuations in the price of power in the local area to save money.
During the night, when electricity demand is usually lowest, the University can get power from the local grid for very low prices and sometimes for free.
But during the day, the prices can hover around $100 per megawatt-hour and spike to $1,000 per megawatt-hour on hot summer days.
When it is cheaper to take power from the outside grid rather than produce its own, the University scales back its power production. For example, when electricity is cheap, the University uses electrically powered chillers to make cold water for the campus. But during the day, when electricity is more expensive to buy, the University makes more of its own in the cogeneration plant, using the steam produced to power steam-driven chillers.
Just the technique of switching power sources as needed is expected to save the University several hundreds of thousands of dollars.
Soon the University will take this concept to the next level. Instead of just taking advantage of cheap electricity at night, it will make a giant "thermal battery" to store that cheap energy for the next day.
"We're one of the first institutions in the area to take advantage of the difference between day and night power costs," said Borer.
Beginning in 2004, the University will construct a 2.6 million gallon tank that it will cool to near freezing temperatures each night when power is least expensive. Then, during the day, the cool water will be pumped out as needed.
Planning ahead
The plant operates using a complex algorithm to determine how much power to make on campus and how much to buy. The algorithm takes into account current and predicted prices of both fuels and electricity as well as current and predicted weather.
In addition to adjusting the plant's output as power prices change, engineers can also switch which fuels are used to power the plant.
The jet engine at the heart of the cogeneration plant can burn either natural gas or diesel fuel and can switch from burning one to the other with just a 90-second-long dip in efficiency. With two options for fuel, the engine is more reliable, and production is cheaper.
All of this flexibility adds to the already high cost-effectiveness of the cogeneration plant.
Before the cogeneration plant was built, the University had to buy electricity from the local power grid and burn additional fuel to produce steam. By producing both electricity and heat from the same process, the University reduces both cost and pollution.
"The University's been here for 250 years," said Borer. "The question is, what do we do knowing it will be here for the next 250? How do we make the most intelligent decisions expecting that sort of future?"
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