Long Term Sustainability: Taking part in demand response programs and corporate power purchase agreements can offer price stability

Above: JOE HAYDEN, vice president of Revenue–North America, for GridBeyond

December, 2023-

Q: Why is it essential for industrial companies to incorporate a plan toward net zero?


A: As the world faces the urgent challenge of climate change, it has become increasingly important for businesses of all types to take significant steps toward achieving net-zero emissions. But this transition also presents an opportunity for businesses to reduce operational costs and enhance their competitive edge, with the right strategy in place. The Department of Energy recently released three reports under its Liftoff series that delve into the difficulties of industrial decarbonization faced by industries such as cement, chemicals, iron and steel. The reports note that U.S. industrials are a significant contributor to emissions, accounting for 23 percent of U.S. carbon dioxide equivalent (CO2e) emissions in 2021. Within that, total energy and process-related emissions accounted for 14 percent of emissions, totaling ~880 MT CO2e in 2021. Although emissions from the metals sector are smaller than other industries, the metals industry accounted for 76.6 million tons of CO2e in 2022, according to the EPA. The report notes the challenges with decarbonization of these industries but said that the narrative is changing. Technology deployment has received congressional support, and customers and other stakeholders increasingly expect companies to address climate change.

Q: How can companies maintain their operations and boost their bottom line, while reducing emissions?

A: When it comes to energy, value is determined by three key factors: price, quantity and time. When and how energy is used is just as important as the price paid for it and how much is used. Ultimately, the ability to be flexible about energy use represents both a value and a cost. Grid demand response (DR) programs allow companies to monetize that flexibility. While the initial costs in installing greener technologies may pose challenges, businesses in the metals sector have an opportunity to utilize their energy strategy to gain capital to reinvest in solar, wind and battery storage, either on site or purchased from a third party through a corporate power purchase agreement (CPPA).

Q: How do these strategies apply to the metals industry?

A: Based on our current client portfolio, GridBeyond estimates that many metals companies have upward of 50 percent to 60 percent flexibility, which means there are opportunities for businesses to participate in DR programs. Not only do these programs support the grid operator to integrate further renewables into the power mix but participants also receive financial payments for participation. DR allows industries to adjust their energy consumption based on grid conditions and electricity prices. By signing a CPPA, companies can lock in a fixed price for electricity, which can help them manage their energy costs and reduce their carbon footprint. CPPAs can also offer longterm price stability, which can provide a hedge against the volatility of traditional energy markets. Overall, CPPAs can be an effective hedging strategy for companies looking to manage their energy costs and reduce their environmental impact. As we experience a wider push toward clean renewable energy and decarbonization, there is increasing interest in the concept of industrial microgrids. These are localized energy systems that operate independently or in conjunction with the main power grid. They offer resilience, reliability and the flexibility to integrate various energy assets. Battery storage complements microgrids by storing excess energy for use during cloudy days or nighttime. Solar energy, together with DR, enhances the metals industry’s ability to manage its energy demands efficiently, while generating additional capital that can be reinvested in further environmental measures and/or technology while ensuring a continuous and sustainable energy supply for metals production.

Q: Can you provide an example of benefits?

A: Let’s assume that a manufacturing facility in Texas, which has annual energy consumption of 8.76GWh, has installed a 2MW solar system and a 1MWh battery storage facility connected in a microgrid. The average electricity price 0.14/kWh. If the solar system generates electricity for six hours per day and the battery is charged and discharged once per day, the monthly energy saving and energy payments could reach $44,000 for this site. This is, of course, a general example but shows that the integration of microgrids, DR, battery storage, and solar energy combine in a holistic approach to decarbonization for the metals industry. This not only helps protect the environment but also ensures the long-term sustainability and competitiveness of the industry as sustainability becomes increasingly critical.

GridBeyond, 346/352-2138, http://gridbeyond.com/