Baseload, DER, Geothermal, Solar

How One Utility Enlisted Geothermal Cooling to Reduce Peak Electric Demand and Improve System Utilization

On July 1st, 2014, PSEG Long Island released its Utility 2.0 Long Range Plan. This plan is on the leading edge of New York’s “Reforming the Energy Vision” (REV) proceeding. REV is a process through which the NYS Public Service Commission is defining the utility of the future — one that meets customers’ and society’s evolving needs by making efficient use of distributed energy resources (DER). The REV defines DERs to include energy efficiency, demand response and distributed generation.

According to Michael Voltz, P.E., PSEG Long Island’s Director of Energy Efficiency and Renewables, “The basic theory behind PSEG Long Island’s Utility 2.0 plan is that investments in energy efficiency and renewables can save customers money by lowering peak demand and eliminating the need for some T&D upgrades as well as the construction of new power plants.  Utility infrastructure must be constructed to meet customer demand during the peak periods, even though that load might come for only 10 to 20 hours each year.  This system capacity, which is seldom fully-utilized, is very expensive to build and maintain.”

Electricity use on Long Island, like most of New York, peaks on hot summer days, primarily driven by residential and commercial air conditioning load.  PSEG Long Island has targeted specific investments that increase their electric system efficiency on the hottest days when the demand is highest, due to air conditioners cycling more frequently. 

Geothermal heat pumps (GHPs) are vastly more efficient than conventional air conditioning systems.  In the summer, GHPs extract the heat from inside a building and transfer it to the cool soil below the ground.  Air conditioners exhaust the heat to the hot outside air surrounding the building. 

Voltz further notes, “On a hot summer day, GHPs are 200-400 percent more efficient than conventional systems.  As outside air temperatures increase, air conditioners become less efficient. Air conditioners are least efficient on the hottest days.  This is exactly when efficiency is needed most, and when it could do the most to contain costs for our customers and reduce the chance of power outages that may result from isolated distribution system overloads. The efficiency of ground source heat pumps is independent of outside air temperature. GHPs can provide enormous savings when an electric utility is supplying hundreds of thousands or even millions of buildings that require cooling at the same time.”

Among other measures PSEG Long Island is proposing is a $9.45 million investment over four years that would result in an increase in rebates for GHPs to an estimated average of about $2,000 for residential systems and $9,000 for commercial systems.  The plan would also fund education and marketing programs to be offered in conjunction with GHP installation contractors.  

The utility estimates that up to 2,900 GHPs will be installed in the PSEG Long Island territory which includes 1.1 million customers in Nassau and Suffolk counties and the Rockaways in New York City under the proposed four year program, with an estimated potential peak demand reduction of about 5 MW. 

According to the Long Range Plan, “A typical PSEG-Long Island residential customer uses approximately 10,000 kWh annually and has an average peak demand of 4 kW.  The GHP system could reduce total electric and fossil fuel consumption for space heating, cooling and water heating by an estimated 4,500-5,000 energy savings and 1.5 kW demand saving for a typical residential customer”.

In June of 2010, the Oak Ridge National Laboratory released its Assessment of National Benefits from Retrofitting Existing Single-Family Homes with Ground Source Heat Pump Systems.  This report noted that there were approximately 600,000 GHP systems installed in the US as of 2005 and it estimated the benefits in energy savings, reduced summer electrical peak demand, consumer utility bill savings and reduced CO2 emissions that would result from increased penetration of GHP in the heating and cooling market.  The report estimated that replacing space heating, space cooling and water heating systems in all single-family homes in the US would result in the following national average savings:

  • 45 percent reduction in primary energy use
  • 45 percent reduction in CO2 emissions
  • 48 percent reduction in energy costs, and
  • 53 percent reduction in summer peak electrical demand for space cooling.

Many utilities across the nation are taking a deeper look at GHP technology as it becomes increasingly expensive to build centralized power stations to meet peak demand.  In addition to the benefit of reducing peak demand, utilities are finding three other major advantages to deploying more GHP systems within their service areas.

  1. GHPs tend to increase system utilization.  GHPs increase electricity use for heating in winter months when power demand is low, while decreasing electricity use in summer by more efficiently meeting cooling needs.  The result is that utility assets are used more evenly throughout the year, resulting in lower delivery costs per kWh.
  2. GHP technology is a renewable technology with built-in storage capacity, available 24/7/365.  There is often no need for backup heat and the energy is available on demand.
  3. In an era when distributed energy sources like wind and solar are contributing to a reduction in kWh sales, GHPs actually increase kWh sales while substantially reducing overall energy bills for customers.  Increased use of GHPs (along with other efficient electric technologies such as electric vehicles) offers a promising avenue for electric utilities to improve system utilization by maintaining and possibly increasing kWh sales while reducing peak demand.

According to John Franceschina, President of the New York Geothermal Energy Organization (NY-GEO), “Many utilities across the country are desperately defending themselves against fears that distributed energy like solar PV may cut into their revenue stream.  PSEG Long Island is showing real leadership by focusing on reducing peak demand and improving their system utilization as a way of saving money for their customers.  Electricity is the fuel of the future.  Forward looking utilities will focus on helping customers switch to geothermal heat pumps instead of burning fossil fuels to heat and cool their homes and buildings.  They will also do everything possible to integrate electric vehicles into their systems.  Those utilities will find an expanding revenue stream while saving money for their customers and successfully meeting regulatory pressures to reduce greenhouse gas emissions.”