Ice is essential to any party. For a typical gathering, about 1 lb per person is needed. Would you wait for the first guests to arrive to begin making ice for your party? Of course, you would not. Imagine how massive your refrigerator and its internal ice maker would have to be to create ice as it is needed.

Now, think of a typical office building. During summer, 100 lb to 400 lb of ice, or equivalent cooling, is needed to keep the average person comfortable over the course of a day. (To determine the amount of ice needed, divide square footage per person by square footage per ton of cooling, and multiply by hours of occupancy. For example: 100 sq ft per person ÷ 400 sq ft per ton × 8 hr = 2 ton-hr = 160 lb per person per day.) That is hundreds of times more ice than is needed in our party example. So, if waiting to make ice is unwise in the case of a party, why is it not hundreds of times more so in the case of a building?

The truth is, installing a big cooling system and not planning ahead is not a best practice, especially considering electricity for commercial buildings is two to three times more expensive on hot summer days. Instantaneous, or “on demand,” cooling strains the power grid, particularly during hot summer months. The danger of this strain can be seen in the midsummer brownouts and blackouts that have become all too common.

The Impact of Air Conditioning

Utility load factor is a utility’s average load as a percentage of its peak load. In other words, it is the amount of available power-generation assets being utilized on a yearly basis. Think of it as a 100-seat bus being operated 24 hr a day, seven days a week, with no passengers at night. A utility dispatches the bus to a facility because, during peak times, all 100 seats will be filled. Of course, this is efficient only when the bus is full; during off-peak hours, the bus is only partially full or is empty. For a facility with a load factor of 50 percent, a bus half that size could be used, if riders are staggered and the bus is scheduled to be full constantly. If you have flown recently, you know airlines are getting very good at this.

Utilities with higher load factors make more efficient use of transmission and distribution lines and avoid the need to build new power plants. The power grid, like the bus in our example, is most efficient when providing a steady flow of power from a utility to customers. Fluctuations in demand require the use of “peaker plants.” Many of these are among the least efficient and dirtiest plants because they are not used consistently.

In the coming years, as air-conditioning use increases, utility load factors will worsen. In the United States, we have a collective utility load factor of about 50 percent. This means we have the capacity to generate twice the power we need, if we use energy at a level rate around the clock. Reducing peak demand can have a major impact on our power grid. Utilities realize this, as evidenced by their pricing structures and incentive programs.

Energy Storage

Around the country, utility companies are encouraging behavior intended to reduce peak electricity demand. This year, the New York State Energy Research & Development Authority (NYSERDA) and Consolidated Edison Company of New York (Con Edison) jointly implemented a program to encourage New Yorkers to install energy storage and other energy-load-shifting technologies. The goal of the program is to achieve 125 MW of permanent peak-coincident electric-load reductions—100 MW through energy efficiency and demand reduction and 25 MW through combined heat and power—in New York City and Westchester County by June 2016. As part of the program, energy-storage incentives were increased by 333 percent.

The NYSERDA-Con Edison program provides $2,600 per kilowatt (up to 50 percent of total project cost) of stored energy. For projects over 1 MW and 500 kW, there is an extra incentive of 15 percent and 10 percent, respectively. Similar programs can be seen across the country. Some California utilities have their own permanent-load-shifting program at $875 per kilowatt. In Texas, Oncor Electric Delivery Co. offers a $254-per-kilowatt incentive. In Florida, Duke Energy offers $300 per kilowatt, while Florida Power & Light Co. offers $480 per kilowatt.

Of course, not all utilities help to offset the costs of energy storage. In many new-construction projects, however, energy-storage systems do not require incentives because they are comparable in price to non-storage chiller plants. With commercial buildings and schools, the pricing structure of electricity almost always encourages energy storage.

If a building is not offered time-of-use pricing by the utility, it commonly is believed to be on a “flat rate” (i.e., there is no difference between daytime and nighttime costs). That is not the case, as demand tariffs on utility bills are common. Typically, when demand charges are converted to daytime energy use, daytime electricity costs effectively double. For example, if energy costs are $0.054 per kilowatt-hour both day and night, but demand costs are $13 per kilowatt, the effective daytime energy costs for a daytime-peaking building will be $0.133 per kilowatt-hour.

To calculate the impact of demand charges on an electric bill, let’s do a back-of-the-envelope calculation for a 1,000-ton system:


Daytime cooling costs

Demand charge per month:

1,000 tons × 0.8 kW per ton = 800 kW

800 kW × $13 = $10,400 per month


Chiller energy use per month:

1,000 tons × 10 hr × 75 percent (diversity) × 0.8 kW per ton × 22 days per month = 132,000 kWh


Approximate cost, demand converted to kilowatt-hours:

$10,400-per-month nighttime demand ÷ 132,000 kWh per month = $0.079 per kilowatt-hour


Daytime energy costs for running chiller:

$0.054 per kilowatt-hour + $0.079 per kilowatt-hour = $0.133 per kilowatt-hour


Daytime cooling cost per ton-hour:

$0.133 per kilowatt-hour × 0.8 kW per ton = $0.1064


Nighttime cooling costs

Demand charge per month:

Buildings with comfort cooling peak during the day, so demand charges do not contribute to nighttime cooling costs.


Nighttime chiller energy costs:

$0.054 per kilowatt-hour + $0.00 (demand contribution) = $0.054 per kilowatt-hour


Nighttime cooling put into storage, cost per ton-hour:

$0.054 per kilowatt-hour × 0.8 kW per ton = $0.043


To summarize, at night, the cost to store cooling is just under 5 cents per ton-hour, while during the day, a ton-hour costs just under 11 cents to generate. So, a flat all-day energy charge of $0.054 per kilowatt-hour combined with a peak daytime demand charge of $13 per kilowatt can be a great rate for storage. In this example, creating cooling at night is nearly 59 percent less expensive.

So, do not think a standard demand rate is not good for storage. A building with peak energy use during the day is a great place to use thermal-energy storage.

Through some demand-response programs, owners of energy-storage equipment are paid to reduce their peak demand. That is like the grocer paying you to buy ice before your party. The key is to know your electricity rates and the programs your utility may be offering in your area.

As peak demand becomes a bigger and bigger problem and as more renewables are added to the grid, the importance of energy-storage technologies will increase. Engineers designing buildings with storage in mind are preparing for the near future: buildings that not only help to stabilize the grid, but turn HVAC systems into money-saving assets. Energy storage not only helps utilities to better manage supply and demand by creating a smarter, more responsive grid, it helps buildings to interact with the grid and enables them to act as virtual power plants. Thermal-energy storage is like buying your ice before the party, but is a hundred times smarter.


Mark M. MacCracken, PE, LEED AP, is chief executive officer of CALMAC, manufacturer of thermal-energy-storage equipment. In his 30-plus years with CALMAC, he has been involved in all aspects of the company, including research-and-development contracts, patents, manufacturing, marketing, and finance. Also, he has served as principal investigator on research projects with Oak Ridge National Laboratory, NASA, and National Renewable Energy Laboratory. Formerly, he was chair of the board of directors of the U.S. Green Building Council.

