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February 24, 2013

Reduction of Peak AC Demand

Executive Summary

Air conditioning (A/C) is one of the most expensive end-use types for utilities to serve. This is primarily because a significant portion of A/C operates for a relatively small amount of time during the year. As a result, 10% to 20% of the utility capacity – generation equipment, transformers and wires – is used for only a few hundred hours per year (1% to 2% of the year). Such low asset utilization is important because the cost for the capacity needed to serve A/C demand is spread across relatively few units of energy (delivered), which can have a significant effect on the utility cost-of-service

A/C demand tends to occur when overall demand for electricity is already high; therefore, it requires use of the most expensive, least efficient and most polluting electricity generation (e.g., simple cycle combustion turbines). Transmission and distribution (T&D) energy losses are most significant when A/C is used because that is when electrical equipment is most heavily loaded and when ambient temperatures are highest. It is also notable that small A/C compressor motors pose an important challenge during grid-wide voltage emergencies because they draw an increasing amount of electric current (Amps) as the voltage (Volts) drops to maintain their power draw (electric power = electric Voltage x electric current – Volts x Amps). 

Distributed electricity storage systems (DESS) used to serve or to offset A/C-related demand provide significant benefits – primarily related to a reduced need for generation and transmission and distribution (GT&D) capacity (equipment). This is especially important for areas or regions experiencing electric supply shortages or transmission congestion. Other potentially important benefits include increased asset utilization of baseload or intermediate duty generation and existing T&D equipment. The same storage could also be used to offset the need for some ancillary services, especially voltage support, and it could improve local electric service reliability and power quality.


In many regions of the United States (U.S.), A/C use comprises a significant portion of peak demand. Although circumstances vary among regions and locations, A/C accounts for 10% to 20% or more of summer peak demand (May-October). That A/C related demand is quite expensive for utilities to serve, primarily because the capacity needed to serve A/C-related demand is only used for a small portion of the year, so very few units of energy are generated and delivered by that capacity (i.e., only a few kilowatt-hours of energy per kilowatt of GT&D capacity).

Two Approaches

There are two fundamental approaches to address A/C demand using storage. The first is use of electricity storage to provide power directly to A/C systems (in lieu of using electricity directly from the grid) to generate the cold when needed. Second is the use of “thermal” storage – in this case, storage of cold – in the form of chilled water or ice. 

Thermal energy storage (TES) is used to: a) generate and store cold at night and b) deliver the stored cold in lieu of generating the cold during the hot daytime hours with an air conditioning system. Cold storage is not new. It is used regularly for cooling in larger buildings. The systems tend to be relatively large and they tend to be one-of-a-kind. However, more modular versions are available as well. 

Both approaches reduce or eliminate the need to generate cold real-time, during peak demand periods, when electric energy and power are expensive. Operation of GT&D equipment is also most energy efficient at night when ambient temperatures are coolest. Similarly, regarding TES, generating cold at night when ambient temperatures are lowest – rather than generating it when the cold is needed and when ambient temperatures are hottest – enables more efficient cold production.

A/C-Related Electric Demand and Utility Asset Utilization

Perhaps the most important facet of the storage for air conditioning value proposition is the effect on utility GT&D asset utilization. To understand this point, it is helpful to depict the phenomenon graphically. Consider Figures 1 and 2 below. The plots shown are actual “load duration curves” for a specific electrical distribution node located in the coastal mid-Atlantic region of the U.S. (A load duration curve depicts every hour of the year arranged based on demand, from highest demand to lowest demand throughout the year.) 

Figure 1 depicts all 8,760 hours of a given year. Over the course of the year, the equipment is used 29% of the time (“load factor”). The red circle in the upper left portion of the figure indicates the part of the load duration curve where peak demand occurs.

That portion of the same load duration curve is shown below in Figure 2. More specifically, Figure 2 shows hourly demand levels during 2% of year – those hours when peak demand occurs. As shown in Figure 2, about 20% of the entire distribution capacity is used for about 1% of the year. Said another way, about 20% of the distribution capacity is used only 1% of the year. Worse yet, in the example, 10% of the distribution capacity is used for about 0.4% of the year. 

It is important to note that the load duration curve depicted in Figures 1 and 2 is for a single node with the utility’s distribution system. While the impact of A/C on transmission capacity asset utilization is somewhat less dramatic, and even less so for electricity generation capacity, the effect is important with regard to for generation and transmission capacity as well. 

Storage for A/C increases asset utilization in three ways. First, it reduces or eliminates the need for GT&D capacity “on the margin” to serve the peak demand. Second, because the storage is charged during off-peak hours – when GT&D capacity is underutilized – more energy is delivered to end-users using the same amount of GT&D capacity. Third, by generating, transmitting and distributing electricity at night, when doing so is more efficient, reduces the amount of capacity needed to deliver each kilowatt-hour of energy.

Voltage Support

Small A/C motors pose significant challenges when the grid is experiencing a “voltage emergency” (i.e., when, for one or more reasons, the grid voltage is dropping to unacceptable levels). Voltage emergencies are at the root of many grid-wide electrical service outages. Specifically, during grid-wise voltage emergencies, small A/C motors draw increasing amounts of current as the voltage falls. The same motors pose a relatively significant challenge as the grid is re-energized after outages because those motors require a surge (“in-rush”) of current to start up. 

Consider one operational scenario: Distributed storage is used to serve small A/C equipment under normal grid conditions. If there is a grid-wide voltage emergency, then the storage responds like other demand response resources by turning off the A/C equipment. If additional power is needed to stabilize the grid, then electricity storage can provide power to the grid. If the storage system has reactive power capability then the storage system could also provide “reactive power” which can also offset grid-wide or even localized voltage problems.


Using electricity or thermal energy storage in conjunction with smaller A/C ‘package units’ is a compelling value position for several reasons. Most importantly: 1) A/C loads comprise a significant portion of electricity peak demand; 2) many A/C loads only operate for a few hundred hours per year, meaning high cost and low GT&D asset utilization; 3) small-to-medium sized motors used for A/C compressors pose an especially difficult challenge during and after grid-wide voltage emergencies by exacerbating regional power outages; and 4) storage used to serve A/C loads could be available for most of the year for numerous other benefits. 

Most benefits are related to: 1) reduced need for new GT&D capacity to serve peak demand (especially in areas experiencing electric supply shortages or transmission congestion) and 2) increased utilization of existing GT&D capacity. Other benefits include reduced T&D energy losses which: a) reduces fuel use and b) reduces the need for GT&D infrastructure by as much as 8%. The same storage used for on-peak A/C could offset the need for some ancillary services, especially voltage support. It could also be used to improve local electric service reliability and power quality. Storage for smaller A/C loads could also be an important element of a robust, responsive and flexible Smart Grid and/or demand response (DR) program implementation. Finally, storage used to manage on-peak A/C could also be an important element of the utility’s integration of distributed/rooftop photovoltaics and bulk wind generation.

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