What Happens in Vegas...

As a real estate owner or manager, do you know how much your building could be saving (or earning for your owners) with demand response? According to a 2013 survey by the Smart Grid Consumer Collaborative, the answer is most likely "no".

Indeed, most property owners do not know what demand response is, let alone how much they could be saving by participating in a program. What's worse, like many energy efficiency programs, demand response sounds too good to be true. If I walked in off the street and offered you a check for $10,000 for letting me make your building more efficient silently in the background, would you do it? Well, if it was me of course you would, but... anyone else and you'd probably be suspicious.

Demand response by itself can be a tough sell, especially in buildings where tenant or occupant comfort is a concern. For instance, Las Vegas utility NV Energy discovered through trial and error that casinos did not seem to be interested in demand response. It wasn't until they wrapped demand response in a more palatable story of energy efficiency that casinos started to listen.

So, it's a good thing that USGBC has incorporated demand response into the latest version of LEED, giving real estate owners one more opportunity to become familiar with it through the lens of green building and energy efficiency.

LEED and Demand Response

USGBC started piloting a new "Demand Response" credit back in 2010. After thorough review, demand response was fully incorporated in the newest version of the green building rating system, LEED v4, which was adopted by USGBC membership back in July 2013 and officially launched at Greenbuild last November. Under LEED v4, owners can enroll in a demand response program and increase the amount of points they earn toward LEED certification.

Demand response programs are designed to accomplish two strategic objectives for real estate owners:

• Owners can choose to reduce their demand for electricity when prices increase beyond a certain point, and/or
• Owners can be paid by utilities for reducing demand at times of peak electricity load, when capacity is so highly taxed that system failure could occur.

Both scenarios offer savings or earning potential for the building owner. Why would a utility want to pay a building owner to not use electricity? The simplest answer seems to be because reducing strain on the grid is less expensive than building a new power plant.

Earning Points

Almost any building can comply with the LEEDv4 EA Demand Response credit, whether or not a program is currently available in your area. If a program is available in your area, your building can earn 2 points. The program must be automated, be for at least a one year term and have a commitment to curtail at least 10% of estimated peak electricity demand. The program must be included within the scope of the commissioning plan.

If a program is not available in your area, you can still earn 1 point. The building must install interval recording meters with communications and ability for the building automation system (BAS) to accept the DR program when it becomes available and develop a comprehensive plan for shedding at least 10% of the building's peak electricity demand.

So, if you are interested in selling demand response, or convincing your owners to enroll in a program, instead of LEED can act as a Trojan horse for demand response programs.

A good understanding of these technologies can increase NOI. And, by enrolling in automated programs, real estate owners can look to technology to do some of the work for them while they sit back and collect the checks.