MANAGING GLOBAL ADJUSTMENT, ONE PEAK AT A TIME Prepared By:

Matt Lensink, P. Eng., Chief Operating Officer

June 22, 2017

Introduction/History

• Founded by Martin Lensink in early 2001

• Thermal power engineering consulting firm

• Core team of 45 people: • In 2013, core team of 12 people • In 2014, core team of 32 people

• Core value is serving customers, above all else

• Multi-Discipline Engineering Firm: • Mechanical; Electrical; Civil/Structural

Core Competencies

• Cogeneration/CHP

• Energy Management

• District Energy

• Boilers

• Power Generation

• Biogas/Biomass

• Air Emissions Control

GA-OEFC-NUG GA-OPG GA-IESO

Contracts administered by the Ontario Electricity Financial Corporation (OEFC) with existing generation facilities

Ontario Power Generation (OPG) nuclear and baseload hydroelectric generating stations

Contracts with the Independent Electricity System Operator (IESO) (and the former Ontario Power Authority) for new gas fired generation, renewable facilities, energy from waste and biomass, nuclear refurbishments, as well as conservation programs

What is GA? It is the difference between the Hourly Ontario Energy Price (HOEP) and..

Global Adjustment (GA) covers the cost of providing adequate generating capacity and conservation programs

Energy vs. GA Breakdown

Credit: Ontario Energy Board, “Regulated Price Plan Price Report.” 2015.

Is GA Consistent?

Why is GA Important to You?

• CLASS “A” CUSTOMERS Pay global adjustment (GA) based on their percentage contribution to the top five peak Ontario demand hours (i.e. peak demand factor) over a 12- month base period.

• In order to keep smaller businesses going in Ontario, the Ontario Government is expanding the Class A electrical consumer designation to include customers that have a peak demand of 1MW or greater during an annual base period that starts May 1st – April 30th.

• *NEW: On March 2, 2017, the Ontario government announced the threshold for North American Industry Classification System (NAICS) 31-33 customers would be further lowered to 500 kW

When have GA Peaks Occurred? (2012-2016)

19,000

20,000

21,000

22,000

23,000

24,000

25,000

2012 2013 2014

Note: Years that do not contain 5 bars, indicate that the peak occurred more than once in the same month

GA Curtailment Will Get Harder

Year Total # of

Participants

Introduced at 5 MWe 2010 250

Dropped to 3 MWe 2014 350-400

Dropped to 1 MWe January, 2017 1,300 – 1,400

Dropped to 0.5 MWe* April, 2017 2,000 – 2,300

* for selected NAICS Codes

Who is Eligible?

• Your host Local Distribution Company (LDC) can help you: • Determines the hourly demand values for each month • Takes the highest hourly value (i.e. peak) from each month • Calculates the average of the 12 month values for the months of

May through to and including April

• 12-month average = 3.85 (3.6 + 2.8 + 2.1 + 3.2 + 4.8 + 4.6 + 4.9 + 3.8 + 4.1 + 5.1 + 3.7 + 3.5) / 12

• You also need to be classified under the North American

Industry Classification System (NAICS) as one of the following… • Mining, Quarrying, and Oil and Gas Extraction • Manufacturing • Greenhouse, Nursery, and Floriculture Production • Refrigerated Warehousing • Data Processing, Hosting and Related Services

Who is Included Under NAICS 31-33 Customers?

Opting into Class A

How are Customers Assessed?

How are Class A Customers Charged?

• Monthly GA Costs (Province Wide) x Peak Demand Factor

• $706.8M X 0.00018368= $129,825.02 (customers GA charge for March 2015)

If I curb my electricity usage or eliminate these peaks entirely, what is the impact on my business? Minor Shift

If I curb my electricity usage or eliminate these peaks entirely, what is the impact on my business?

Significant Shift

Overall Cost Savings

Cost PDF Scenario Cost Savings

706.8 M

(March 2015)

0.00018368 No Shifting $129,825 N/A

0.00017997 Minor $127,203 $2,622

0.00015585 Significant $110,155 $19,670

0.00000000 Complete Load

Displacement $0 $129,825

WHAT CAN I DO ABOUT IT?

• Steel making facility in southern Ontario

• Only runs production at night

• Taking advantage of off-peak electricity rates

• Avoids Global Adjustment charges

A SOLUTION:

TIME SHIFTING

• Kimberly-Clark tissue mill in Huntsville • 24/7 operation

• Curtails mill 13 times per year • Shifts preventative maintenance to ‘GA Days’

• Mill curtails 5.4 MWe of total 7.5 MWe load

• 41% reduction in annual GA Spend

A SOLUTION:

CURTAIL PRODUCTION

• Campbell’s Soup plant in Etobicoke, ON • 24/7 operation

• Installed 4.5 MWe cogeneration plant • Generates electricity and heat 24/7

• Benefit from electricity savings and natural gas savings. • Over $1.8 million in annual savings

• Benefited from SaveOnEnergy incentive grant

• Hedge against policy changes

A SOLUTION:

COGENERATION

• Simple cycle generation using either:

• Natural Gas

• Diesel

• Emissions control required

• Design for conversion to cogeneration in the future.

A SOLUTION:

PEAK SHAVING

• Utilize energy storage for peak shaving

• Lithium ion batteries

• Compressed air

• No incremental GHGs

• Limited storage capacity for dynamic GA market

A SOLUTION:

PEAK SHAVING

• Demand response & Global Adjustment

• 4 x 2800 kW Generators

• Synchronized with grid.

• Project installed by Wajax

A CASE STUDY:

PEAK SHAVING

Customizing the Solution

• Grid Parallel • Synchronize with utility grid • Stable voltage and frequency

• Partitioned Connection • Separate a portion of the facility to generation

for peak hours

• Islanded Connection • Take the whole facility off of the grid for peak

hours

WHAT ABOUT INCREMENTAL GHG?

Biodiesel Cycle

• The carbon that is emitted by combustion of biodiesel is

recovered by plants which can be followed through the

cycle to create biodiesel again

RENEWABLE NATURAL GAS

WHAT NOW?

GA Prediction

• Self-monitor – monitor weather, IESO data, and other metrics to self-monitor and predict peaks

• Third-party Notification Services – a third party provider can notify or dispatch for curtailment or peak shaving assets Can provide week ahead, day ahead, or

real time notification

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How Do You Opt-In?

QUESTIONS?? Matt Lensink, P. Eng., Chief Operating Officer

CEM Engineering, 905-935-5815, matt@cemeng.ca