Power for emergency systems focus on value add

Value-add strategies intend to help owners build better business cases to install and operate larger generation capacity that can mitigate major environmental events that create extended power outages

By Simon Gandica January 18, 2023
Courtesy: Smith Seckman Reid, Inc.


Learning Objectives

  • Gain an understanding of how a facility’s power generation can reduce demand on a local utility and contribute to a facility’s bottom line.
  • Look at an overview of the pros and cons of a demand response program.
  • Review the concept of peak shaving to limit peak demand.


Emergency System Insights

  • To negotiate low energy rates and offset electrical utility charges, owners can take advantage of local power generation.
  • Power generators, either diesel or natural gas, are the most common sources of emergency power.
  • To mitigate generation and distribution constraints, utility companies create demand response programs. There are attractive financial incentives for generator owners to make those units available on demand.

Power for emergency systems is a broad and complex topic. There are many articles explaining the technical aspects of power for emergency systems, as well as listing code requirements justifying the way emergency systems are designed. This article takes a slightly different approach and presents how power for emergency systems also can be designed to add financial value the owner’s operation.

Most building systems are capital expenditures. The building core, shell, finishes, electrical, plumbing and heating, ventilation and air conditioning systems in general cost money to the owner without any tangible return on investment. Capital expenditures are typically capitalized and become fixed assets that are depreciated overtime. This is also true for power generators; however, power generators are unique because owners can take advantage of local generation, used to primarily power emergency systems, to negotiate low energy rates and offset electrical utility charges.

Figure 1: Illustrating power company’s interruptible program. Facility is consuming power from the grid. Courtesy: Smith Seckman Reid, Inc.

Power generation for emergency systems

The financial gains resulting from generating local electricity with nonrenewable sources cannot be realized as income unless the owner is a utility provider; but the value added by local generation is tangible and positively impacts the owner’s bottom line. Power generator systems can also be designed to provide reliable power to high revenue areas of buildings. All design decisions oriented to add value to the business should also keep the safety of the operation in the facility as the main priority.

NFPA 70: National Electrical Code defines emergency systems as “those systems legally required and classed as emergency by municipal, state, federal or other codes or by any governmental agency having jurisdiction.” An emergency power supply provides power for emergency systems and is defined as “the source of electrical power of the required capacity and qualify for an emergency power supply system.”

In other words, an EPS is an alternate source of power, typically local to the facility that provides power to specific loads necessary to safely operate a facility and to allow occupants to exit the building in a safe manner during emergency situations. Emergency power can come from a variety of sources. Power generators, either diesel or natural gas, are the most common sources of emergency power although energy storage units are also popular in the form of batteries, inverters and UPSs.

Figure 2: Facility has switched to local power generators, taking the building off the grid. Courtesy: Smith Seckman Reid Inc.

Added value strategies for emergency power

The most commonly added value strategy to negotiate low energy rates and offset electrical utility charges is to take advantage of utility companies’ demand response programs. According to the Electric Power Research Institute, there are many power generators already integrated within customers’ power systems that do not operate when utility power is available. At the same time, EPRI explained that 33 out of 40 of the largest power companies in the U.S. offer incentives for customers that make their generators available to support the utility grid; some of those programs have been in place since the 1970s.

Utility companies create these programs to be able to mitigate generation and distribution constraints. Thus, there are attractive financial incentive for generator owners to make those units available on demand. The Florida Power and Light refers to its program as commercial demand reduction and explains that its intent is to reduce the system peak demand during capacity shortfalls or system emergencies. FPL advertises substantial reduction in electric bills. Owners participating in the program take advantage of the rate discounts year-round, yet their local power generator capacity was only available when hurricane Ian affected Florida’s west coast in September 2022.

From the customer standpoint, demand response programs are written around voluntary load curtailment. Those programs put in place terms and conditions that define the maximum frequency and duration of events. Commonwealth Edison Co. specifies in its contracts a maximum curtailment frequency of 20 events and 100 total hours per year. Customers remain connected to the grid, thus if the local generation fails, power from the grid remains available for the customer to use.

The magnitude of the financial benefits for customers depends on how much load customers are willing to shave off the grid by transferring it to the local generators or simply by shutting down certain building loads. The financial benefit also depends on how much notice the customer agrees to perform the load transfer.

There are different engineering strategies to design new power systems or retrofit existing ones that are flexible enough to take full advantage of demand response programs. These strategies should take into consideration the criticality of the customer’s operation, the sophistication of their maintenance staff and the upfront cost that the customer is willing to invest.

One simple way to design a system that can take full advantage of demand response programs is to size the power generation system for full back up, which means that power generators have the capacity to serve the facility under peak demand. By doing so, the customer can agree to curtail 100% of the building load on short notice, which allows power companies to offer the highest incentives. Full backup does not mean to substantially upsize the power generators.

Emergency generators are sized to power the highest probable emergency loads of the facility. Most emergency generators run lightly loaded. A properly engineered controls and load shedding scheme allow owners to take full advantage of the available capacity when emergency loads are not operating at peak demand. Thus, the incremental cost of upsizing the generator to provide full back up is off set by the benefit of discounted utility rates.

There are some considerations to make when engineering an emergency power system that is designed for demand response. One of them is to determine who is responsible to perform the load curtailments. Some power companies require the integration of remote terminal units in the customer’s infrastructure; RTUs give control to the power company to start the generators and curtail load. The advantage of this configuration is that power companies maintain trained professionals on staff to perform these operations.

Some customers are highly skeptical to provide third-party companies with control of the backup infrastructure. Demand response contracts can be negotiated for customers to maintain control of the load curtailment. In this case, power companies agree to notify the customer for the need of load curtailment and the customer agrees to shed the load within the agreed upon timeframe.

Not every customer or every power system is suitable for full back up. Power generators can serve the load of the facility partially. Since the power curtailment is monitored at the meter, customers can still benefit from serving their loads partially. Demand response contracts cover a specific amount of power that the customer will drop. This amount is set by the customer and does not need to be the total facility demand. Thus, providing generator power certain areas of the system, or existing systems that already serve emergency loads still create an opportunity for customers to participate in demand response programs.

Whether it is full or partial back up, the terms and conditions if interruptible programs apply only when the power grid is available to the customer. Since the code-required use of emergency generators is limited to power emergency loads when utility power is unavailable, the benefit of making emergency generators for interruptible programs comes from taking advantage of the available infrastructure to create value to the customer when the equipment is not in use.

Figure 3: Peak shaving is the strategy that uses power generators to limit peak demand. Power generators serve partial load to lower peak demand. Courtesy: Smith Seckman Reid Inc.

Should peak demand rely on an emergency system?

Another opportunity to add value with emergency generators is by managing the customer’s peak demand. When analyzing utility bills for large customers, a large portion of the monthly charges is related to demand (kilowatt), not consumption (kilowatt-hour). Consequently, a customer that consumes 500,000 kWh per month pays more if the peak demand is 3,000 kW than a customer that consumes the same kilowatt-hour with a peak demand of 2,000 kW. The billing cycle is divided in intervals. In Texas for instance, CenterPoint Energy breaks the billing cycle in 15-minute intervals; as a result, the highest demand average of any 15-minute interval sets the peak for the billing cycle.

Peak shaving is the strategy that uses power generators to limit peak demand. Similarly, to demand response, demand readings happen at the meter. Therefore, any load transferred to the local generators contributes to lower the peak demand recorded at the utility meter. Peak shaving has some advantages such that any type of load can be transferred to the generators, not necessarily emergency loads, so customers can identify those loads not critical to the day-to-day operations to minimize risk. A separate automatic transfer switch is installed on nonemergency load to prevent a fault on those loads from affecting any emergency load.

Another advantage is the simplicity of the system. The controls system for peak shaving is commonly integrated within the generators, paralleling gear or automatic transfer switch control scheme. Peak shaving happens on the customer side, so there are no contracts to negotiate with utility providers. Ideally, the power system is engineered for peak shaving, but existing systems can also be retrofitted to take advantage of peak shaving with limited investment. Conversely, the downside of peak shaving is that the customer only acknowledges the financial value if the generators are running. Interruptible programs on the other hand let customers benefit from lower rates even if they are never called to curtail load.

Nonemergency loads

When power generators are sized to serve nonemergency loads, there is an opportunity for customers to identify high revenue areas that would bring substantial financial benefits from staying operational during power outages. The health care sector is a premium example of this. The power system for a health care facility is typically oversized due in part to the codes that regulate the sector. Article 517 of the NFPA 70, for instance, requires the installation of three separate branches for hospitals “capable of supplying a limited amount of lighting and power service that is considered essential for the life and effective hospital operation during the time the normal electrical service is interrupted for any reason.”

To accomplish this, life safety, critical and equipment branches are built from separate transfer switches. Each branch serves a specific group of loads allowed by code; the diversity factors applied to those loads are low, creating the need for large power generators that will be lightly loaded most of the time. Nevertheless, the code allows for the installation of a fourth branch to serve optional loads as long as the transfer won’t overload the generating equipment. These loads shed automatically before the generating equipment is overloaded. Imaging equipment is generally considered an optional load, yet they bring substantial revenue to most hospital operators. Therefore, adding imaging equipment to the optional branch of the hospital creates financial value to the owner of the facility.

Creating more value

Power for emergency systems has expensive installation and operating cost, although they are extremely important to the safe operation of the facility. These value-add strategies intend to help owners build better business cases to install and operate larger generation capacity to mitigate major environmental events that create extended power outages. Code-required power for emergency system is not designed to maintain buildings operational or remain occupied. Owners with the ability to generate enough power to continue to operate can control the outcome of their business during contingency situations.

Value add is different from value engineering. While value engineering focuses on achieving the essential functions of a building at the lowest life cycle cost, a value-add engineering strategy focuses on using the building systems to create financial value for the owners. There are many other opportunities, such as microgrids, renewable energy generation, co-generation, building automation, etc. that owners can explore to generate positive cashflow from building assets.

Simon Gandica, PE, PMP, is an electrical engineer and principal at Smith Seckman Reid Inc. with a focus on health care and industrial projects. He has directed multimillion-dollar projects from conception to occupation.


Author Bio: Simon Gandica, PE, PMP, is an electrical engineer and principal at Smith Seckman Reid Inc. with a focus on health care and industrial projects. He has directed multimillion-dollar projects from conception to occupation.